Deckers UGG Continues to Drive Revenue With International Strength

Core Insights - Deckers Outdoors Corporation (DECK) reported a significant growth in its UGG brand, with net sales increasing by 10.1% year over year to $759.6 million in Q2 of fiscal 2026, outpacing the company's overall net sales growth of 9.1% [1][9] Group 1: UGG Brand Performance - UGG's international markets were crucial for growth, collectively increasing by 38% year over year, which helped mitigate slower performance in the U.S. market [2] - The quarterly growth of UGG was primarily driven by a 17% increase in wholesale, supported by strong demand from retail partners and early European shipments, although there was a 10% decline in direct-to-consumer (DTC) sales due to higher wholesale stock levels and a challenging U.S. consumer environment [3] - UGG's global revenue rose by 12% in the first half of the fiscal year, fueled by key brand initiatives, strong international growth, and successful new product launches, including the Mel franchise, which saw significant sales increases [4] Group 2: Future Outlook - The company anticipates a cautious consumer environment in the second half of the fiscal year due to pricing and tariff impacts, projecting low-to mid-single-digit percentage growth for UGG in fiscal 2026, indicating steady brand momentum [5] - Despite competitive pressures from companies like American Eagle and Boot Barn, UGG's international momentum and strong wholesale demand position it as a key growth driver for Deckers [6][7] Group 3: Competitive Landscape - American Eagle Outfitters reported a 6% increase in total net revenue to $1.36 billion in Q3 of fiscal 2025, with a gross profit rise of 5% year over year, although gross margin faced slight pressure [6] - Boot Barn Holdings achieved an 18.7% net sales growth year over year to $505.4 million in Q2 of fiscal 2026, with gross profit increasing to 36.4% of net sales, driven by higher sales volumes and improved merchandise margins [7] Group 4: Valuation and Earnings Estimates - Deckers shares have increased by 1.9% over the past six months, compared to a 17.6% rise in the industry, with a current Zacks Rank of 2 (Buy) [8] - The forward price-to-earnings ratio for DECK is 15.67, which is lower than the industry average of 18.07 [10] - The Zacks Consensus Estimate indicates a year-over-year earnings growth of 1.1% for the current fiscal year and 6.3% for the next fiscal year [11]