Deckers Q1 Earnings Preview: Spotlight on HOKA's Rebound and Tariff Headwinds

Deckers Outdoor Corp enters its fiscal Q1 2026 report in a defensive stance after a strong fiscal 2025, with investors focused squarely on signs of stabilization—or further erosion—in its high-growth HOKA brand. Despite a record-setting finish last quarter, sentiment around DECK has shifted notably as questions about HOKA’s U.S. DTC trajectory, tariff exposure, and broader macro uncertainty mount. The stock has become a battleground name, with bulls betting on brand strength and margin recovery, while bears argue that peak growth may be behind it. As such, tonight’s earnings and accompanying commentary will center on HOKA’s channel dynamics, margin compression, and any evidence that management can reignite investor confidence in its growth algorithm.

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Consensus expectations for Q1 call for EPS of $0.68 on revenue of $925.9 million, but guidance from management was more conservative: net sales between $890–$910 million and diluted EPS in the $0.62–$0.67 range. Citi, which sees Q1 as the trough for HOKA growth, is more upbeat, forecasting EPS of $0.73, while Bank of America (BAML) remains cautious with a $0.66 print. Gross margins are expected to contract roughly 250bps year-over-year due to higher freight costs, promotional activity, and an unfavorable channel mix, particularly from a weaker DTC contribution.

Key metrics to watch include:

• HOKA revenue growth, expected in the low double digits, with Citi modeling +13% and Evercore forecasting +11%. However, U.S. DTC is likely to remain soft—Citi sees it down -1% vs consensus of +6%.
• UGG revenue, which is seasonally less significant in Q1, but is forecasted to grow around 8% y/y, with DTC +2% and wholesale +12% (Evercore).
• Gross margin, projected to decline due to rising costs and weaker channel leverage.
• Outlook commentary, particularly for Q2 EPS (Citi sees $1.40–$1.45 vs. consensus $1.51) and any hints toward full-year trends despite the company withholding FY26 guidance due to tariff uncertainty.

Deckers’ Q4 results in May were strong on the surface, with sales of $1.02 billion beating estimates and EPS of $1.00 nearly doubling its guidance range. HOKA grew 10% and UGG increased 4%, while gross margin improved to 56.7%. Management closed the year highlighting 16% revenue growth, 30% EPS growth, and strong momentum for both brands internationally. HOKA revenue hit $2.2 billion (+24% y/y), and UGG reached $2.5 billion (+13%). But it was the sharp deceleration in HOKA’s U.S. DTC growth—from +27% in Q3 to just +3.1% in Q4—that drew the most scrutiny and fueled concerns heading into Q1.

Analysts are largely aligned on the source of near-term concern: HOKA’s channel transition has been bumpy, as new product rollouts (Bondi 9, Clifton 10) clashed with elevated inventories of discounted legacy models in wholesale. This cannibalized DTC traffic and pressured average selling prices. Evercore and BAML both see little evidence of a near-term rebound in DTC trends, and have trimmed price targets (Evercore to $110, BAML to $114) in anticipation of a muted Q1. UBS and Needham, meanwhile, remain constructive, arguing that HOKA’s slowdown is transitory and likely to re-accelerate in H2—pending clearer sell-through and innovation signals.

Looking ahead, tariffs loom large. CFO Steve Fasching warned that FY26 cost of goods sold could rise by as much as $150 million due to new trade policy—costs the company doesn’t expect to fully offset. While management indicated that some of this will be absorbed through pricing and margin compression, the final impact on demand remains uncertain. Fasching noted potential for inventory builds as the company looks to front-load shipments to minimize tariff exposure, which could pressure working capital and inflate Q2 inventories.

Expectations for the full year are now implicit rather than explicit. Previously, management had targeted mid-teens growth for HOKA and mid-single digits for UGG, but those goals have been suspended due to policy noise. Any color on FY26 sales cadence, margin levers, and pricing strategies in tonight’s call will carry outsized weight. Bulls are hoping for a return to normalized mid-teen HOKA growth by Q2, while skeptics want proof that the brand can reignite momentum amid an increasingly crowded max-cushion category.

Deckers also has levers in its favor. The company sits on $1.9 billion in cash, increased its share repurchase authorization to $2.5 billion, and operates with best-in-class margins. UGG continues to perform reliably, and international expansion—especially for HOKA—remains a long-term opportunity. But near-term investor psychology hinges on DTC performance and margin stabilization. As Argus pointed out, shares have suffered sharply after the last two earnings events and remain in a downtrend, down ~50% from all-time highs.

In sum, tonight’s report is less about the absolute Q1 numbers and more about directional signals: can HOKA’s issues be framed as short-lived or structural? Will management offer enough clarity to reset expectations? And how much margin risk is priced in amid tariff uncertainty? If Deckers can navigate this earnings gauntlet and show evidence of stabilization, the setup could improve materially into the back half of the year. But the burden of proof is squarely on the company’s shoulders.