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Staying true to form, Deckers Outdoor (DECK) cruised past 4Q25 EPS expectations, continuing a five-year trend of consistent EPS beats. However, the footwear maker's yr/yr revenue growth sharply decelerated to 6.5% from the high-teen/low-twenty percent level it had been recently achieving. Making matters worse, DECK issued downside guidance for 1Q26 and opted to withhold FY26 guidance due to macroeconomic uncertainties and anticipated tariff impacts of up to $150 mln in cost of goods sold (COGS). Tariffs are expected to pressure gross margins by approximately 250 bps yr/yr without immediate mitigation from price increases or cost-sharing, contributing to investor concerns about future profitability.

• The slowdown in revenue growth, particularly for HOKA, marks a shift from DECK’s recent trajectory. HOKA’s 10% net sales increase to $586 mln in Q4 compares unfavorably to its 24% growth in Q3, 35% in Q2, and 30% in Q1. This deceleration stems from several factors, including model changeovers for key products like the Bondi 9 and Clifton 10, which led to increased price promotions and impacted average selling prices, though unit volumes remained strong. Additionally, a strategic shift toward wholesale expansion diluted direct-to-consumer (DTC) performance. DECK's DTC net sales decreased by 1.2% in Q4, while wholesale net sales for the company (which HOKA heavily contributes to) increased by 12.3% in the same quarter.
• Meanwhile, UGG Brand grew net sales by just 3.6% to $374.3 mln in Q4, a significant step down from 16% growth in Q3 and 13% in Q2. UGG’s slower growth reflects inventory constraints heading into Q4, limiting sales potential despite strong demand, particularly in international markets. Both brands face challenges from tougher yr/yr comparisons and macroeconomic pressures, including cautious U.S. consumer spending.
• DECK's downside 1Q26 guidance further disappointed investors. This outlook reflects post-tariff impacts without mitigation from planned price adjustments or cost-sharing with partners, which are not expected until after Q1. The company anticipates HOKA growth of at least low-double digits and UGG growth of at least mid-single digits, signaling continued moderation in growth rates.
• The decision to withhold FY26 guidance, citing trade uncertainty and potential tariff-related COGS increases, has heightened market unease. This lack of forward visibility, combined with concerns about U.S. consumer spending and potential margin compression, has spooked investors, as it deviates from DECK’s historical practice of providing clear annual guidance.
• DECK’s Q4 report showcased some notable positives, particularly in profitability. The company achieved a gross margin of 56.7% for Q4, up 50 bps from the year-earlier period, driven by DECK's disciplined inventory management and favorable product mix as it shifted toward higher-margin products, especially within HOKA’s premium offerings, despite some promotional activity tied to model changeovers.

DECK’s stock plunge reflects investor concerns over decelerating revenue growth, particularly HOKA’s slowdown to 10% in Q4, and disappointing Q1 guidance, which incorporates unmitigated tariff impacts. The decision to withhold FY26 guidance due to trade and macroeconomic uncertainties has amplified market fears, overshadowing a strong EPS beat and improved margins.