Shares of Deckers Brands, the parent company of Hoka and Ugg, dropped over 8 percent on Thursday in after-market trading following the company’s mixed performance in the second quarter.
The Goleta, Calif.-based company reported that net sales in the second quarter of fiscal 2027 increased 3.5 percent to $1.48 billion compared to $1.43 billion in the same year-ago period. Net income for the three months ended Sept. 30 rose 16.8 percent to $313.1 million, or $2.31 a diluted share, down from $268.2 million, or $1.82 a diluted share, the prior year.
Net sales this quarter missed analysts’ expectations, which called for net sales in the range of $1.50 billion to $1.52 billion. However, the company did beat the Street’s best bet when it comes to diluted earnings per share (EPS), with analysts expecting EPS to be in the range of $1.76 to $1.83, according to Yahoo Finance.
The earnings beat is most likely due to the tariff refunds the company secured in the second quarter. The company said on Thursday that it received International Emergency Economic Powers Act (IEEPA) tariff net refunds totaling $46.0 million, plus associated interest of $3.0 million, which were recognized as a reduction of cost of sales and an increase to total other income, respectively.
The net benefit to both gross margin and operating margin was approximately 310 basis points. Net of tax, this resulted in an approximate 28 cent benefit to second quarter fiscal year 2027 diluted EPS.
Turning to the company’s performance by brand, Hoka led the way with net sales of $677.2 million, a 6.8 percent increase compared to $634.1 million a year. At Ugg, net sales increased 3.5 percent to $786.4 million compared to $759.6 million over the same period.
Deckers’ “Other” brands division — which includes Teva — saw net sales plummet 54.3 percent to $17.0 million compared to $37.2 million last year. The company said that net sales for the respective “Other” brands, wholesale channel and domestic geography include current fiscal year declines related to the phase-out of Koolaburra brand standalone operations.
As for wholesale, Deckers said that net sales in the channel increased 5.5 percent to $1.09 billion compared to $1.04 billion last year, while the direct-to-consumer (DTC) channel saw net sales decline 1.8 percent to $387.5 million compared to $394.6 million a year ago. The company said DTC comparable net sales were down 6.4 percent in the quarter.
By region, the company noted that net sales domestically dipped 0.4 percent to $835.8 million compared to $839.5 million in Q2 2026. International net sales in the period increased 9.0 percent to $644.7 million compared to last year’s $591.3 million.
Stefano Caroti, president and chief executive officer of Deckers Brands, said in a statement on Thursday that the company delivered earnings above its own expectations by “maintaining disciplined marketplace management and a focus on expense control in a challenging consumer environment.”
Looking ahead, the company is lowered yearly sales outlook following its most recent performance. Deckers now expects net sales for the full fiscal 2027 year between $5.70 billion and $5.73 billion. This is down from its previous yearly guidance, which called for net sales between $5.86 billion to $5.91 billion for fiscal 2027.
However, However, Deckers raised its expectations for diluted EPS for the year, which is now expected to be in the range of $7.80 and $7.95. That compares with the prior outlook at between $7.35 and $7.50.
“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,” Caroti said. “We remain confident in the significant global opportunities ahead for both Hoka and Ugg, and our ability to drive sustainable growth and create long-term shareholder value.”
Separately, Deckers also said the company has appointed Rati Sahi Levesque to its board of directors, effective Dec. 1. In connection with her appointment, Lauri Shanahan will retire from Deckers’ board after more than a decade.
Levesque currently serves as president, chief executive officer and a director of The RealReal. In her new role, Levesque will serve as a member of the audit and risk management committee of the Deckers’ board.