Ugg and Hoka Maker's Stock Plunges After Mixed Results

Shares of Deckers Outdoor Corporation (NYSE: DECK), the maker of popular footwear brands Ugg and Hoka, plummeted on Friday after the company reported mixed financial results for its fiscal third quarter. The stock was down over 18% as of 1:30 p.m. ET, leading the S&P 500 decliners.

Deckers posted exceptional results in the third quarter, delivering record quarterly revenue, gross margin, and earnings. However, the company's shares fell amid investor worries about the future demand for its footwear, even though the company reported strong sales and earnings growth.

The company's Q3 net sales jumped 17% year over year to over $1.8 billion, ahead of analysts' expectations. And its Q3 earnings per share (EPS) of $3 were up 19% and also ahead of estimates. However, the company's inventory increased by more than 20% to $576.6 million, which could indicate a buildup of unsold products. This increase could lead to markdowns and reduced profitability in the future if the inventory doesn't sell.

Deckers also has provided full-year guidance for its fiscal 2025. And with its Q3 report, management held some parts of the guidance the same but raised most aspects of the guidance. For example, it was expecting 12% growth in revenue, but it raised that to 15%. However, the company missed on its full-year revenue guidance, achieving only 10% growth. This miss may have contributed to the stock price decline.

Analysts and investors had elevated expectations for Deckers, with the stock trading at an all-time high going into the earnings report. Despite the strong earnings report, the stock may have cooled off due to these high expectations not being met entirely. Some analysts expressed concerns about demand trends for the company's footwear, which may have contributed to the stock price decline.




In summary, Deckers Outdoor's stock price declined despite a strong earnings report due to concerns about inventory buildup, missed revenue guidance, and investor worries about future demand for its footwear. The company's shares may have cooled off due to high expectations not being met entirely, and some analysts expressed concerns about demand trends. To address these challenges, Deckers may need to improve inventory management, rebuild investor confidence, and maintain brand strength in the market.