Deckers stock sinks on outlook worries over Hoka, Ugg growth

Deckers Brands Faces Challenges Amid Tariff Concerns

Deckers Brands, the parent company of popular footwear brands Hoka and Ugg, has trimmed its sales guidance for the two brands due to concerns over tariffs and their impact on demand. The company’s shares plummeted 15% on Friday, reflecting investor concerns about the potential slowdown in growth. Hoka, a rapidly growing running shoe brand, is now expected to grow by a low-teens percentage in fiscal 2026, down from the previously forecasted mid-teens percentage. Ugg, known for its boots, is expected to grow in the range of a low to mid single-digit percentage, a decrease from the initial mid-single digit forecast.

The revised guidance comes after the company reported its fiscal second-quarter earnings, which highlighted the impact of tariffs on consumer demand. According to finance chief Steven Fasching, the effects of tariffs and higher prices on demand are becoming more apparent. As US consumers face price increases, their purchase behavior is being impacted, particularly in the consumer discretionary space. While the company still believes in the long-term potential of its brands, the current guidance reflects a more cautious approach.

Impact on Growth and Revenue

The slower pace of growth for Hoka and Ugg, combined with the reduced sales guidance, raises concerns about the brands’ momentum after years of outperformance. Together, they account for the majority of Deckers’ revenue and have been crucial in offsetting weaknesses in other categories. However, CEO Dave Powers downplayed fears of a long-term slowdown, emphasizing that both brands remain strong among core consumers. Powers expressed confidence in the long-term trajectory of the company’s portfolio, citing the continued market share gains and brand heat of Hoka and Ugg.

Deckers’ full-year revenue guidance also fell short of analysts’ expectations, with the company forecasting revenue of about $5.35 billion in fiscal 2026, shy of the predicted $5.45 billion. The expected earnings per share range of $6.30 to $6.39 is roughly in line with the estimated $6.32 per share. The company warned that tariff costs could total around $150 million this fiscal year, with plans to offset roughly half of these costs through price adjustments and cost-sharing with factory partners.

Investor Concerns and Market Performance

Deckers’ shares have dropped more than 55% year to date, leaving investors on edge about any signs of decelerating demand. The company’s challenges amid tariff concerns have raised concerns about the potential impact on the footwear industry as a whole. As the company navigates these challenges, it remains to be seen how the revised guidance will affect investor confidence and the overall performance of the brand. With the ongoing trade tensions and tariffs, Deckers Brands will need to carefully manage its pricing strategy and cost structure to mitigate the impact on demand and maintain its competitive position in the market.