Deckers Outdoor Corp (NYSE:DECK) Stock Falls Over 8% After Q2 Revenue Miss and Cautious Outlook

Deckers Outdoor Corp (NYSE:DECK) reported its second-quarter fiscal 2026 earnings, revealing a performance that fell short of Wall Street's top-line expectations despite posting significant growth in both revenue and earnings per share. The market's immediate reaction was sharply negative, with the stock declining over 8% in after-hours trading, indicating investor disappointment primarily with the revenue miss.

Quarterly Performance Versus Estimates

The footwear and apparel company reported net sales of $1.43 billion for the quarter ended September 30, 2025, representing a 9.1% increase compared to the same period last year. However, this figure came in below the analyst consensus estimate of $1.45 billion. On the bottom line, the company outperformed expectations, posting diluted earnings per share of $1.82, which surpassed the estimated $1.61.

Key financial metrics from the quarter include:

• Net Sales: $1.43 billion (reported) vs. $1.45 billion (estimated)
• Earnings Per Share: $1.82 (reported) vs. $1.61 (estimated)
• Gross Margin: 56.2%, up from 55.9% a year ago
• Operating Income: $326.5 million, up from $305.1 million

Brand Performance and Market Dynamics

The quarter was largely driven by the continued strength of Deckers' two flagship brands. HOKA and UGG both delivered double-digit growth, underscoring their momentum in the global marketplace. President and CEO Stefano Caroti highlighted the brands' ability to connect with consumers through innovative products as a key differentiator.

A breakdown of the sales figures reveals important trends:

• HOKA Brand: Sales increased 11.1% to $634.1 million.
• UGG Brand: Sales increased 10.1% to $759.6 million.
• Geographical Mix: International net sales surged 29.3%, while domestic sales saw a slight decline of 1.7%.
• Sales Channels: Wholesale net sales grew 13.4%, but direct-to-consumer (DTC) sales decreased 0.8%, with comparable DTC sales down 2.9%.

Full-Year Outlook and Analyst Expectations

Looking ahead, Deckers provided its financial outlook for the full fiscal year ending March 31, 2026. The company's guidance appears cautious when held against current analyst projections. Deckers expects net sales of approximately $5.35 billion and diluted EPS in the range of $6.30 to $6.39. This sales forecast falls notably short of the analyst consensus estimate of $5.57 billion for the full year, which likely contributed to the negative market sentiment following the report.

The company's outlook for its key brands is as follows:

• HOKA: Expected to increase by a low-teens percentage.
• UGG: Expected to increase by a low-to-mid-single-digit percentage.

Capital Allocation and Balance Sheet

Deckers maintained a strong financial position, ending the quarter with $1.41 billion in cash and cash equivalents and no outstanding debt. The company also demonstrated a commitment to returning value to shareholders, repurchasing approximately 2.6 million shares for a total of $282.0 million during the quarter. As of September 30, 2025, approximately $2.2 billion remained under its stock repurchase authorization.

Market Reaction and Conclusion

The steep after-hours sell-off suggests that investors were focused more on the revenue miss and the conservative full-year sales guidance than on the earnings per share beat. While the underlying business shows robust growth from its core brands and impressive international expansion, the failure to meet quarterly revenue estimates and the projection of slower full-year sales growth than the market anticipated have created near-term headwinds for the stock. The company's ability to maintain strong profitability and execute its share repurchase program provides a solid foundation, but the market will be watching closely for signs of reaccelerating top-line growth to meet its elevated expectations.

For a detailed look at future earnings estimates and historical performance, you can review the earnings and estimates data for DECK.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. The information presented is based on publicly available data and should not be relied upon as the sole basis for making an investment decision.