Deckers Outdoor Faces Margin Pressure Amid Slowing Uggs and Hoka Sales

Bernstein initiates coverage of Deckers Outdoor (DECK) with an Underperform rating and sets a price target of $100.00 USD. The analyst's rating contrasts with other firms such as Barclays, Raymond James, Truist Securities, and UBS, which have maintained Overweight or Buy ratings and raised price targets in recent months. Deckers designs and sells casual and performance footwear, apparel, and accessories, with Ugg and Hoka accounting for 51% and 45% of total sales in fiscal 2025. The firm generates 64% of its sales in the United States and operates e-commerce in over 50 countries.

Bernstein Research has initiated coverage of Deckers Outdoor (DECK) with an Underperform rating and set a price target of $100.00 USD. This rating contrasts with recent analyst sentiments from firms such as Barclays, Raymond James, Truist Securities, and UBS, which have maintained Overweight or Buy ratings and raised their price targets in recent months.

Deckers Outdoor, a California-based company, designs and sells casual and performance footwear, apparel, and accessories. In fiscal 2025, the company's two signature brands, Ugg and Hoka, accounted for 51% and 45% of total sales, respectively. The firm generated 64% of its sales in the United States and operates e-commerce in over 50 countries.

According to Bernstein Research, both Ugg and Hoka are experiencing a slowdown in growth. Hoka is said to be "maxed out in US running" and is shifting to lower-quality growth, while Ugg is coming out of a multi-year trend cycle. Bernstein expects a clear slowdown in growth to high-single digits in the coming few years, driven disproportionately by international markets. Additionally, the firm forecasts a 190-basis point decline in gross margin from FY26 to FY30.

The analysts at Bernstein also warn that the company's margins, currently at industry highs, will likely be pressured by slowing growth and a shift in the revenue mix towards wholesale and lower-priced categories. They model a decline in gross margin from 60% to around 41% over the next five years.

Despite a 42% drop in the stock this year, consensus earnings expectations remain too optimistic, especially for Hoka. Bernstein forecasts medium-term earnings growth of about 7%, down from nearly 30% over the past several years.

In contrast, other analysts have maintained more bullish views. For instance, Adrienne Yih at Barclays raised her rating to Overweight with a price target of $141.00, while Rick Patel at Raymond James raised his rating to Strong Buy with a price target of $137.00. These ratings reflect a more optimistic outlook on the company's future performance.

Deckers Outdoor's financials, including a market capitalization exceeding industry averages, a solid revenue growth rate of approximately 16.86% in the last 3 months, and impressive net margin and ROE metrics, suggest a strong market position. However, the recent analyst ratings and growth projections indicate potential challenges ahead, particularly in the international markets and wholesale channels.