Deckers Outdoor: Can HOKA and UGG Sustain Their Momentum in a Bumpy Macro Environment?

Deckers Outdoor (DECK) has long been a darling of the premium footwear space, but the past year has tested its mettle. With HOKA and UGG delivering jaw-dropping growth—23.6% and 13.1% revenue increases in fiscal 2025, respectively—the question isn't whether these brands can sell shoes. It's whether they can keep doing so while navigating tariffs, inflation, and a global economy teetering on the edge of a downturn. Let's break it down.

The Momentum Machine

Deckers' magic lies in its dual brands. HOKA, the performance-running juggernaut, has become synonymous with “max cushioning,” while UGG remains a lifestyle icon, especially in colder climates. In Q1 2026, HOKA surged 19.8% to $653.1 million, and UGG notched 18.9% growth to $265.1 million. International markets were the real story: HOKA's EMEA and APAC regions saw record wholesale reorders, while UGG's China and European sales skyrocketed. These aren't just numbers—they're proof of a brand ecosystem that thrives on loyalty and differentiation.

But here's the rub: margins are under pressure. Tariffs on Vietnamese imports (Deckers' primary manufacturing hub) could cost $185 million in fiscal 2026. And while the company has passed some costs to consumers via price hikes, gross margins dipped from 57.9% to 56.9% in early 2025. The question is whether customers will keep paying a premium for HOKA's cushioned soles or UGG's sheepskin boots when the economy turns south.

Risk vs. Resilience

Deckers isn't blind to the headwinds. CEO Stefano Caroti has been vocal about the “elevated uncertainty” in global trade. But the company's playbook is robust:
- Tariff Mitigation: Price increases and cost-sharing with manufacturers have offset half the tariff hit. The rest? Absorbed by a company with $1.889 billion in cash—enough to buy back $2.5 billion worth of stock.
- Supply Chain Diversification: Moving production from China to Vietnam reduced but didn't eliminate risks. Still, HOKA's international revenue now makes up 34% of total sales—a buffer against U.S. market volatility.
- Brand Power: HOKA's Bondi 9 and Clifton 10, plus UGG's 365 collection, keep the product pipeline fresh. These aren't just shoes; they're experiences.

But don't be fooled by the balance sheet. A 100% tariff on Vietnamese imports would crush margins. And while UGG's DTC growth in China is impressive, it's still a small fraction of the brand's total sales.

The Cramer Take

Deckers is a classic “buy the brand, sell the volatility” stock. The HOKA and UGG engines are durable, but they're not immune to a broader slowdown. If the U.S. enters a recession, discretionary spending on $200+ running shoes could wane. Meanwhile, currency fluctuations in Europe and Asia—where Deckers' international sales grew 49.7% in Q1—could erode margins if the dollar strengthens.

But here's the kicker: Deckers isn't just selling shoes; it's selling a lifestyle. HOKA's “ultra-comfort” niche and UGG's cozy aesthetic have built a moat that's hard to replicate. And with a stock repurchase program that's devouring shares at a $150 pace, the company is betting on its own value.

Final Verdict

Deckers is a mixed bag. The long-term growth story is intact—HOKA's innovation and UGG's timeless appeal will keep the doors open. But near-term risks are real. Investors should watch gross margins closely and monitor tariff developments. If the company can maintain its 57% margin range while navigating trade wars, this could be a golden opportunity. If not, the premium pricing could backfire.

For now, I say hold. Deckers has the cash, the brand, and the playbook to weather the storm. But don't go all-in—wait for a pullback or clearer guidance on trade policies. In this market, patience is a virtue.