Deckers Outdoor Corporation (NYSE:DECK) saw its shares decline in after-hours trading on Thursday following the release of its fiscal first-quarter earnings report. The stock, which closed regular New York trading at $96.23, fell approximately 6.1% in extended sessions to around $93.40. The decline came despite the company reporting earnings per share that surpassed analyst consensus by six cents, a result driven largely by a substantial reduction in diluted shares through stock repurchases.
Earnings Breakdown
For the fiscal first quarter ended June 30, 2026, Deckers reported net income of $130.0 million, a decrease of 6.6% compared to $139.2 million in the same period last year. Operating income also fell 6.0% to $155.3 million from $165.3 million. However, diluted earnings per share rose slightly by 1.1% to $0.94, up from $0.93 in the prior year. This increase was made possible by a 7.4% reduction in diluted shares outstanding, which fell to 138.6 million from 149.6 million. Excluding the impact of share repurchases, earnings per share would have been approximately $0.87, just below the analyst consensus of $0.88.
Revenue and Margins
Revenue for the quarter increased 5.7% to $1.020 billion, up from $964.5 million a year ago, matching analyst expectations. Gross margin expanded by approximately 60 basis points to 56.4%, reflecting improved product mix and cost management. However, selling, general, and administrative (SG&A) expenses rose 12.7% to $419.9 million, outpacing revenue growth and putting pressure on operating margins, which contracted 190 basis points to 15.2%.
Brand Performance
Hoka, one of Deckers' flagship brands, posted a 7.7% sales increase to $703.5 million, while Ugg revenue advanced 4.9% to $278.0 million. Direct-to-consumer sales grew 13%, significantly outpacing the 2.2% growth in wholesale channels. International sales rose 8.4%, more than double the domestic growth rate, highlighting the company's expanding global footprint.
Share Repurchases and Guidance
During the quarter, Deckers repurchased approximately 3.3 million shares for $338.2 million at a weighted average price of $103.79 per share. The company's after-hours trading price of around $93.40 was about 10% below that buyback price. Deckers maintained its full-year revenue outlook of $5.86 billion to $5.91 billion but raised its EPS forecast by five cents to a range of $7.35 to $7.50. The company expects to repurchase shares equivalent to about 80% of its anticipated free cash flow for fiscal 2027.
Market Context and Risks
The stock had already declined 11.7% in the five trading days leading up to the earnings release, falling from $109.03 on July 16 to the closing price of $96.23. Analysts are expected to focus on operating leverage in upcoming estimate revisions, given that SG&A expenses grew faster than revenue. Deckers still has $4.7 billion available for share buybacks and reported zero borrowings. However, risks such as tariffs, softer consumer demand, currency volatility, and supply chain complications could impact future results.
Chief Executive Stefano Caroti commented, "Deckers delivered a solid start to the fiscal year," citing product innovation and global demand for Hoka and Ugg. The company's ability to align operating profit with earnings per share will be a key focus for investors moving forward.
