Deckers Outdoor (NYSE:DECK) Corporation shares plummeted over 21%, despite beating fourth-quarter earnings expectations. The UGG and HOKA footwear maker’s disappointing forward guidance and concerns about slowing growth in its key brands triggered a wave of analyst downgrades.
Decker Brands: Mixed Q4 Results Overshadowed by Weak Forward Guidance
Deckers delivered a strong fourth-quarter earnings beat but failed to convince investors about its near-term prospects. The company reported adjusted earnings per share of $1.00, significantly surpassing analyst estimates of $0.59 by 65.07%. Revenue came in at $1.02 billion, slightly above the consensus estimate of $1.01 billion and representing 6.5% year-over-year growth.
The headline numbers, however, masked underlying concerns about brand momentum. HOKA, the company’s fast-growing athletic footwear brand, posted 10% year-over-year growth, falling short of the 14.3% consensus expectation.
This deceleration is particularly concerning given HOKA’s role as a key growth driver for the company. UGG performed better than expected with 3.6% growth, ahead of the consensus expectation of a 4.9% decline, but the modest growth rate reflects the mature nature of the brand.
For the full fiscal year 2025, Deckers posted record results with revenue increasing 16.3% to $4.99 billion and diluted earnings per share rising 30% to $6.33. CEO Stefano Caroti highlighted that “Deckers delivered another exceptional year of results in fiscal 2025, highlighted by the HOKA and UGG brands’ respective revenue growth of 24% and 13%, as well as record earnings per share.”
The optimism from the annual results quickly evaporated when management provided disappointing guidance for the first quarter of fiscal 2026.
The company expects earnings per share of $0.62-$0.67, well below analyst estimates of $0.79, representing a significant miss of approximately 20%. Revenue guidance of $890-910 million also fell short of the $925.3 million that analysts were anticipating.
Perhaps most concerning, management cited macroeconomic uncertainty related to evolving global trade policies and chose not to provide full-year guidance for fiscal 2026, creating additional uncertainty for investors.
Analyst Downgrades Reflect Growth Concerns
The disappointing guidance triggered a wave of analyst downgrades as Wall Street reassessed Deckers’ growth trajectory. Evercore analysts downgraded the stock to In Line from Outperform, with analysts led by Jesalyn Wong stating, “We think DECK might be entering a new phase of lower growth profile as we see signs of deceleration across its two key brand growth engines – UGG and HOKA. We prefer to remain on the sidelines and wait for positive signals.”
KeyBanc Capital Markets also cut its rating to Sector Perform from Overweight, citing “HOKA’s slowing trajectory, shift toward wholesale door growth, and potential demand erosion from price increases” as key concerns. The firm noted that “with U.S. awareness already high, we see limited near-term upside and lower our estimates accordingly.”
Most dramatically, Telsey Advisory downgraded Deckers to Market Perform from Outperform while slashing its price target to $120 from $240 – a 50% reduction that reflects significantly lowered expectations. The firm cited multiple headwinds, including “the deceleration of the HOKA and DTC businesses, margin pressures from channel mix shifts towards wholesale, the potential for increased promotions against low levels in the prior years, and tariff costs, along with general challenges to overall global macro visibility.”
The analyst concerns center on HOKA’s decelerating growth momentum, which has been a primary driver of Deckers’ outperformance in recent years. The shift toward wholesale distribution over direct-to-consumer sales is expected to pressure margins, while potential tariff impacts add another layer of uncertainty to the outlook.
DECK Suffers Dramatic Decline Amid Broader Market Weakness
The stock opened sharply lower at $97.93 and has traded in a range of $96.10 to $100.05 during the session, with exceptionally heavy volume of 6.72 million shares compared to the average daily volume of 3.22 million.
The dramatic decline has significantly impacted Deckers’ market valuation, with the market capitalization falling to approximately $15.05 billion. The stock is now trading near its 52-week low range, with the annual low at $93.72 compared to the 52-week high of $223.98 reached earlier in the year.
Year-to-date, DECK shares have now declined 51.19%, making it one of the worst-performing stocks in the Consumer Cyclical sector and significantly underperforming the S&P 500’s 1.44% decline. Over the past year, the stock has fallen 34.25% while the broader market has gained 10.05%. However, longer-term investors have still benefited, with the stock up 139.70% over three years and 231.83% over five years, reflecting the company’s successful brand-building efforts during its growth phase.
The current trading multiples reflect the market’s reassessment of the company’s growth prospects. Despite the strong historical performance, investors are now pricing in slower growth expectations, with the forward P/E ratio at 21.23 and analyst price targets ranging from $100 to $240, with an average target of $141.71.
Despite the near-term challenges, Deckers maintains a strong balance sheet with $2.24 billion in cash and minimal debt (9.77% debt-to-equity ratio). The company also announced an increase in its share repurchase authorization to $2.5 billion, signaling management’s confidence in long-term prospects despite current headwinds.
However, with multiple analyst downgrades and concerns about both HOKA’s growth trajectory and macro pressures from tariffs, investors appear to be taking a wait-and-see approach until clearer positive signals emerge.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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