Deckers Q2 Earnings Preview: Can Deck Beat Market Expectations?

Core Viewpoint - Deckers Outdoor Corporation is set to announce its second-quarter fiscal 2025 earnings on October 24, with expectations of revenue growth and a positive bottom line despite market challenges [1]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for Deckers' revenues is $1.20 billion, reflecting a 9.6$1.22, indicating a 7% growth year-over-year [1]. - Deckers has a trailing four-quarter earnings surprise average of 47.2%, with a 25.9% outperformance in the last reported quarter [1]. Brand Performance - The UGG brand is expected to see a 2% increase in sales, while HOKA is projected to grow by 20.9% year-over-year [3]. - Conversely, the Teva brand is anticipated to face a 3.3% decline in sales [3]. Direct-to-Consumer Strategy - Deckers is focusing on expanding its direct-to-consumer channels, with expected revenue growth of 15.8% year-over-year from this segment [4]. - Enhancements in online and in-store experiences are aimed at increasing sales volumes and capturing higher profit margins [4]. International Expansion - The company is targeting international markets, particularly in regions like China and EMEA, to boost market share and brand recognition [4]. Margin Pressures - Anticipated gross margin contraction of 180 basis points is expected due to rising costs and a shift towards a normalized promotional environment [5]. - SG&A expenses are projected to increase as a percentage of net sales, leading to a 300 basis points contraction in operating margin [5]. Earnings Prediction Model - The Zacks model indicates a likelihood of an earnings beat for Deckers, supported by a positive Earnings ESP of +2.77% and a Zacks Rank of 3 (Hold) [6].