Deckers(DECK) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a revenue increase of 9% for Q2 2026 compared to the previous year, with diluted earnings per share growing by 14% [7][29] - Total company revenue for the first half of fiscal 2026 grew by 12%, with HOKA revenue increasing by 15% and UGG revenue rising by 12% [7][21] - Gross margin for Q2 was 56.2%, up 30 basis points from 55.9% in the previous year, benefiting from price increases and favorable product mix [32][34] Business Line Data and Key Metrics Changes - HOKA's revenue in the first half increased by 15%, driven by updates to major road running franchises and strong sell-through rates [11][12] - UGG's global revenue in the first half increased by 12%, with men's footwear growing at twice the rate of the overall brand [21][22] - HOKA's wholesale revenue grew by 13% in Q2, while UGG's wholesale increased by 17%, partially offset by a 10% decline in UGG's DTC [30] Market Data and Key Metrics Changes - International regions drove UGG and HOKA revenue growth, with international sales increasing by 38% year-over-year [8] - HOKA gained two points of market share in the U.S. road running category over the past twelve months, outperforming competitors in Europe [12][18] - The U.S. marketplace remains dynamic, with a shift towards multi-brand shopping experiences impacting consumer behavior [9][30] Company Strategy and Development Direction - The company aims to achieve a balanced business model with 50% of sales from direct-to-consumer (DTC) and 50% from wholesale channels [10] - Strategic focus on brand building and marketing investments to enhance consumer awareness and expand market share for HOKA and UGG [8][39] - The company is committed to long-term sustainable growth, managing brands for profitability rather than chasing short-term sales [49][95] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer sentiment in the U.S., anticipating a more cautious consumer environment due to inflation and price increases [44][94] - The company remains confident in the growth trajectory of HOKA and UGG, with expectations for continued strong demand and market share gains [39][40] - Tariff impacts are expected to be significant in the second half of the fiscal year, with mitigation strategies in place to offset some of the pressures [37][70] Other Important Information - The company ended Q2 with $1.4 billion in cash and equivalents, with no outstanding borrowings [34] - Share repurchases totaled approximately $282 million during the quarter, reflecting the company's commitment to returning value to shareholders [35] Q&A Session Summary Question: About the guidance reinstatement and consumer behavior - Management acknowledged a cautious consumer outlook due to tariffs and price increases but emphasized the strength of their brands and long-term growth strategy [44][49] Question: Insights on the back half guidance for HOKA - Management indicated more pressure in Q3 with expectations for stronger growth in Q4, depending on consumer behavior during the holiday season [55][56] Question: DTC versus wholesale channel dynamics - Management expects improvements in DTC sales in Q3 and Q4, with a focus on balancing growth between DTC and wholesale channels [63][81] Question: Long-term margin structure and tariff impacts - Management confirmed that tariff pressures will continue to affect margins, but they are committed to maintaining strong profitability levels [68][70] Question: Pricing actions and consumer demand - Management reported that price increases have not negatively impacted demand, with strong sell-throughs for key styles [77][78]