EXEC: Hoka Model Seems to be to Energetic Lifestyle and Athletic Specialty as Subsequent Hills to Conquer

Deckers Brands (DECK) President and CEO Stefano Caroti reported Thursday night, January 29, that the mother or father of the Hoka, Ugg and Teva manufacturers delivered an excellent third quarter efficiency, underscored by a robust composition of outcomes that reveal strong international demand for the corporate’s manufacturers, fueling an elevated outlook for fiscal yr 2026.

Caroti’s evaluation and rather more had been introduced in the course of the firm’s fiscal third-quarter convention name with analysts to debate the outcomes of the three-month vacation quarter ended December 31, 2025.

Total firm web gross sales for the quarter elevated 7.1 p.c to $1.96 billion, in comparison with $1.83 billion within the prior-year fiscal Q3 interval. Net gross sales elevated 6.8 p.c on a constant-currency (cc) foundation. The numbers additionally mirror the phase-out of the Koolaburra model’s standalone operations.

• Deckers’ complete Wholesale web gross sales elevated 6.0 p.c y/y to $864.6 million, reflecting the phase-out of the Koolaburra model’s standalone operations.
• Deckers’ complete DTC web gross sales elevated 8.1 p.c y/y to $1.09 billion. DTC comparable web gross sales elevated 7.3 p.c year-over-year.

Caroti mentioned the corporate’s outcomes demonstrated constructive inflection relative to the primary half, pushed by its market administration initiatives.

“This result exceeded our expectations for both brands,” Caroti shared. “Importantly, it was achieved while maintaining high levels of full price selling and demonstrated resilient price elasticity.”

The outcome was reported because the preservation of robust gross margins, which contributed to a double-digit improve in DECK’s third-quarter diluted earnings per share.

“As I reflect on our progress this year and our focus to build brands for long-term sustainable growth, I’m extremely pleased with our performance over the first nine months of this fiscal year, which contributed to total company revenue increasing 10 percent, Hoka revenue growing 16 percent, Ugg revenue growing 8 percent and diluted earnings per share increasing 13 percent,” Caroti continued.

The Hoka Business
Global Hoka income within the third quarter elevated 18.5 p.c y/y to $628.9 million, including $98 million of incremental income over the prior yr. The progress was mentioned to incorporate energy in each DTC and Wholesale, with good points within the U.S. and worldwide markets.

Hoka’s efficiency was mentioned to learn from one other sequential enchancment within the U.S. DTC enterprise, which delivered wholesome progress within the quarter, contributing to a extra balanced outcome throughout DTC and Wholesale, in response to feedback from the corporate’s CFO, Steve Fasching.

Caroti mentioned the robust efficiency was pushed by broader client adoption of the Hoka model’s progressive and versatile merchandise, particularly as the corporate has refined its strategy to managing the worldwide market.

“This helped achieve balanced growth across channels as DTC revenue increased 19 percent versus last year and Wholesale revenue grew 18 percent compared to last year,” Caroti shared. “As we continue to build this brand and introduce new products to the market, we are proactively maintaining a healthy pull model of demand across all channels.”

He additionally famous the strategy aligns with the corporate’s long-term goals of attaining progress in each channel and area.

“While some fluctuations in channel growth may occur as we make strategic adjustments to distribution, we remain committed to creating a more balanced business over time, as demonstrated by Hoka’s performance this quarter. We continue to incorporate insights from consumers and learnings from the marketplace to refine how we go to market,” Caroti mentioned.

In addition, he outlined {that a} notable initiative for the quarter has been Hoka’s membership program, which has enhanced client loyalty by delivering a “distinct, differentiated customer experience.”

“Our revamped membership program now includes exclusive and early product access, select opportunities for special discounts and rewards for higher purchase frequency,” the CEO continued. “Though we are still early in the development of the Hoka membership program with additional consumer engagement drivers and differentiation in the pipeline for next year, we’re already seeing a benefit in revenue per consumer, units per transaction and multi-category purchasing from Hoka members relative to the average consumer. These members’ key performance indicators are directly contributing to our positive results, helping drive an acceleration of the Hoka brand’s DTC growth in the third quarter compared to the first half of the fiscal year.”

DTC Channel
In the U.S., the Hoka DTC enterprise was mentioned to have returned to “healthy” progress within the quarter, with a “meaningful improvement” in on-line new client acquisition in comparison with earlier within the fiscal yr.

“In addition, as we look ahead to future product transitions, we see an opportunity to more effectively utilize our higher-margin DTC channel to strategically manage end-of-season inventory in a controlled manner as we tightly manage Wholesale marketplace inventories to ensure a clean environment for future launches,” Caroti instructed.

He famous that Hoka’s improved DTC efficiency demonstrates the effectiveness of the model’s loyalty advertising and marketing ways, which have enabled the corporate to:

• Enhance the patron’s journey.
• Increase model affinity.
• Build lasting relationships.
• Increase buyer lifetime worth for a rising buyer base.

Wholesale Channel
Caroti burdened that the corporate stays centered on driving robust efficiency with Hoka within the Wholesale channel.

“We believe it’s very important for Hoka to compete in a multi-brand environment, particularly in the performance category where innovation is critical to success,” he mentioned. “Our partners remain an important destination for consumers to experience the Hoka brand’s unique blend of technology, geometry and premium materials directly on their feet. Hoka has continued to perform very well in the Wholesale channel globally, driving healthy levels of full price sell-through and gaining additional market share.”

Quoting numbers from market analysis agency Circana, Caroti mentioned Hoka’s market share within the U.S. “increased significantly” within the Road Running class above $140 for the three months ending in December.

“This growth further establishes Hoka as a top brand in the segment and demonstrates the strength of our full price sell-through,” he mentioned.

In Europe, the tempo of sell-out reportedly continues to drive document ranges of reorders, with Hoka’s prime strategic clients averaging 90 p.c sell-through, which is claimed to be fueling future-season demand.

Caroti attributed the Hoka model’s market share enlargement to 3 essential components:

• Compelling progressive merchandise that resonate with shoppers,
• Enhanced international model consciousness and recognition, and
• Increased model entry in additional places.

“These developments have opened the door for a wider range of consumers to connect with the brand, not just for performance-related reasons,” Caroti mentioned.

The Lifestyle Move
Caroti instructed that, as extra shoppers select to put on Hoka as a part of their active-lifestyle wardrobe, the model is well-positioned to capitalize on the rising pattern.

“Hoka is proactively advancing its lifestyle strategy, identifying this segment as a significant opportunity in terms of product development and expansion through wholesale distribution, account segmentation and differentiation,” The CEO defined. “As the lifestyle category evolves, Hoka is positioned to leverage the company’s global expertise in this area. As Hoka continues to tap into significant lifestyle opportunities, it’s important to acknowledge the valuable growth potential within our established categories.”

Caroti mentioned the principle international market priorities for Hoka embody:

• Enhancing the model’s premium place by product innovation,
• Engaging authentically with shoppers by strategic product segmentation, and
• Expanding the model’s attain whereas sustaining efficiency integrity.

The Opportunity in Channel Penetration
“As we look at wholesale distribution in the U.S. market, run specialty remains our priority segment to introduce and engage consumers with Hoka brand’s innovative performance products,” Caroti confirmed. “Our aim here is to uphold Hoka’s performance credibility by continuing to lead in this segment. In the sporting goods category, Hoka is present in roughly half of the targeted stores we consider potential distribution points. We also see more opportunities to expand shelf space and market share in existing doors as we continue to diversify our product offering.”

He mentioned the most important alternative for Hoka’s enlargement within the U.S. lies inside the athletic specialty section, the place we’re presently represented in solely about one-quarter of the shops they consider might be related for the model shifting ahead.

Internationally, he mentioned the corporate is way earlier within the technique of increasing Hoka’s distribution.

In Europe, Caroti shared that the model is making regular progress in constructing consciousness and market presence.

“We still have room for door and market share expansion in the European run specialty segment, where we continue to climb in brand ranking throughout various countries in the region, having captured around 80 percent of the opportunity we see for this segment,” he detailed.

“Furthermore, Hoka has reached approximately 40 percent of the European sporting goods destinations considered relevant for the brand and is available in less than 20 percent of suitable athletic specialty stores in the region.”

He mentioned this illustrates the numerous alternative that is still for engaging distribution enlargement.

“In Asia, our primary area of focus remains China, where we operate mainly through a mix of company-owned and partner-run mono-brand retail stores. Typically, we keep a 2:1 ratio of Wholesale partner locations to company-owned retail stores. Currently, we occupy a little less than one-third of the potential we see over the next several years,” the CEO defined.

Caroti wrapped up the channel distribution dialog, saying that the corporate continues to see significant untapped international alternatives for Hoka.

“We’re building this brand for the long term, and we’ll continue to take a methodical approach to global expansion, maintaining a full model of demand while gradually improving the balance between DTC and Wholesale channels,” he famous. “Our ongoing progress in international markets, along with positive developments in our U.S. operations, makes us very optimistic about Hoka’s promising future.”

Inside the Hoka Product Machine
Caroti reported that its prime Hoka franchises proceed to carry out very effectively, and the enterprise is now working in a a lot cleaner international market relative to a yr in the past. He mentioned the model’s launch of Gaviota 6 is off to an incredible begin, additional bolstering its place within the stability class, alongside the constructive reception of the Arahi 8.

“Hoka has a number of exciting product updates to come in the [fiscal] fourth quarter across our key strategic priorities of winning in road, dominating trail and igniting lifestyle,” the CEO mentioned.

He mentioned the class has two key product tales launching within the fiscal fourth quarter that runs by March.

For the Road class, he referred to as out the model’s pinnacle racing shoe, the Cielo X1 3.0, which he mentioned is the quickest and lightest racing shoe Hoka has ever created, and the utterly redesigned Mach 7, which he mentioned is crafted for responsive each day runs with tempo.

“Beyond the Road segment, we eagerly anticipate the launch of Speedgoat 7, which is designed to build Hoka’s legacy in the Trail category by offering an exceptional underfoot experience across diverse terrains,” he detailed. “In Lifestyle, we’re excited to announce the launch of our first absolutely built-in advertising and marketing marketing campaign for this class, that includes new ambassador partnerships, international model experiences and merchandise that join with well-known Hoka franchises.

Deckers Profitability and Expenses
Gross margin for the third quarter was 59.8 p.c of web gross sales, higher than anticipated, primarily as a result of a lower-than-expected impression from elevated tariffs, reflecting the timing of stock flows and the combination of stock offered by in the course of the quarter, which benefited from lower-tariff stock within the pipeline.

“Larger benefits from our pricing actions, primarily attributable to the Ugg brand and though above last year, we had slightly lower promotions than planned for the quarter,” CFO Fasching defined. “In achieving this result, both Ugg and Hoka maintained a very healthy level of full price selling, with each achieving an average selling price slightly above the prior year and Hoka delivering gross margin expansion in the quarter, contributing to our better-than-expected result.”

Fasching mentioned SG&A greenback spend within the third quarter was $557 million, up 4 p.c versus final yr’s $535 million as the corporate continued investing in key areas of the enterprise. As a share of income, SG&A was 28.5 p.c, which is 80 foundation factors under final yr’s charge of 29.3 p.c, with leverage primarily pushed by favorable impacts from overseas foreign money change charge remeasurement.

Operating revenue was $614.4 million in Q3, in comparison with $567.3 million within the year-ago Q3 interval.

The firm’s tax charge for the quarter was 23.3 p.c, in contrast with 21.8 p.c within the prior yr.

Resulting diluted EPS amounted to $3.33 per share for the fiscal third quarter, which was 33 cents above final yr’s $3.00 diluted earnings per share, representing EPS progress of 11 p.c year-over-year.

Deckers Balance Sheet Summary

• Cash and money equivalents had been $2.09 billion at quarter-end, in comparison with $2.24 billion on the comparative date in fiscal 2025.
• Inventories, together with the impression of incremental tariffs, had been reported at $633.5 million at quarter-end, in comparison with $576.7 million at quarter-end final yr.
• The firm had no excellent borrowings at quarter-end.

Share Repurchase Program
In the third quarter, DECK repurchased roughly $349 million price of shares at a median value of $92.36 per share. Through the primary 9 months of fiscal yr 2026, the corporate has repurchased roughly 8 million shares, representing greater than 5 p.c of shares excellent firstly of this fiscal yr.

As of December 31, 2025, the corporate had roughly $1.8 billion in approved share repurchases remaining. And given robust money stream and money stability and in consideration of the present market valuation, Fasching mentioned they continue to be dedicated to persevering with to return worth to shareholders by the share repurchase program.

“In fiscal year 2026, we are on track to repurchase more than $1 billion in total by the end of the year, which is expected to contribute more than 20 cents of diluted earnings per share improvement,” he acknowledged.

Outlook
Deckers Brands elevated its full-year income expectations to a spread of $5.400 billion to $5.425 billion.

“For Hoka specifically, we’ve raised our expectation now reflecting mid-teens revenue growth versus last year,” Fasching shared. Ugg income is predicted to extend in mid-single digits versus final yr, which is on the excessive finish of prior steering.

“We intend to continue driving healthy profitable growth for both Ugg and Hoka,” added Caroti. “We expect Hoka to remain our fast-growing brand with significant potential for international expansion and consistent progress in the U.S., supported by effective marketplace management.”

Gross margin is now anticipated to be roughly 57 p.c, 100 foundation factors above prior steering, primarily as a result of a lower-than-anticipated web impression from tariffs.

SG&A continues to be anticipated to be roughly 34.5 p.c of income as DECK continues to put money into long-term progress and alternatives for Ugg and Hoka.

Operating margin is now anticipated to be roughly 22.5 p.c of web gross sales, which is 100 foundation factors above prior steering.

DECK nonetheless expects an efficient tax charge of roughly 23 p.c for the yr.

“These updates and the continued benefits from both year-to-date and projected fourth quarter share repurchase result in a raise to our expected diluted earnings per share, which is now in the range of $6.80 to $6.85, representing a 7 percent to 8 percent increase over last year’s record EPS,” Fasching mentioned.

“Regarding tariffs, based on the robust pricing power of our brands, which has not materially impacted demand to date, combined with a lower-than-expected blended tariff rate in Q3, we now expect the unmitigated tariff impact on fiscal year 2026 to be approximately $110 million,” Fasching estimated. “As a result of our better-than-expected price action benefits and the favorable timing of inventory sold, we now estimate a net tariff impact of approximately $25 million.”

Fasching famous that this estimate doesn’t mirror a full-year impression if tariffs stay in place.

The elevated full-year 2026 steering consists of the next assumptions for the fourth quarter:

• Hoka is predicted to ship 13 p.c to 14 p.c progress, representing the model’s largest quarterly income, pushed by momentum in worldwide areas and continued U.S. progress, each of that are contributing to international market share good points.
• Ugg income is assumed to be roughly flat with final yr, as some orders beforehand deliberate for This autumn shipped earlier in Q3, with each quarters contributing to the model’s elevated outlook for the yr.

“Our implied gross margin assumes an approximate 200 basis point headwind, the entirety of which is expected to come from the net pressure from tariffs,” Fasching mentioned.

The CFO famous that, “this is projected to be our largest quarterly net impact from tariffs in fiscal year 2026 on a rate basis as we anticipate the full 20 percent burden in Q4 and slightly more deleverage in our SG&A spend in the quarter as we continue to make investments while taking advantage of our overall improved outlook. We believe these targeted variable investments will help us continue to carry momentum into FY ’27.”

Fasching closed by saying the corporate has a excessive diploma of confidence in its manufacturers’ means to proceed delivering distinctive outcomes into the subsequent fiscal yr.

“Specifically, we believe Deckers has the ability to continue delivering meaningful revenue growth paired with a top-tier operating margin beyond this year, through operating a pull model of demand, maintaining a well-managed global marketplace that drives high levels of full price selling, utilizing shared service synergies across brands as we invest to add capabilities and remaining disciplined in our approach to portfolio management, focusing on investments in areas that we see the highest long-term returns,” he concluded.

Image courtesy Hoka/Deckers Brands, Inc.