Is DECK's Q3 2025 EPS sustainable long-term?

Deckers Outdoor's (DECK) Q3 2025 EPS of $3.00, which represents a 17.3% year-over-year growth, appears to be a strong indicator of financial performance in the short term. However, to determine if this EPS is sustainable in the long term, we need to analyze several key factors:

1. Revenue Growth Trends: DECK has shown consistent revenue growth over the past three years, with a year-over-year increase of 17.1% in Q3 2024. The company's direct-to-consumer (DTC) and wholesale channels have also seen significant growth, with DTC net sales increasing by 24.0% and wholesale net sales increasing by 21.0%. This robust revenue growth trajectory suggests a strong demand for the company's products, which could support long-term EPS sustainability.

2. Gross Margin and Operating Margin: DECK's gross margin improved from 51.3% in Q3 2023 to 56.9% in Q1 2025, and the operating income grew from $70.7 million to $132.8 million over the same period. The improvement in gross margin and operating income indicates better operational efficiency, which is a positive sign for long-term EPS sustainability.
3. Industry Position and Outlook: DECK operates in the Textiles, Apparel & Luxury Goods industry, which is expected to grow at a CAGR of 6.8% from 2024 to 2030. The luxury goods market, in which DECK operates through its HOKA and UGG brands, is driven by factors such as rising disposable incomes, particularly in emerging markets, and the growing influence of social media and influencer marketing. These factors suggest a favorable industry environment for DECK's long-term growth.
4. Financial Projections and Guidance: DECK's full fiscal year 2025 outlook includes net sales expected to increase by approximately 10% to $4.7 billion, with a gross margin of approximately 54% and operating margin in the range of 19.5% to 20%. The company's EPS is projected to be in the range of $29.75 to $30.65, which, while slightly below the $3.00 EPS achieved in Q3 2025, suggests a sustainable earnings trajectory based on the company's growth projections.

In conclusion, while DECK's Q3 2025 EPS of $3.00 is a strong achievement, it is important to consider the company's historical performance, industry trends, and future projections to assess the sustainability of this EPS in the long term. Based on the evidence presented, DECK's EPS appears to be supported by robust revenue growth, improving margins, a favorable industry outlook, and positive financial projections, suggesting that the company's EPS could be sustainable in the long term.