Deckers Outdoor Corporation Q2 FY26 Earnings Analysis

- Deckers anticipates high single-digit consolidated company revenue growth by fiscal year 2030. - HOKA is expected to grow low double digits annually between fiscal 2028 and 2030. - UGG is projected to increase mid-single digits annually over the same period. - For fiscal year 2027, revenue is expected between $5.86 billion and $5.91 billion, reflecting high single-digit growth. - HOKA’s U.S. growth is mid-single digits, with double-digit international growth. - UGG growth is balanced across channels with mid-single digits expected. - The company plans continued HOKA retail expansion with 20-25 new store openings annually in key international cities. - Strong wholesale order books and product innovations support growth. - Investment focus on product innovation, marketing, technology, and store expansion to drive long-term growth. - DTC sales expected to grow faster than wholesale, and international faster than U.S. markets.

- Deckers expects low double-digit earnings per share (EPS) growth compounded annually from fiscal 2027 to 2030. - Operating margin is forecasted to be in the low 20% range, around 21.5% for fiscal 2027, with a view to maintain strong gross margins driven by pricing power and product value. - The company anticipates achieving operating expense leverage starting fiscal 2028 as investments and expenses moderate. - Revenue growth is projected in the high single-digit range annually through fiscal 2030, with HOKA targeting low double-digit growth and UGG mid-single digits. - For fiscal 2027, diluted EPS guidance is $7.30 to $7.45, up from $7.02 in fiscal 2026, reflecting continued profitable growth and share repurchases. - Capital allocation includes share repurchases of at least 80% of free cash flow, supporting EPS growth. - Overall, Deckers is confident in consistent, strong, and disciplined growth balancing investment in brands with profitability.

- Capital expenditures for fiscal year 2027 are expected to be in the range of $145 million to $155 million, which is above last year. - Increased capex is primarily due to: - Bolstering technology infrastructure. - Adding select global-focused stores. - Refreshing some existing stores. - Investments are also focused on supporting key growth initiatives such as marketing, people (new hires), technology for data utilization, and direct-to-consumer (DTC) expansion. - Strategic expansion includes the global retail presence of the HOKA brand. - These investments aim to position the company for operating expense leverage starting fiscal year 2028 and beyond.

- There is no mention of any current or planned fundraising through debt or equity in the provided transcript. - The company emphasizes a strong balance sheet with $1.9 billion in cash and equivalents as of March 31, 2026. - The company has been actively repurchasing shares, having repurchased nearly $1.1 billion worth of shares in fiscal 2026. - They highlight strong free cash flow above $900 million for three consecutive years. - The company plans to continue prioritizing capital returns through increased share repurchase authorizations. - No indications or statements about raising capital through new debt or equity issuance were made during the call.

- The company has a strong and healthy order book for HOKA, supported by successful innovation stories across road and trail categories. - There is a clear design distinction now between HOKA's Max, Glide, and Speed silos. - The introduction of the Clifton Pro concept is expected to expand consumer reach. - Strong spring sell-throughs of new models like Gaviota, Mac, and SpeedGoat 7 confirm positive momentum. - Wholesale partners have experienced success with full-price sell-through, reinforcing strong demand. - Inventory levels remain lower despite business growth, indicating healthy balance sheet and retail inventory. - Earlier timing shipments related to launches and warehouse transitions have caused some quarterly fluctuations but are not indicative of long-term trends. - The company anticipates continued robust order books due to strong brand demand and successful retail execution.