Key Takeaways NIKE sees strength in performance categories, but Q4 revenues fell 12% y/y, with a gross margin contraction.Deckers posts robust HOKA and UGG growth, supported by wholesale gains and global consumer demand.China remains a challenge for NIKE, while Deckers records strong international growth across EMEA and APAC.Competition in the athletic footwear market is intensifying, with NIKE Inc. (NKE) and Deckers Outdoor Corporation (DECK) emerging as the key names capturing investor interest. NIKE cont ...

Core Insights - Deckers Outdoor Corporation (DECK) is currently trading at a price-to-sales (P/S) ratio of 2.67, which is above the Zacks Retail-Apparel and Shoes industry average of 1.64 [1][4] - The company's stock has experienced a significant decline of 22.3% over the past three months, underperforming the industry drop of 2.1% [4][5] - DECK's gross margin fell by 110 basis points year over year to 55.8% in Q1 of fiscal 2026, with expectations of further contraction [14] Valuation and Performance - DECK's P/S ratio is higher than peers such as Boot Barn Holdings (2.22), Under Armour (0.43), and Crocs (0.99) [4] - The stock closed at $100.47, which is 55.1% below its 52-week high of $223.98 [10] - The company has trailed the Retail-Wholesale sector's rally of 3.5% and the S&P 500's growth of 9.3% during the same period [5] Operational Challenges - DECK faces margin pressures due to a shift towards lower-margin wholesale sales, elevated tariff costs, and softer U.S. direct-to-consumer trends for HOKA [5][13] - The anticipated $185 million in unmitigated tariff costs is a primary concern, particularly with potential increases in Vietnam import duties [13] - Elevated inventory levels reached $849 million, up 13% year over year, raising concerns over potential markdowns [16] Growth Potential - Despite challenges, DECK's brands HOKA and UGG exceeded growth targets in Q1, with HOKA growing 19.8% to $653.1 million and UGG growing 18.9% to $265.1 million [19] - International revenues surged by 49.7% year over year in Q1, with strong gains in Europe, APAC, and China [20] - The company is focusing on innovation and brand storytelling, with new product launches and optimized distribution strategies [21] Strategic Initiatives - DECK's wholesale net sales rose 26.7% to $652.4 million in Q1, driven by HOKA's 30% increase in global wholesale revenues [22] - The company expects a 14% increase in wholesale revenues in fiscal 2026 [23] - Management is implementing strategies to address operational headwinds, including loyalty program improvements and store expansion [15]

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]