After a number of years of upward momentum, some analysts are rising involved about Ugg and Hoka guardian firm Deckers Manufacturers after its newest earnings report on Thursday.
A kind of voices is Tom Nikic, senior analyst at Needham, who mentioned the Goleta, Calif.-based firm is “poised” for unfavourable response by buyers regardless of a second quarter 2026 income beat.
And he isn’t fallacious. On Friday, shares for Deckers Manufacturers have been down over 13 p.c to $88.83 a share.
“The problems largely stem from the Ugg model, which noticed a serious deterioration of DTC traits, overshadowing positivity round Hoka (accelerating DTC traits, strong wholesale order books, and so on.),” Nikic wrote in a analysis word. “Although we really feel higher about Hoka than we did earlier within the yr, we’re getting involved concerning the Ugg model, as they could be hitting a wall after a number of sturdy years.”
Consequently, Needham lowered its inventory worth goal to $113 from $128, and tweaked its fiscal yr 2026 earnings per share to be within the vary of $6.36 to $7.00, down from $6.28 to $7.10.
Ashley Helgans, fairness analyst at Jefferies, added in a separate word that Ugg gross sales have been up 10 p.c year-over-year and beat consensus by 3 p.c, though the beat was pushed totally by wholesale, which was up 17 p.c, in comparison with DTC, which was down 10 p.c.
“Administration attributed the DTC slowdown to improved wholesale stock in-stocks, weaker client sentiment, and client shift in direction of multi-brand in-store purchasing experiences,” Helgans wrote. “We view the DTC slowdown as disappointing to buyers given expectations for quarter-over-quarter enchancment. Furthermore, wholesale benefited from earlier European shipments because of a warehouse transition. [The] firm expects these components will proceed to weigh on whole DTC progress.”
Nevertheless, Stefano Caroti, president and chief government officer of Deckers Manufacturers, labored to debunk investor issues on the corporate’s Q2 earnings name with analysts on Thursday. The CEO famous that Deckers has two of the “healthiest manufacturers within the world market” with a “very sturdy and constant client base and a rising world demand.”
“Our first half demonstrates the power of those manufacturers,” Caroti mentioned. “For the again half, we’re anticipating a extra cautious client as the total impression of tariffs and worth will increase might be felt right here within the U.S. Having mentioned that, our manufacturers are well-positioned when the buyer reveals up for the vacations. And as all the time mentioned, we don’t handle our enterprise month-to-month and quarter-to-quarter. We construct manufacturers for long-term worthwhile, sustainable progress.”
Steven Fasching, chief monetary officer of Deckers Manufacturers, additionally chimed in, stating that the corporate is “not going to attempt to chase progress” in a present interval that could possibly be detrimental to the model.
“That’s what our steering displays is we’re going to preserve these manufacturers,” Fasching mentioned. “We’re going to handle them within the market that enables us to develop these – develop these significant over a sustainable longer time period.”
Williams Buying and selling analyst Sam Poser largely agrees with Deckers administration and stays “very assured” that fiscal 2026 steering. In his current word, Poser wrote that he believes Ugg gross sales will improve low-single digits to mid-single digits, Hoka gross sales will improve low-teens, and gross margin of roughly 56 p.c will all be exceeded ultimately.
Poser additionally referred to as the corporate’s “bluff” on administration’s gross margin steering – which requires it to be down roughly 300 foundation factors within the second half of fiscal 2026 – because it pertains to a extra normalized promotional setting, and the priority concerning the U.S. client’s decline in discretionary spending.
“Administration’s steering displays the present traits, though [execs] acknowledged that back-to-school gross sales have been sturdy,” Poser wrote. “At some point of gross sales for Ugg from Black Friday by Christmas represents extra quantity than every week of gross sales from July by early October. [If you take into account] clear stock [coupled] with the strict shortage mannequin it adheres to, second half 2026 gross sales and margins are positioned to beat steering, and the present consensus expectations.”
