Deckers (DECK) Q1 2026: International Revenue Jumps 50% as HOKA and UGG Outperform Amid Tariff Headwinds

July 24, 2025 | By EarningsIQ Research

Deckers’ first quarter delivered a decisive signal: global demand for HOKA and UGG is resilient, with international revenue surging 50% despite a choppy U.S. consumer backdrop and looming tariff risks. Management’s disciplined marketplace execution and selective price increases are offsetting headwinds, but investors should watch for gross margin pressure ahead as tariff impacts accelerate. With no formal full-year guidance, Deckers’ ability to sustain share gains and pricing power under new trade dynamics will define its next act.

Summary

• International Expansion Drives Growth: HOKA and UGG’s global footprint fueled broad-based gains in EMEA and China.
• Margin Structure Faces Tariff and Promotion Pressure: Gross margin compression and higher SG&A signal a shifting profitability mix.
• Brand Momentum Remains Strong: Innovation and franchise upgrades are supporting consumer demand despite macro uncertainty.

Performance Analysis

Deckers posted 17% revenue growth, propelled by HOKA’s record quarter and robust UGG performance, with the wholesale channel as the primary engine. International revenue surged 50%, outpacing U.S. growth and highlighting the effectiveness of Deckers’ global brand-building strategy. HOKA delivered $108 million in incremental revenue, while UGG achieved its largest June quarter ever, adding $42 million.

Gross margin declined by 110 basis points, reflecting a mix shift toward wholesale, increased promotion, and higher freight rates. SG&A expenses grew 11%, driven by ongoing investments in marketing, logistics, and retail expansion, but SG&A as a percentage of revenue improved due to timing and one-time benefits. EPS rose 24% year over year, aided by disciplined cost control and share repurchases.

• Wholesale Channel Outperforms: Both HOKA and UGG saw strong sell-in and healthy sell-through, with wholesale outpacing direct-to-consumer (DTC) growth.
• International DTC Gains: Direct sales outside the U.S. posted robust growth, offsetting ongoing softness in U.S. e-commerce.
• Inventory Management: Inventory rose 13% year over year, but management cited successful clearance of prior models and healthy order books for new launches.

Deckers’ performance demonstrates brand strength and operational discipline, but margin pressures and macro uncertainty will test the durability of these gains as the year progresses.

Executive Commentary

Strategic Positioning

1. International Acceleration as a Core Growth Lever

Deckers’ international markets are now the primary growth engine, with EMEA and China leading both HOKA and UGG’s expansion. Management highlighted record wholesale reorders in Europe and strong DTC gains, especially in China, where HOKA’s volumes doubled for key franchises. This geographic diversification is insulating the business from U.S. consumer volatility, and provides a runway for further share gains.

2. Channel Mix and Marketplace Management

Wholesale is outpacing DTC, reflecting a shift in consumer preferences toward in-person retail and Deckers’ disciplined approach to expanding retail partnerships. Brick-and-mortar stores are driving full-price sales, while U.S. e-commerce remains pressured. The company continues to expand its own retail footprint, but at a measured pace, with only 48 HOKA stores globally and selective openings planned in key cities.

3. Brand Innovation and Franchise Upgrades

Product innovation is central to Deckers’ strategy, with key HOKA franchises (Bondi, Clifton, Arahi) posting strong global sell-through and positive consumer feedback. Upcoming launches, like the Mafate 5 and Mach X3, are supported by strong bookings, and UGG’s focus on men’s and year-round styles is yielding results. The HOKA “Together We Fly Higher” campaign exemplifies the brand’s effort to deepen consumer engagement and storytelling.

4. Pricing Power and Tariff Mitigation

Selective and staggered price increases have been implemented to offset anticipated tariff headwinds, with no material order book erosion reported post-announcement. Deckers is also leveraging partial cost sharing with suppliers and evaluating further mitigation levers, but the full impact of tariffs will not be offset in the near term, pressuring gross margins through fiscal 2026.

5. Capital Allocation and Share Repurchases

Deckers’ $1.7 billion cash balance and $2.4 billion repurchase authorization provide flexibility to support growth investments and return capital to shareholders. The company repurchased $183 million of shares in Q1, signaling confidence in long-term fundamentals and a willingness to act when valuation is deemed attractive.

Key Considerations

Deckers’ Q1 results highlight the company’s ability to drive premium brand growth across geographies and channels, but also surface emerging pressures that will shape the trajectory for the rest of the year.

Key Considerations:

• Tariff Impact Escalation: Management now expects up to $185 million in unmitigated tariff costs for FY26, with only partial offset from price increases and supplier concessions.
• Wholesale Reliance Risk: The current growth mix is heavily weighted toward wholesale, which is margin dilutive versus DTC and exposes Deckers to retailer inventory risk if consumer demand softens.
• Margin Compression Ahead: Gross margin and operating margin are both expected to decline year over year, with the most acute pressure in the second half as higher-cost inventory and tariffs flow through.
• Innovation Execution and Timing: Deckers is spacing out key product launches and tightening inventory management to avoid channel overhangs, but success will depend on flawless execution in a crowded athletic market.

Risks

Deckers faces significant margin risk from tariffs, with management flagging that mitigation efforts will lag cost increases, particularly in the back half. Promotional intensity is rising, and the U.S. DTC channel remains pressured. Any stumble in new product launches or a consumer pullback from higher prices could disrupt the current growth narrative.

Forward Outlook

For Q2 2026, Deckers guided to:

• Revenue of $1.38 billion to $1.42 billion, with HOKA up approximately 10% and UGG up at least mid-single digits.
• Gross margin of 53.5% to 54%, down versus prior year due to tariffs, increased promotions, and higher freight costs.
• SG&A at approximately 33.5% of revenue, reflecting ongoing brand investment.
• Diluted EPS of $1.50 to $1.55, compared to $1.59 last year.

For full-year 2026, management did not provide formal guidance due to tariff uncertainty but reiterated its framework:

• HOKA as the fastest-growing brand, international growth outpacing U.S., and wholesale outpacing DTC in the near term.
• Operating margin expected to decline from FY25’s record levels, with potential leverage in future years if the environment normalizes.

Takeaways

Deckers’ global brands continue to outpace the market, but margin headwinds and macro uncertainty are intensifying.

• International and Wholesale Strength: Deckers’ growth is increasingly driven by global markets and wholesale, but this mix shift is dilutive to margins and heightens sensitivity to consumer sentiment and retailer inventory.
• Tariff and Cost Pressures: The coming quarters will test Deckers’ ability to offset $185 million in tariff costs, with margin recovery dependent on the timing and success of price increases and further mitigation levers.
• Execution on Innovation and Brand Building: Sustaining momentum will require flawless execution on new product launches and continued investment in marketing and retail capabilities, especially as competition intensifies.

Conclusion

Deckers’ Q1 2026 results showcase the power of its global brands and operational discipline, but the real test lies ahead as tariff headwinds and shifting consumer dynamics put pressure on the company’s margin structure. Investors should track the interplay of pricing power, innovation cadence, and international expansion as Deckers navigates a more complex operating environment.

Industry Read-Through

Deckers’ results reinforce a key trend in footwear and apparel: global brand equity and innovation can drive share gains even as macro and trade headwinds mount. The surge in international revenue and continued wholesale outperformance offer a blueprint for peers seeking growth beyond a saturated U.S. market, but the margin compression signals that tariffs and rising promotions are structural challenges for the sector. Brands with pricing power, diversified channels, and disciplined execution will be best positioned as trade and consumer volatility persist.

DECK Consumer Discretionary Footwear Global Brands Tariffs Wholesale Innovation International