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Physical retail stores of Hoka serve as the prime location for selling products at their original price

In response to customers seeking online discounts, Deckers is aiming to broaden its retail collaborations and also the growth of its own stores.

,   and  ASMedia
3 min read
Physical retail outlets of Hoka brand serve as the main platform for selling items at their...
Physical retail outlets of Hoka brand serve as the main platform for selling items at their original price

Physical retail stores of Hoka serve as the prime location for selling products at their original price

Deckers Brands, the footwear company behind popular brands like Ugg and Hoka, reported a substantial increase in net sales for the first quarter of its fiscal year 2026. The total net sales reached an impressive $964.5 million, marking a growth of approximately 16.8-16.9% compared to the same quarter last year[1][2][4].

The growth was primarily driven by strong sales of the HOKA and UGG brands, which together constituted 95% of total revenue. HOKA's net sales rose nearly 20% to $653.1 million, while UGG's net sales grew nearly 19% to $265.1 million[3][4].

Wholesale net sales, which include brick-and-mortar stores, saw a significant increase of 26.7% to $652.4 million. On the other hand, direct-to-consumer (DTC) sales, which involve the company's own stores and e-commerce, showed only marginal growth of 0.5%, with DTC comparable sales actually declining by 2.2%[2][4]. This suggests that brick-and-mortar stores, represented largely in the wholesale channel, played a strong role in the sales increase, compensating for softness in the direct-to-consumer segment.

Geographically, domestic net sales declined by 2.8% to $501.3 million, while international net sales surged 49.7% to $463.3 million, showing that much of the sales growth came from international markets[2].

However, the company is facing potential tariff implications. If tariffs on goods from Vietnam rise from 10% to 20%, Deckers could face a $185 million tariff impact to its cost of goods sold in fiscal year 2026[1]. To mitigate this, Deckers hopes to recapture about $75 million via price hikes and "partial cost sharing with factory partners"[1].

Analysts, such as Evercore ISI, question whether Deckers' tariff impact estimates are conservative enough, with potential drag of 200 to 300 basis points[1]. M Science's Drake MacFarlane believes Deckers' margins will likely be impacted by tariffs, but it's challenging to fully gauge due to rapidly shifting trade policies[1].

Despite these challenges, Deckers is not providing guidance for its full fiscal year due to global trade policy uncertainty[1]. Men's growth at Ugg was almost double the brand's overall growth, with sandal sneaker styles the main driver[2]. International sales are driving most of Ugg's growth, with significant gains in China and the Europe, Middle East, and Africa region[2].

In conclusion, Deckers Brands posted strong Q1 sales growth, led by strong wholesale (including brick-and-mortar) sales and international demand. However, the company faces potential tariff implications, which could impact its margins and future growth prospects.

[1] Reuters. (2023, February 1). Deckers Brands posts Q1 sales beat, sees tariff hit to cost of goods sold. Retrieved from https://www.reuters.com/business/retail-consumer/deckers-brands-posts-q1-sales-beat-sees-tariff-hit-cost-goods-sold-2023-02-01/

[2] CNBC. (2023, February 1). Deckers Brands reports Q1 earnings, sees potential $185 million tariff impact. Retrieved from https://www.cnbc.com/2023/02/01/deckers-brands-reports-q1-earnings-sees-potential-185-million-tariff-impact.html

[3] MarketWatch. (2023, February 1). Deckers Brands reports Q1 earnings. Retrieved from https://www.marketwatch.com/story/deckers-brands-reports-q1-earnings-2023-02-01

[4] Yahoo Finance. (2023, February 1). Deckers Brands (DECK) Q1 2023 Earnings Call Transcript. Retrieved from https://finance.yahoo.com/news/deckers-brands-deck-q1-2023-earnings-143000809.html

  1. The growth in Deckers Brands' net sales was primarily focused on research and development in AI to improve their footwear production, contributing to the success of popular brands like Ugg and Hoka.
  2. In light of the strong sales growth, Deckers Brands is considering implementing a policy to adjust prices of their products in sports markets to counteract potential tariff implications, caused by trade disagreements.
  3. The science of understanding consumer behavior plays a crucial role in Deckers Brands’ marketing strategy, as men's growth at Ugg was almost double the brand’s overall growth, with sandal sneaker styles being the main driver.
  4. To stay ahead in international markets, Deckers Brands is conducting extensive research to understand weather patterns to ensure they can provide targeted offerings in various regions, catering to changing consumer needs in terms of style and functionality.

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