Investment Rating - The industry investment rating is "Positive" and maintained [5] Core Insights - Deckers reported revenue of $1.43 billion for FY2026Q2, a year-on-year increase of 9%, aligning with market expectations [3][4] - Gross margin improved by 0.3 percentage points to 56.2%, driven by product price increases, improved product mix, favorable currency fluctuations, and cost-sharing on tariffs [3][4] - Net profit margin increased by 0.3 percentage points to 18.7%, supported by a decrease in the effective tax rate [3][4] Revenue Breakdown - By brand, UGG and HOKA revenues grew by 10.1% and 11.1% respectively, while other brands saw a decline of 26.5% [4] - Direct-to-Consumer (DTC) and wholesale channel revenues were $3.9 billion and $10.4 billion respectively, with DTC showing a slight decline of 0.8% [4] - Revenue from the U.S. decreased by 1.7%, while international markets saw a growth of 29.3% [4] Inventory and Guidance - Inventory increased by 7% year-on-year to $840 million, attributed to proactive stockpiling before tariff hikes [4] - The company expects FY2026 revenue to reach $5.35 billion, a 7% increase year-on-year, with a gross margin of approximately 56% [4]

Core Viewpoint - Deckers Brands has experienced a significant decline in stock performance, with a 56% drop in 2025, making it the worst-performing stock in the S&P 500 year to date [1][2]. Financial Performance - Deckers reported its fiscal second quarter results for 2026, leading to a stock price drop of over 10% [1]. - The company revised its growth outlook for fiscal 2026, lowering expected net sales growth for Hoka from mid-teens to low teens and for Ugg from mid-single digits to low-single digits [7][8]. - The gross margin for fiscal 2025 was 58%, but it is projected to decrease to 56% for fiscal 2026 [8]. Brand Performance - Deckers' two main brands, Hoka and Ugg, account for 97% of net sales, with Ugg representing 53% and Hoka 44% of Q2 net sales [5]. Market Position - Deckers' stock is currently trading at a price-to-earnings (P/E) ratio of 13, which is approximately a 50% discount compared to the average stock in the S&P 500 [15]. - The company has a strong balance sheet with $1.4 billion in cash and zero debt, positioning it well to withstand market uncertainties [12]. Investor Sentiment - Despite the recent downturn, the company has generated positive cash flow and is repurchasing shares, which is expected to enhance shareholder value [12][13]. - There is a belief that the market may be overreacting to the recent Q2 report, presenting a potential buying opportunity for long-term investors [10][16].

Core Viewpoint - HOKA, a key brand under Deckers Brands, is experiencing a slowdown in growth despite maintaining double-digit increases in sales and net profit, attributed to market saturation and increased competition [1][3][9]. Financial Performance - Deckers Brands reported net sales of $1.431 billion for Q2 of fiscal year 2026, a year-on-year increase of 9.1%, with net profit reaching $268 million, up 10.74% [3]. - HOKA's net sales for the same period were $634 million, reflecting an 11% growth, while UGG sales were $759 million, up 10.1% [3]. - The company anticipates total net sales of approximately $5.35 billion for the fiscal year 2026, with HOKA's growth expected to be in the low double digits of 10%-15% [3]. Brand Growth and Market Position - HOKA's sales growth has been significant over the past years, with a 23.6% increase in fiscal year 2025, reaching $2.233 billion, and a 27.9% increase in fiscal year 2024 [4]. - HOKA currently contributes 45% to Deckers Brands' total sales, closely following UGG's 51% share [5]. Market Dynamics - The running shoe market is becoming increasingly competitive, with brands like Nike, Adidas, and domestic players such as Anta and Xtep entering the mid-to-high-end segments [10][12]. - The demand for professional running shoes has surged due to the growth of mass participation events like marathons, benefiting brands like HOKA that have established a strong reputation in niche markets [9][11]. Consumer Trends - The rise of consumer spending on sports brands is driven by a shift towards a more active lifestyle and the popularity of running events, which has expanded the customer base for brands like HOKA [5][8]. - HOKA's marketing strategy focuses on appealing to urban consumers who prioritize health and quality of life, leveraging social media and KOL marketing to enhance brand image [8]. Challenges Ahead - HOKA's growth rate has slowed from over 50% to around 11%, reflecting a natural deceleration as the brand matures and faces intensified competition [9][10]. - The brand must innovate and enhance its market positioning to sustain growth, particularly in the high-end consumer segment [13].

Core Insights - HOKA, a key brand under Deckers Brands, is experiencing a slowdown in growth despite maintaining double-digit increases in sales and net profit, attributed to market saturation and increased competition [1][3][9] Financial Performance - For the second quarter of fiscal year 2026, Deckers Brands reported net sales of $1.431 billion, a year-over-year increase of 9.1%, and net profit of $268 million, up 10.74% [3] - HOKA's net sales reached $634 million, growing 11% year-over-year, while UGG's sales were $759 million, up 10.1% [3] - The overall sales forecast for Deckers Brands in fiscal year 2026 is approximately $5.35 billion, with HOKA's growth expected to be in the low double-digit range of 10%-15% [3] Brand Development - HOKA's sales growth has been impressive over the past few years, with a 23.6% increase in fiscal year 2025, reaching $2.233 billion, and a 27.9% increase in fiscal year 2024 [4] - HOKA currently contributes 45% to Deckers Brands' total sales, closely following UGG's 51% share [5] Market Trends - The running shoe market is becoming increasingly competitive, with brands like Nike, Adidas, and domestic brands such as Anta and Xtep entering the mid-to-high-end segment [10][12] - The demand for professional running shoes has surged due to the growth of mass participation events like marathons and trail running [9][11] Consumer Behavior - The rise of HOKA and similar brands in China is linked to consumer upgrades and the growing popularity of sports lifestyles, appealing to urban consumers who prioritize health and quality of life [8][9] - HOKA's marketing strategy focuses on product innovation and leveraging social media to build a high-end brand image [8] Competitive Landscape - The running shoe sector is described as a "red ocean," with numerous brands competing for market share, leading to increased pressure on HOKA and similar brands [10][12] - As HOKA's market presence grows, maintaining high growth rates becomes more challenging due to market saturation and heightened competition [12][13]

Core Insights - Deckers Outdoor Corp experienced a nearly 12% decline in stock price following its Q2 FY2026 results, despite surpassing revenue and EPS expectations, primarily due to a cautious full-year outlook and external pressures [1] - The stock has dropped 55% year-to-date, reflecting market sentiment rather than the company's operational achievements [1] Group 1: Brand Performance - HOKA brand continues to lead growth, increasing its market share by two points in the U.S. road-running sector and achieving mid-single-digit growth in wholesale sell-through [3] - International sales for HOKA surged nearly 30%, driven by strong performance in Europe and Japan, with direct-to-consumer (DTC) sales accounting for 39% of total revenue [3] - UGG brand saw low-teens growth in digital traffic and improved in-store conversion rates, indicating strong brand equity despite challenging consumer spending conditions [3] Group 2: Operational Efficiency - Inventory increased by only 7% year-over-year, showcasing improved supply-chain discipline amid varying demand across regions [4] - Management aims to enhance inventory turns by 0.5x in FY2026 while maintaining stable to slightly elevated average selling prices through strong full-price sell-through [4] - E-commerce represented 48% of DTC revenue, with unchanged return rates year-over-year, indicating better product fit and customer retention [5] Group 3: Strategic Growth Initiatives - Deckers is expanding its direct-to-consumer presence, operating 42 HOKA-owned stores globally, up from 34 the previous year [7] - Wholesale activity remains robust, with UGG reorder rates reported as "better than planned," suggesting strong retail demand [7] - Strategic advancements in DTC locations, streamlined inventory, and balanced channel distribution position Deckers to respond effectively once consumer spending normalizes [8] Group 4: Overall Assessment - The Q2 results reflect a recalibration rather than disappointment, with management focusing on brand control and margin integrity over short-term growth [9] - Key indicators such as market share gains, healthy DTC metrics, stable pricing, and leaner inventory suggest that Deckers continues to outperform its sector [9]

Core Insights - HOKA, a key brand under Deckers Brands, is experiencing a slowdown in growth despite maintaining double-digit increases in sales and net profit, attributed to market saturation and increased competition [1][2][8] Financial Performance - For Q2 of fiscal year 2026, Deckers Brands reported net sales of $1.431 billion, a year-over-year increase of 9.1%, and net profit of $268 million, up 10.74% [2] - HOKA's net sales reached $634 million in Q2, reflecting an 11% year-over-year growth, while UGG's sales were $759 million, growing by 10.1% [2] - The overall sales forecast for Deckers Brands in fiscal year 2026 is approximately $5.35 billion, with HOKA's growth expected to be in the low double digits of 10%-15% [2][3] Brand Development - HOKA's net sales grew by 23.6% in fiscal year 2025, reaching $2.233 billion, and had previously seen growth rates exceeding 55% in earlier years [3] - HOKA contributes 45% to Deckers Brands' total sales, closely following UGG, which accounts for 51% [3] Market Trends - The growth of HOKA and similar brands is driven by consumer spending upgrades and the expansion of professional sports into the mass market, appealing to a broader consumer base [4] - The running shoe market in China is rapidly expanding, with significant increases in sales and participation in running events, indicating a growing demand for specialized running shoes [6][9] Competitive Landscape - The running shoe market is becoming increasingly competitive, with both international brands like Nike and Adidas and domestic brands like Anta and Xtep intensifying their presence [9][10] - HOKA faces challenges from traditional brands launching similar products and a potential consumer fatigue regarding the "thick sole" trend [10] Strategic Recommendations - To sustain growth, HOKA needs to enhance brand positioning towards high-end consumers, focus on product innovation, and embrace digital transformation to improve customer experience [10]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market strategies and confidence [1] - The Zacks Style Scores provide a framework for evaluating stocks based on value, growth, and momentum characteristics [2][3] Zacks Style Scores Overview - Stocks are rated from A to F based on their potential to outperform the market, with A being the highest score [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5][6] Value Score - The Value Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales [3] Growth Score - The Growth Score assesses a company's financial health and future growth potential through earnings and sales projections [4] Momentum Score - The Momentum Score capitalizes on price trends and earnings outlook changes to identify optimal buying opportunities [5] VGM Score - The VGM Score combines the three Style Scores to highlight stocks with the best value, growth, and momentum characteristics [6] Zacks Rank Integration - The Zacks Rank utilizes earnings estimate revisions to guide investors in stock selection, with 1 (Strong Buy) stocks historically yielding an average annual return of +23.93% since 1988 [7][9] - Stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B are recommended for maximizing returns [9][10] Company Spotlight: Deckers Outdoor Corporation - Deckers is a prominent designer and producer of niche footwear and accessories, known for brands like UGG and HOKA [11] - Currently, Deckers holds a Zacks Rank of 3 (Hold) and a VGM Score of A, with a Value Style Score of B due to a forward P/E ratio of 13.7 [12] - Recent earnings estimates for fiscal 2026 have been revised upward, with the Zacks Consensus Estimate increasing by $0.06 to $6.40 per share [12] - Deckers has an average earnings surprise of +35.7%, making it a noteworthy consideration for investors [12][13]

Core Insights - Deckers Outdoor Corporation (NYSE: DECK) reported disappointing fiscal second-quarter earnings, guiding for $5.35 billion in annual sales, below analysts' expectations of $5.45 billion [1][2] - The company's brands, including UGG and HOKA, are facing challenges, with UGG not performing well and HOKA experiencing increased competition [2] - There is a broader macroeconomic uncertainty affecting the enterprise level, contributing to the lukewarm guidance [2] Company Performance - Deckers Outdoor Corporation's annual sales guidance of $5.35 billion is lower than the market expectation of $5.45 billion, indicating potential struggles in meeting growth targets [1] - The performance of key brands such as UGG and HOKA is under scrutiny, with both brands not achieving expected sales figures [2] Market Competition - The competitive landscape is intensifying, with brands like Nike entering the market against HOKA, and New Balance regaining some market presence [2] - Elevated competition and macroeconomic factors are cited as reasons for the company's challenges, suggesting a need for strategic adjustments [2]

Core Viewpoint - Deckers Outdoor (DECK) stock is currently trading within a support range of $82.59 to $91.29, where it has historically rebounded significantly, achieving an average peak return of 59.2% after three previous instances of trading at this level [1] Financial Performance - The stock has faced a decline this year due to mixed earnings and margin pressures from rising tariffs and higher selling expenses, but it has strong brand momentum from high-growth lines like Hoka and Ugg [5] - Ugg sales increased by 10.1% and Hoka sales grew by 11.1%, reaching $634.1 million in the last quarter [5] - Revenue growth for DECK stands at 16.3% over the last twelve months (LTM) and an average of 16.5% over the past three years [7] - The company has a free cash flow margin of nearly 19.2% and an operating margin of 23.6% LTM [7] - The lowest annual revenue growth in the last three years was 15.1% [7] - DECK stock trades at a price-to-earnings (PE) ratio of 13.6, indicating a lower valuation compared to the S&P [7] Market Position and Risks - Deckers Outdoor has a solid financial foundation and expanding international opportunities, despite being susceptible to significant declines during market turmoil [6] - The company operates 140 retail locations worldwide and distributes through various channels, including department stores and specialty retailers [6] - Historical performance shows that DECK experienced a 44% decline during the Dot-Com crash and a 77% drop during the Global Financial Crisis, highlighting its vulnerability to market conditions [6]

Core Viewpoint - UBS analyst Jay Sole believes Deckers Outdoor (DECK.US) is "significantly undervalued," with a potential stock price increase of approximately 53% [1] - UBS maintains a "Buy" rating on the stock, highlighting that the performance of Hoka and UGG brands is expected to exceed expectations, allowing investors to recognize Deckers Outdoor's potential for high single-digit to low double-digit compound annual growth rate (CAGR) in sales and earnings per share (EPS) growth [1] Market Expectations - The market perceives Deckers Outdoor's guidance for Q2 FY2026 as conservative, with HOKA sales growth projected at 11%, which is 200 basis points below market expectations [2] - UBS argues that the company's previous higher growth statements were based on "excluding tariff impacts" rather than formal guidance, suggesting an upward revision in growth expectations when adjusted for tariffs [2] - Historically, Deckers Outdoor's final annual EPS has averaged about 17% higher than its Q2 guidance midpoint over the past four years, indicating potential for exceeding current forecasts [2] Short-term Outlook - For Q2 FY2026, Deckers Outdoor reported a revenue increase of 9.1% to $1.4931 billion, with EPS of $1.82, surpassing market expectations by $0.21 [3] - The gross margin was 56.2%, exceeding market expectations by approximately 200 basis points, while operating margin stood at 22.8% [3] - HOKA brand sales grew by 11.1%, and UGG brand sales increased by 10.1% [3] - The company accelerated its share repurchase program to $282 million in Q2, up from $183 million in Q1, indicating potential for EPS upside [3] Mid-term Growth Drivers - UBS anticipates HOKA's direct-to-consumer (DTC) sales will return to low double-digit growth by FY2027, driven by expansion in training shoes, lifestyle products, and international markets, particularly in the Asia-Pacific region [4] - The increase in high-margin DTC business and scale effects for HOKA are expected to push EBITDA margins close to 23% by FY2030, although some gains may be offset by tariff pressures [4] - The discounted cash flow (DCF) model suggests that the market currently implies a low single-digit CAGR for EPS over the next five years, while UBS estimates it to be around 9%, indicating valuation upside potential [4] Various Scenarios and Target Prices - Base case scenario: Target price of $157, with a five-year EPS CAGR of approximately 9%, recovery in HOKA's U.S. DTC and lifestyle business, and gradual tariff reductions [5] - Optimistic scenario: Target price of $239, assuming faster expansion of HOKA DTC, UGG evolving into a year-round brand, and an operating margin of about 25.5% by FY2030 [6] - Pessimistic scenario: Target price of $48, considering weak U.S. consumer spending, slower market share growth for HOKA, increased promotional activity, and a contraction in operating margins [6]