Deckers Raises Profit Outlook as Sales Growth Slows
First-quarter net sales reached $1.020 billion as growth cooled from the preceding quarter.
Deckers Outdoor (DECK), the footwear company behind HOKA and UGG, reported slower first-quarter growth as higher expenses outweighed an improvement in gross margin. Operating income fell 6.0% even as sales increased.
The quarter extended a deceleration from the prior year. Sales growth slowed to 5.7% from 9.6% in the preceding quarter and 16.9% a year earlier, while constant-currency growth eased to 4.8%.
Diluted earnings edged up roughly 1% to $0.94 a share from $0.93 a year earlier, after growing 24% in the year-earlier first quarter. Revenue fell 8.9% sequentially, and earnings slipped from $0.96 a share in the preceding quarter.
HOKA sales rose 7.7% to $703.5 million, down from 14.5% growth in the preceding quarter, while UGG sales increased 4.9% to $278.0 million. Direct-to-consumer revenue grew 13.0%, compared with a 2.2% increase in wholesale sales, reversing the year-earlier pattern in which wholesale had provided most of the growth.
International sales increased 8.4% and continued to outpace domestic growth of 3.2%, though the overseas pace slowed from 25.5% in the preceding quarter. Direct-to-consumer comparable sales rose 6.8%, moderating from 8.2% but remaining above the declines recorded in the first half of the prior fiscal year.
Gross margin expanded 60 basis points to 56.4%, but selling, general and administrative expenses rose 12.7%, more than twice the sales-growth rate. That spending reduced operating margin to about 15.2% from roughly 17.1% a year earlier.
Deckers raised its fiscal 2027 diluted-EPS forecast to $7.35 to $7.50 a share from $7.30 to $7.45, while maintaining its $5.86 billion to $5.91 billion sales outlook. The company now expects gross margin to be slightly better than 56.5% and operating margin to be slightly better than 21.5%.
The company repurchased $338.2 million of shares during the quarter and ended with about $4.7 billion remaining under its authorization. Its EPS forecast now assumes repurchases equal to about 80% of projected free cash flow, making continued capital returns part of the full-year earnings outlook.