Deckers cuts full-year sales guidance as direct-to-consumer business weakens; tariff refunds support margins
Deckers’ second-quarter revenue fell short of Bloomberg consensus expectations, and the company cut its full-year growth guidance for both HOKA and UGG; tariff refunds lifted its margin and earnings per share guidance. Nomura prefers Anta among the Chinese sportswear companies it covers.
Original source：Nomura International (Hong Kong) Ltd.First published on Unhidea：Original source date：
Key takeaway
Deckers’ slowing sales growth was concentrated in its direct-to-consumer channel, while tariff refunds supported the company’s raised profit guidance. Nomura favors Anta’s multi-brand positioning as a way to address industry competition.
Why did revenue fall short of expectations?
Deckers reported on 22 October that revenue for the second quarter of fiscal 2027 was 1.481 billion dollars, up 2.8% year on year at constant currency and below the Bloomberg consensus estimate of 1.506 billion dollars; the main drag came from the direct-to-consumer channel.
Direct-to-consumer revenue fell 1.8% year on year in the quarter, compared with growth of 13% in the previous quarter; direct-to-consumer comparable sales fell 6.4% year on year. Wholesale revenue grew 5.5%, accelerating from 2.2% in the previous quarter.
Management observed that consumers are increasingly inclined to wait for discounts and concentrate their purchases during promotions, while placing greater emphasis on products’ immediate relevance and practicality.
How have growth expectations changed for the two main brands?
In the second fiscal quarter, HOKA revenue was 677 million dollars, up 6.8% year on year, below the previous quarter’s 7.7%; UGG revenue was 786 million dollars, up 3.5%, also below the previous quarter’s 4.9%.
The company lowered its fiscal 2027 revenue guidance from 5.86 billion to 5.91 billion dollars to 5.7 billion to 5.725 billion dollars. Its full-year revenue growth forecast for HOKA fell from the low double digits to the high single digits, while that for UGG fell from the mid-single digits to the low single digits.
Regional performance diverged: US domestic revenue fell 0.4% year on year in the second fiscal quarter, while international revenue rose 9.0%; the company said Asia-Pacific recorded the highest growth and contributed significantly to international revenue growth.
Why was profit guidance raised despite the sales guidance cut?
The second fiscal quarter gross margin rose 4.3 percentage points year on year to 60.5%, driven mainly by tariff refunds. Excluding the refunds, gross margin was 57.4%, still up 1.2 percentage points year on year and above the market consensus estimate of 55.1%.
The company raised its fiscal 2027 gross margin guidance from 56.5% to 58.5% and its operating margin guidance from 21.5% to 23.0%; it raised diluted earnings per share guidance from 7.35 to 7.50 dollars to 7.80 to 7.95 dollars.
The new earnings per share guidance includes a contribution of approximately 0.52 dollars from tariff refunds; excluding that contribution, it stands at 7.28 to 7.43 dollars, slightly below the previous guidance.
How does Nomura view Chinese sportswear companies?
Among the Chinese sportswear companies it covers, Nomura prefers Anta and assigns it a buy rating. The bank believes Anta will benefit over the long term from its positioning in outdoor activities and emerging sports, and that its multi-brand strategy will help it address industry competition.
Nomura’s target price for Anta is 91.4 Hong Kong dollars, based on a price-to-earnings multiple of 17.5 times for the next 12 months; the downside risks it lists include intensifying domestic and international competition, slower-than-expected sales growth and a weaker-than-expected macroeconomic environment.
