Shares of Deckers Outdoor (DECK +5.30%), the global footwear company with brands like Hoka and UGG, were climbing today after the company delivered better-than-expected results in its first-quarter report. Coming after the stock plunged earlier in the year on fears of tariff-related headwinds and weakening consumer sentiment, the results helped reassure investors that its growth story was still intact.
As of 12:21 p.m. ET on Friday, the stock was up 11.7% on the news.
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Deckers is still growing
Revenue growth accelerated from the previous quarter, growing 17% to $964.5 million, largely due to the international market. That result was well ahead of the consensus analyst estimate of $900.4 million.
Growth at both of its marquee brands was strong, with Hoka revenue rising 19.8% to $653.1 million, and UGG sales up 18.9% to $265.1 million during a seasonally slow quarter for the sheepskin boot brand. Sales at its other brands, which make up a small percentage of the business, fell 19% to $46.3 million.
With the direct-to-consumer and its domestic segments weak, the company picked up the slack in wholesale and international sales. Wholesale revenue jumped 26.7% to $652.4 million, which is key because the wholesale channel tends to drive more full-price sales. International sales increased 49.7% to $463.3 million, nearly making up half of its total, driven in part by strength in China.
NYSE: DECK
Key Data Points
Gross margin fell from 56.9% to 55.8%, but operating income jumped from $132.8 million to $165.3 million, and earnings per share (EPS) rose from $0.75 to $0.93, well ahead of estimates at $0.68. In a quarter when analysts were expecting a decline in EPS, it instead rose by 24%.
What's next for Deckers
Given the monster beat, the stock could have jumped more, but Deckers still sees headwinds related to tariffs, saying it expects costs of goods sold to increase $185 million because of new tariffs, representing nearly 4% of revenue.
For the second quarter, the company expects revenue of $1.38 billion to $1.42 billion, up 7% at the midpoint, and EPS of $1.50 to $1.55, which compares to $1.59 a year ago.
While the guidance indicates management still expects a slowdown from the current quarter, the stock looks like a good buy at a price-to-earnings ratio of just 18.
