Core Insights - Deckers Outdoor Corporation (DECK) anticipates a significant impact on its business due to recent U.S. trade policy changes, particularly higher tariffs, expecting an increase of up to $150 million in cost of goods sold for fiscal 2026 [1][10] Group 1: Business Impact - Less than 5% of Deckers' footwear production comes from China, with most production based in Southeast Asia, primarily Vietnam, which reduces but does not eliminate exposure to tariff impacts [2] - The company plans selective and staggered price increases in the U.S. and is negotiating cost-sharing agreements with manufacturing partners, but these measures will only partially offset the added costs [3] - Deckers expects its gross margin, which was a record 57.9% in the previous year, to decline in fiscal 2026 due to tariffs, increased promotional activity, higher material costs, and rising freight charges [4] Group 2: Financial Position and Strategy - Despite the challenges posed by tariffs, Deckers maintains a strong balance sheet with $1.9 billion in cash and no debt, focusing on long-term growth through brand investment, international expansion, and operational efficiency [5] - Shares of Deckers have declined by 48.7% year to date, compared to the industry's decline of 14.8% [9] - The forward price-to-earnings ratio for DECK is 16.83X, slightly below the industry's average of 17.60X, with a Value Score of D [12] Group 3: Earnings Estimates - The Zacks Consensus Estimate for DECK's fiscal 2026 earnings indicates a year-over-year decline of 4.4%, while fiscal 2027 estimates suggest a 9.1% increase [14] - Recent earnings estimates for fiscal 2026 and 2027 have been revised downward over the past 30 days [14]

Core Insights - Urban Outfitters (URBN) is currently rated as a 1 (Strong Buy) by Zacks, while Deckers (DECK) holds a 4 (Sell) rating, indicating a more favorable investment outlook for URBN [3] - URBN has a forward P/E ratio of 14.25 and a PEG ratio of 1.19, suggesting it is undervalued compared to DECK, which has a forward P/E of 16.83 and a PEG ratio of 6.19 [5][6] - The P/B ratio for URBN is 2.69, significantly lower than DECK's P/B of 6.16, further supporting URBN's position as the superior value option [6][7] Valuation Metrics - URBN's forward P/E ratio of 14.25 indicates a more attractive valuation compared to DECK's 16.83 [5] - The PEG ratio for URBN is 1.19, while DECK's is 6.19, highlighting URBN's better earnings growth potential relative to its price [5] - URBN's P/B ratio of 2.69 contrasts with DECK's 6.16, suggesting URBN is more aligned with traditional value metrics [6] Investment Outlook - The solid earnings outlook for URBN, combined with its favorable valuation metrics, positions it as a more attractive investment compared to DECK [7]

Core Insights - Deckers Outdoor Corporation (DECK) is experiencing significant growth driven by its brands HOKA and UGG, while Under Armour, Inc. (UAA) is transforming into a premium athletic brand [1] - The competitive landscape raises questions about which stock offers better upside potential for investors [1] Deckers Outdoor Corporation (DECK) - Deckers is focusing on high-margin markets, with fiscal 2025 net sales reaching $4.98 billion, a 16.3% year-over-year increase [2] - Projected first-quarter revenues for fiscal 2026 are between $890 million and $910 million, with HOKA expected to grow in low-double digits and UGG in mid-single digits [2] - Product innovation is key, with strong demand for updated HOKA models and new UGG hybrid products [3] - The company is expanding its omni-channel presence, balancing growth between wholesale and direct-to-consumer (DTC) channels, with international markets outperforming [4] - Despite record results in fiscal 2025, DECK faces challenges from new tariffs potentially adding costs of up to $150 million in fiscal 2026 [5] - Gross margin is expected to decline from 57.9% in fiscal 2025, with a projected contraction of 210 basis points for fiscal 2026 [6] - SG&A costs are anticipated to grow faster than revenues, leading to a decline in earnings per share to 62-67 cents from 75 cents in the prior year [8] - DECK's stock has dropped 13.6% over the past three months due to margin pressures and cautious guidance [20] Under Armour, Inc. (UAA) - Under Armour is enhancing its DTC channel by focusing on premium pricing, resulting in double-digit growth in average unit retail in fiscal 2025 [10] - The brand's loyalty program, with 28 million members, significantly contributes to U.S. DTC revenues [11] - EMEA region is a strong performer, with plans for expansion into France, Spain, and Germany in fiscal 2026 [12] - UAA recorded a 170-basis-point increase in gross margin in fiscal 2025, with expectations for further margin gains in fiscal 2026 [13][14] - The company is targeting $75 million in annualized savings by the end of fiscal 2026 through cost optimization [15] - Despite expected revenue declines of 4-5% in the first quarter of fiscal 2026, UAA is focused on long-term brand elevation and operational discipline [16][17] - UAA's stock has gained 5.5% over the past three months, driven by improving margins and premiumization efforts [20] Comparative Analysis - The Zacks Consensus Estimate for DECK suggests a 7.6% growth in sales but a 4.4% decline in earnings per share for fiscal 2026 [18] - UAA's estimates indicate a 2.1% decline in sales but a 9.7% growth in earnings per share for fiscal 2026 [19] - DECK is trading at a forward P/S multiple of 2.77, while UAA's is at 0.57, indicating UAA may offer better value [22] - Under Armour is viewed as a better investment case due to its strategic shift towards premiumization and disciplined cost control [25][26]

Core Insights - Deckers Outdoor Corporation (DECK) reported a fourth-quarter operating income of $173.9 million for fiscal 2025, marking a 20.6% year-over-year increase, with an operating margin of 17%, up 200 basis points from the previous year [1][10] - The company achieved a gross margin of 56.7%, a 50 basis point increase, driven by higher full-price sales in the UGG brand and a favorable product mix [2][10] - For fiscal 2025, DECK's operating income reached $1.18 billion, up from $927.5 million, with an operating margin of 23.6%, reflecting a 200 basis point increase year-over-year [4] Financial Performance - Selling, general and administrative (SG&A) expenses totaled $405.8 million, representing 39.7% of revenues, which is a 150 basis point improvement compared to the prior-year quarter [3] - The operating margin for fiscal 2025 was primarily driven by strong gross margin performance, which expanded by 230 basis points year-over-year to 57.9% [4] Competitive Landscape - Adidas reported an operating profit of €610 million in the first quarter of 2025, an 82% increase year-over-year, with an operating margin of 9.9% [7] - Urban Outfitters recorded an operating income of $128.2 million in the first quarter of fiscal 2026, a 71.8% increase from the previous year, with an operating margin of 9.6% [8] Valuation and Estimates - DECK trades at a forward price-to-earnings ratio of 16.45X, slightly below the industry average of 17.40X [11] - The Zacks Consensus Estimate for DECK's fiscal 2026 earnings indicates a year-over-year decline of 4.4%, while fiscal 2027 estimates suggest a 9.1% increase [12]

Company Overview - Deckers Outdoor, known for Hoka running shoes and Ugg boots, has seen its stock decline by 49.5% year-to-date as of June 17 [2][5] - Despite recent struggles, Deckers has historically been one of the best-performing stocks, with returns exceeding 10,000% at one point [2] Recent Performance - In the fiscal fourth quarter ending March 31, Deckers' revenue grew by only 6.5%, a significant drop from nearly 20% growth in the first three quarters [5] - Hoka's growth slowed from nearly 30% in the first three quarters to just 10% in the fourth quarter, indicating potential market share loss to competitors like Nike [5] - Ugg, Deckers' largest brand, experienced a growth rate of just 3.6% in the fourth quarter compared to 13% for the full year [5] Guidance and Expectations - The company did not provide full-year guidance due to macroeconomic uncertainties related to tariffs, projecting first-quarter revenue between $890 million and $910 million, representing 9% growth at the midpoint [6] - Earnings per share are expected to decline from $0.75 to a range of $0.62 to $0.67 [6] - Deckers anticipates a gross margin decline of 250 basis points due to increased freight costs, promotional activities, and a shift in sales channels [7] Investment Opportunity - The significant stock sell-off may present a buying opportunity, as the challenges faced by Deckers are viewed as mostly temporary [8] - With the share price halved, Deckers trades at an attractive price-to-earnings ratio of 16, which is a substantial discount compared to the S&P 500 [9] - The company has initiated a stock buyback program, increasing its repurchase authorization to $2.5 billion, representing 16% of its market cap [9] Financial Position - Deckers has a strong financial position with no debt, $1.9 billion in cash, and a favorable assets-to-liabilities ratio of 3.5 [10] - The long-term outlook remains positive as Hoka and Ugg have established differentiated brands with a history of growth [10] Future Growth Potential - Even modest profit growth could lead to significant stock appreciation, as tariff-related challenges are expected to diminish over time [11]

Core Insights - Deckers Outdoor Corporation's performance is primarily driven by strong consumer demand for its flagship brands, HOKA and UGG, with year-over-year sales growth of 10% and 3.6% respectively in Q4 FY25 [1][9] Brand Performance - HOKA's sales reached $2.2 billion in FY25, reflecting a 23.6% year-over-year increase, supported by new product launches and international expansion, particularly in EMEA and China [4][2] - UGG generated $2.5 billion in sales for FY25, marking a 13.1% year-over-year growth, with a focus on expanding its product line beyond cold-weather offerings [4][3] International Growth - HOKA's international revenues grew by 39% year-over-year, now accounting for 34% of total brand sales, while UGG's international revenues increased by 20%, representing 39% of total sales [4][2] Competitive Landscape - Key competitors in brand innovation include Wolverine World Wide, Inc. and Urban Outfitters Inc., with Wolverine's Saucony and Merrell brands showing strong revenue growth [5][6] - Urban Outfitters' brand portfolio also demonstrated positive performance, with notable increases in net sales for its brands [7] Financial Performance and Valuation - Deckers' shares have declined by 50% year-to-date, compared to a 17.6% decline in the industry [8] - The company trades at a forward price-to-earnings ratio of 16.45X, slightly below the industry's average of 17.01X [10] - Zacks Consensus Estimate indicates a projected earnings decline of 4.4% for FY26, with a potential recovery of 9.1% in FY27 [11]

Core Viewpoint - Deckers Outdoor Corporation (DECK) has experienced a significant decline in stock price, dropping 49% over the past six months, which is substantially worse than the broader retail and market indices [1][4][9] Group 1: Stock Performance - DECK shares have underperformed compared to the Zacks Retail-Apparel and Shoes industry, which fell by 15.7%, and the Retail-Wholesale sector's decline of 3.4% [1][4] - The stock closed at $107.70, nearly 51.9% below its 52-week high of $223.98 reached on January 30, 2025, and is trading below its 50 and 200-day moving averages [6][9] - Compared to peers, Boot Barn's shares increased by 9.6%, while Adidas and Nike saw declines of 7.3% and 18.7%, respectively [5] Group 2: Growth Challenges - The decline in DECK's stock price is attributed to slowing growth and increased competition in the footwear and accessories market, alongside weaker direct-to-consumer (DTC) sales in the U.S. for HOKA [4][9] - Management anticipates up to $150 million in additional costs due to new tariffs, which will impact gross margins that reached a record 57.9% in fiscal 2025 but are expected to decline in fiscal 2026 [15][20] - The company has opted not to provide formal revenue or earnings guidance for fiscal 2026 due to uncertainties in global trade policies and consumer sentiment [19] Group 3: Strategic Initiatives - Deckers is focusing on sustainable growth through global expansion, innovation, and a balanced channel strategy, with HOKA and UGG deriving 34% and 39% of revenues from international markets in fiscal 2025 [21] - The company is investing in innovation, with five HOKA franchises generating over $100 million annually, and is adapting to consumer preferences through digital-first strategies [22] Group 4: Valuation Concerns - DECK is currently trading at a forward 12-month price-to-sales (P/S) ratio of 2.96, significantly higher than the industry average of 1.74 and the sector average of 1.61, raising concerns about its elevated valuation amid current challenges [10][11]

Core Insights - Deckers Outdoor Corporation's wholesale business significantly contributed to revenue growth in Q4 of fiscal 2025, with HOKA and UGG performing strongly [1][10] - Total revenues reached $1.02 billion in Q4, marking a 6% increase year over year, despite modest pressure on direct-to-consumer sales [3][10] Wholesale Performance - Wholesale revenues increased by 12.3% year over year to $611.6 million, showcasing the channel's strength in generating incremental sales [1][10] - HOKA's growth was driven by an expanded retail presence and the successful launch of the Bondi 9, while UGG's gains were attributed to strong demand for seasonal products [2][10] Strategic Initiatives - U.S. wholesale efforts included a pilot program with Journeys aimed at attracting younger consumers, while international growth was supported by partnerships with Intersport, Sport Check, and the JD Group [4] - Deckers aims for a balanced 50-50 split between wholesale and direct-to-consumer sales, with expectations for wholesale to continue outpacing DTC in fiscal 2026 [5][10] Competitive Landscape - Key competitors in the wholesale channel include Steven Madden, Ltd. and Urban Outfitters Inc., both of which reported revenue growth in their respective wholesale segments [6][8] - Steven Madden's wholesale channel generated $439.3 million in Q1 2025, while Urban Outfitters achieved a 24% revenue increase in its wholesale channel for Q1 fiscal 2026 [7][8] Financial Metrics - Deckers shares have declined by 45.4% year to date, compared to a 13.1% decline in the industry [9] - The company trades at a forward price-to-earnings ratio of 17.82X, slightly above the industry average of 17.77X [12]

Company Performance - Deckers (DECK) closed at $110.91, reflecting a +1.55% change from the previous day, outperforming the S&P 500's daily gain of 0.09% [1] - Over the past month, Deckers' shares declined by 9.79%, underperforming the Retail-Wholesale sector's gain of 6.31% and the S&P 500's gain of 7.21% [1] Upcoming Earnings - Deckers is expected to report earnings of $0.67 per share, indicating a year-over-year decline of 10.67%, while revenue is projected to be $899.01 million, representing an 8.92% increase compared to the same quarter last year [2] - For the full year, earnings are projected at $6.12 per share and revenue at $5.36 billion, showing changes of -3.32% and +7.61% respectively from the previous year [3] Analyst Estimates and Valuation - The Zacks Consensus EPS estimate has decreased by 5.3% over the past month, and Deckers currently holds a Zacks Rank of 4 (Sell) [5] - Deckers has a Forward P/E ratio of 17.86, which is a premium compared to the industry's average Forward P/E of 17 [5] - The company has a PEG ratio of 6.57, significantly higher than the Retail - Apparel and Shoes industry's average PEG ratio of 1.94 [6] Industry Context - The Retail - Apparel and Shoes industry ranks in the bottom 30% of all industries, with a current Zacks Industry Rank of 173 [6] - The Zacks Industry Rank measures the strength of industry groups, indicating that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Insights - Deckers Outdoor Corporation's international expansion strategy is a significant driver of growth, with HOKA and UGG brands contributing notably to this momentum [2][12] - In fiscal 2025, international sales increased by 19.9% year over year, reaching $374.1 million, underscoring the importance of global markets [2][12] International Sales Performance - HOKA's international revenues grew by 39% year over year, now making up 34% of total sales, up from 30% in fiscal 2024 [3] - UGG's international revenues rose by 20% year over year, accounting for 39% of total UGG sales, an increase from 37% in the previous fiscal year [3] Strategic Initiatives - Deckers expanded its presence in key regions such as Europe, the Middle East and Africa (EMEA), and China, including the opening of HOKA's Shanghai Experience Center [4] - In Europe, HOKA gained significant shelf space and recognition in markets like the U.K., Germany, France, and Italy, while in China, the brand enhanced digital engagement and visibility through sponsorships [5] Future Growth Plans - The company aims to increase its international revenue mix to 50% of total sales in the coming years, reducing reliance on the North American market [6] - Management anticipates that international growth will continue to outpace growth in the U.S. market [6] Competitive Landscape - Key competitors in the international market include Wolverine World Wide and Skechers U.S.A., with Wolverine reporting a 16.4% year-over-year sales increase in Q1 2025 [7][8] - Skechers' international sales now represent 65% of its total business, with EMEA sales growing by 14% [9] Financial Performance and Valuation - Deckers' shares have declined by 47.9% year to date, compared to the industry's decline of 13.7% [10] - The company trades at a forward price-to-earnings ratio of 17.02X, slightly below the industry average of 17.72X [13] - The Zacks Consensus Estimate for fiscal 2026 earnings implies a year-over-year decline of 3.3%, while fiscal 2027 estimates suggest a 9.1% increase [14]