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Despite worries about the impact of tariffs, Deckers has seen solid growth in both revenue and profit during the first quarter.
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The company anticipates that tariff-related costs will rise by $185 million this year.
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However, projections for the second quarter suggest a deceleration in growth.
The stocks of Deckers Outdoor (NYSE: Deck), which offers well-known brands like Hoka and Ugg, rose today after the company shared positive results from its first-quarter report. Early in the year, stocks had plummeted due to fears surrounding tariffs and diminishing consumer confidence. The recent report helped to ease investor concerns about ongoing growth.
By 12:21 PM on Friday, the stock had climbed 11.7% following the news.
Revenue surged from the previous quarter, thanks largely to international markets, reaching $964.5 million—an impressive 17% increase. This figure exceeded analysts’ expectations, which were around $900 million.
Both flagship brands performed well; HOKA’s revenue jumped 19.8% to $653.1 million, while UGG saw an 18.9% increase to $265.1 million during its key sales quarter. In contrast, other brands, which represent a smaller portion of the overall business, experienced a 19% decline, totaling $406.3 million.
With direct consumer sales struggling, especially domestically, Deckers has compensated through increased wholesale and international sales. Wholesale revenue grew by 26.7% to $652.4 million, which is noteworthy, as wholesale channels generally see a rise in demand. International sales soared by 49.7% to $463.3 million, bolstered significantly by strong performance in China.
The total margin decreased from 56.9% to 55.8%. However, operating income rose significantly from $132.8 million to $165.3 million. Earnings per share (EPS) increased from $0.75 to $0.93, surpassing estimates of $0.68. This is particularly impressive, considering analysts had predicted a drop in EPS for the quarter.
Despite this strong performance, the anticipated rise in costs due to tariffs—accounting for nearly 4% of revenue—could limit further stock gains. Deckers expects costs for goods sold to rise by $185 million from the new tariff burden.
For the second quarter, revenue is projected to be between $1.38 billion and $1.42 billion, with EPS expected to land between $1.50 and $1.55. While the management’s guidance indicates a desire to reduce growth from the previous quarter, the stock still appears to be a worthwhile investment, particularly considering the price versus revenue ratio.
