For the second quarter (Q2) ended September 30, 2026, net sales increased 3.5 per cent year on year (YoY) to a record $1.48 billion, or 2.8 per cent on a constant-currency basis. Net income rose 17 per cent to $313.1 million, operating income increased 19.3 per cent to $389.5 million, and diluted earnings per share (EPS) climbed 27 per cent to $2.31 from $1.82.
Deckers Brands has raised its FY27 diluted earnings per share outlook after second-quarter earnings exceeded expectations, supported by disciplined marketplace management and expense control.
Second-quarter net sales rose 3.5 per cent to $1.48 billion, while net income increased 17 per cent to $313.1 million.
Tariff refunds lifted margins and EPS, as Hoka and UGG both delivered sales growth.
The gross profit grew to $895.1 million from $803.8 million, with gross margin expanding to 60.5 per cent from 56.2 per cent, while operating margin improved to 26.3 per cent from 22.8 per cent.
“We delivered earnings above our expectations in the second quarter by maintaining disciplined marketplace management and a focus on expense control in a challenging consumer environment,” said Stefano Caroti, president and chief executive officer, Deckers Brands.
“As we move through the back half of fiscal 2027, we are taking deliberate actions to strengthen our connection with consumers, sharpen execution, and concentrate resources behind our greatest opportunities,” added Caroti.
Hoka and UGG sales advance
Hoka net sales increased 6.8 per cent to $677.2 million in the quarter, while UGG sales rose 3.5 per cent to $786.4 million. Sales from other brands fell 54.3 per cent to $17 million, reflecting in part the phase-out of Koolaburra standalone operations, Deckers said in a press release.
Wholesale sales rose 5.5 per cent to $1.09 billion, whereas direct-to-consumer (DTC) sales decreased 1.8 per cent to $387.5 million. DTC comparable sales declined 6.4 per cent on a constant-currency basis.
International sales offset softer domestic market
International net sales increased 9 per cent to $644.7 million, while domestic sales edged down 0.4 per cent to $835.8 million. The domestic, wholesale and other-brands figures included current-year declines related to the Koolaburra business phase-out.
Tariff refunds support margin expansion
During the quarter, Deckers received $46 million in International Emergency Economic Powers Act (IEEPA) tariff net refunds and $3 million in associated interest. The refunds were recognised through lower cost of sales and higher other income, respectively, and contributed approximately 310 basis points to both gross and operating margins. After tax, they added approximately $0.28 to diluted EPS.
Selling, general and administrative expenses rose to $505.7 million from $477.3 million. As at September 30, cash and cash equivalents stood at $1.21 billion, compared with $1.41 billion a year earlier, while inventories were $860.8 million versus $835.6 million. The company had no outstanding borrowings.
First-half performance and capital allocation
For the six months ended September 30, 2026, net sales rose 4.4 per cent to $2.50 billion. Gross profit increased to $1.47 billion from $1.34 billion, while operating income rose 10.8 per cent to $544.8 million. Net income increased 8.8 per cent to $443.1 million and diluted EPS improved to $3.24 from $2.74.
Deckers repurchased approximately 3.2 million shares for $299.3 million during the second quarter. First-half repurchases totalled approximately 6.5 million shares for $637.5 million, leaving about $4.4 billion available under its authorisation.
Deckers raises FY27 earnings outlook
For the year ending March 31, 2027, Deckers now expects consolidated net sales of $5.70-$5.73 billion, with Hoka sales projected to grow by a high-single-digit percentage and UGG sales by a low-single-digit percentage. It forecast gross margin of approximately 58.5 per cent, selling, general and administrative expenses equivalent to about 35.5 per cent of sales, and operating margin of approximately 23 per cent.
The company raised its FY27 diluted EPS guidance to $7.80-$7.95, including an estimated $0.52 benefit from IEEPA tariff net refunds received through October 8. The outlook incorporates $87.9 million in tariff net refunds and $4.7 million in related interest, assumes no further refund collections and includes planned share repurchases worth $1 billion.
Fibre2Fashion News Desk (SG)
