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]

Financial Data and Key Metrics Changes - The company reported a revenue increase of 9% in the second quarter, reaching $1.43 billion, and a 14% increase in diluted earnings per share (EPS) to $1.82 [7][25][29] - For the first half of fiscal year 2026, total company revenue grew by 12%, with HOKA revenue increasing by 15% and UGG revenue rising by 12% [7][18] - Gross margin for the second quarter was 56.2%, up 30 basis points from 55.9% in the previous year, benefiting from price increases and favorable product mix [27][28] Business Line Data and Key Metrics Changes - HOKA's wholesale revenue increased by 13% in the second quarter, while DTC (Direct-to-Consumer) grew by 8% [25][27] - UGG's wholesale revenue rose by 17%, but DTC experienced a 10% decline due to pressures from better in-stock positions with wholesale partners [26][27] - HOKA gained two points of market share in the U.S. road-running category over the past year, while UGG's men's footwear grew at twice the rate of the overall brand [11][19] Market Data and Key Metrics Changes - International regions drove significant growth for both HOKA and UGG, with UGG and HOKA revenue increasing by 38% in international markets [7][18] - HOKA saw strong performance in EMEA and China, with notable growth in loyalty membership and significant gains among younger consumers [16][17] Company Strategy and Development Direction - The company aims for continued international expansion and a balanced business model between DTC and wholesale channels, targeting a 50/50 split [9][24] - HOKA is focusing on performance categories such as trail running, hiking, fitness, and lifestyle, with plans to introduce more lower-profile products [10][85] - UGG is enhancing its brand presence through marketing campaigns and collaborations to maintain cultural relevance and consumer engagement [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the U.S. consumer environment, anticipating a more cautious consumer behavior due to inflation and price increases [39][84] - The company remains confident in its brands' positioning and long-term growth potential, despite short-term challenges [35][42] Other Important Information - The company repurchased approximately $282 million worth of shares during the second quarter, with $2.2 billion remaining authorized for share repurchases [30] - The guidance for fiscal year 2026 includes total revenue expectations of approximately $5.35 billion, with HOKA projected to grow in the low teens and UGG in the low to mid-single digits [31][32] Q&A Session Summary Question: Can you unpack the guidance for HOKA and UGG growth expectations? - Management indicated that the guidance reflects a cautious outlook due to anticipated consumer behavior changes and tariff impacts, but remains confident in brand strength [39][42] Question: What is the split between DTC and wholesale for Q3 and Q4? - The company expects improvements in DTC sales in the back half of the year, with a more significant growth in Q4 compared to Q3 [55] Question: How are price actions affecting demand? - Management noted that premium brands have more elasticity, and they have not seen issues with sell-throughs despite price increases [68] Question: What are the growth opportunities for HOKA? - HOKA is focusing on performance, trail, fitness, lifestyle, and potential apparel categories, with significant upside in both U.S. and international markets [90]