Deckers Outdoor Corporation (NYSE: DECK) experienced a volatile trading session on Thursday, as shares initially surged following better-than-expected fourth-quarter results, only to give back gains in extended trading amid concerns over the company's margin trajectory. The stock closed regular trading at $102.70, up approximately 4.5%, but later slipped to around $100.56 in after-hours activity, reflecting investor uncertainty about the premium-footwear maker's profitability outlook.
The company, which owns the HOKA and UGG brands, reported fourth-quarter net sales of $1.119 billion, a 9.6% increase year-over-year, surpassing analyst expectations. HOKA continued to shine, with sales climbing 14.5% to $671.2 million, while UGG rose 9.2% to $408.6 million. Direct-to-consumer sales, which include purchases through Deckers' own stores and websites, grew 13.2%, and wholesale sales to retailers increased 7.1%.
However, the earnings beat was overshadowed by the company's fiscal 2027 guidance, which projected gross margin of approximately 56.5%, down from the fourth-quarter gross margin of 57.6% and below the prior year's 56.7%. Operating margin is expected to come in at about 21.5%. This margin compression, coupled with a cautious outlook on consumer spending and tariff risks, weighed on investor sentiment in after-hours trading.
Strong Full-Year Performance and Capital Returns
For the full fiscal year 2026, Deckers reported revenue of $5.472 billion, up 9.8% from the prior year, and diluted earnings per share of $7.02, an 11% increase. Chief Executive Stefano Caroti hailed fiscal 2026 as 'another record year,' citing the 'continued momentum of HOKA' and the 'enduring strength of UGG.'
Looking ahead, the company forecast fiscal 2027 sales in the range of $5.86 billion to $5.91 billion and per-share profit of $7.30 to $7.45, both above average analyst estimates of $5.82 billion and $7.34, according to data from LSEG. Deckers also expanded its stock-buyback program by $3.5 billion, bringing the total authorization to approximately $5 billion. Chief Financial Officer Steve Fasching noted that the company generated 'over one billion dollars of free cash flow' in fiscal 2026, and the fiscal 2027 profit forecast assumes share repurchases equal to about 80% of projected free cash flow.
Analyst Reactions and Competitive Landscape
Piper Sandler analyst Anna Andreeva upgraded Deckers to Neutral from Underweight this week, raising the price target to $100, and noted that shares are 'not expensive' after their recent pullback. However, the firm expressed a preference for On Holding in the athletic footwear space, citing intensifying competition. Other analysts pointed to the company's heavy reliance on Vietnam for manufacturing, which keeps trade policy and tariff risks in focus.
Deckers acknowledged in its outlook that results are exposed to consumer confidence, discretionary spending, inflation, foreign exchange fluctuations, tariffs, trade restrictions, and supply-chain disruptions. The forecast does not assume any tariff refunds, adding to the uncertainty.
Sales outside the HOKA and UGG brands fell 35.6% in the quarter, primarily due to the phase-out of Koolaburra standalone operations and the sale of Sanuk. This underscores the company's growing dependence on its two flagship brands to drive growth. The after-hours fade suggests that while Deckers delivered a solid quarter, investors remain cautious about the sustainability of its premium growth story amid margin pressures.