Deckers 3Q26 Immediate Call Postmortem
Global Hoka and Ugg performance exceeded expectations and was “exceptional” with balanced growth across DTC and wholesale. Americas accelerated. Stefano made point to say this was with high levels of full price selling and resilient pricing elasticity. Racking my brain to think of anything negative here, other than “conservative” guidance that Laurent tried to bring up in Q&A (LOL for this company).
Anyone that thinks Ugg is “peak” likely going to have a hard time defending against the “robust response to newness that underscores demand across categories”. Specifically, the lifestyle sneaker segment (ahem Nike has problems here) more than doubled and ranked in the top five across the franchise.
So much good stuff on Hoka but to start they had meaningful improvement in customer acquisition online versus earlier this year. Sounds like they finally built a muscle to clear inventory online going forward. Bears might pick at this even though it’s a best practice that when properly executed drives higher gross margin. Hoka had healthy full price sell through at wholesale so not sure how much bears can push.
The biggest opportunity for Hoka in the US is the specialty channel where they are only in one-quarter of the doors they should be in. Lots of opportunity in Europe – only reached 40% of sporting goods destinations relevant for the brand and only in 20% of the doors suitable. Main message here is there is meaningful untapped opportunities for Hoka and they maintain a pull model.
Almost wonder if management looked at my last postmortem because today they used much more recent Circana data (three months ending December 31) to illustrate that they gained market share. To remind you we criticized them last quarter for using TTM instead (in a highly changing environment).
Now they expect unmitigated tariff impact of $110 million and net impact of only $25 million in FY26. Made point to say it’s not a full year impact. 4Q26 should have the largest quarterly net impact from tariffs in FY26.
For Hoka, Stefano very explicitly and confidently said he “sees opportunity across every region, every channel, every category in the business this year.” Said new product introduced is performing very well. Steve followed that up with saying they had big franchise updates last year and are seeing consumers engage in that quite a bit. Have to say I agree as it’s hard to find any of the major product franchises launched last year on promo at all, anywhere.
Lejuez got a few nuggets in Q&A. Sell through continues to outpace sell-in for Hoka. All major introductions continue to perform well. In specialty space performance product does better than lifestyle and they are the number two brand in those doors. Have been cautious about the economy and consumer but never about their brands.
Sam the man followed up by asking about the definition of lifestyle. That’s kind of an elephant in the room question as nobody really know WTF management teams mean when they refer to this. Management said consumers are wearing Hoka more in lifestyle situations, so they have permission to move more in this direction. Uncharacteristically he didn’t ask ten other questions.
Dana Telsey’s voice will haunt me forever but love it when she makes a call – seems to be working extra hard these days given that perfectly timed Lululemon HQ visit last week. Asked the one question that all the other “children” would never think: exposure to Saks. They have little to none.
*These are our unabridged quick thoughts and notes from the call. We get them out as soon as possible after the call ends. Management has given some topics to dig deeper into and will circle back afterwards with much more in depth work on what was mentioned. You can find that work (and more on Deckers and other retail/consumer research) at our website here: M Squared Capital
Originally posted on X and Substack.