EPS of $3.00 increased by 18.9% from previous year
Gross margin of 60.3%
Net income of 456.73M
""...it’s great to be here with you today to discuss our superb third quarter, the largest and most profitable in Deckers’ history." - Stefano Caroti, CEO" - Stefano Caroti
Deckers Outdoor Corporation (DECK) Q3 2025 Financial Results: Strong Growth and Record Margins
Executive Summary
Deckers Outdoor Corporation reported a record-breaking performance in Q3 2025, achieving revenue of $1.83 billion, reflecting a 17% increase year-over-year. This achievement underscored the strength of the UGG and HOKA brands, with UGG growing by 16% and HOKA experiencing even stronger growth at 24%. Management highlighted that this quarter's gross margin improved to 60.3%, a significant accomplishment attributed to effective inventory management and a focus on full-price selling. With a strong cash position of $2.2 billion and no debt, Deckers is well-positioned for sustained growth as management raises its fiscal year revenue expectation to over $4.9 billion. The upcoming launches, specifically for the HOKA brand, are anticipated to further bolster performance in the coming quarters.
Key Performance Indicators
Revenue
1.83B
QoQ: 39.34% | YoY:17.10%
Gross Profit
1.10B
60.35% margin
QoQ: 50.37% | YoY:20.30%
Operating Income
567.27M
QoQ: 85.94% | YoY:16.27%
Net Income
456.73M
QoQ: 88.48% | YoY:17.14%
EPS
3.01
QoQ: 89.31% | YoY:18.89%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $1.83 billion (YoY: +17%, QoQ: +39%)
Gross Profit: $1.10 billion (Gross Margin: 60.3%)
Operating Income: $567 million (Operating Margin: 31.0%)
Net Income: $457 million (Net Margin: 25.0%)
EPS: $3.00 (YoY: +19%).
Financial Highlights
Key Financial Metrics:
- Revenue: $1.83 billion (YoY: +17%, QoQ: +39%)
- Gross Profit: $1.10 billion (Gross Margin: 60.3%)
- Operating Income: $567 million (Operating Margin: 31.0%)
- Net Income: $457 million (Net Margin: 25.0%)
- EPS: $3.00 (YoY: +19%).
- Cash at End of Period: $2.24 billion
- Inventory: $577 million (up 7% YoY)
- SG&A Expenses: $535 million (29.3% of revenue)
Management noted a strategic inventory build-up that allowed them to capture demand effectively, which contributed to the record gross margins seen this quarter, a beneficial shift compared to prior year's shortages.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.83B
17.10%
39.34%
Gross Profit
1.10B
20.30%
50.37%
Operating Income
567.27M
16.27%
85.94%
Net Income
456.73M
17.14%
88.48%
EPS
3.01
18.89%
89.31%
Key Financial Ratios
currentRatio
3.17
grossProfitMargin
60.3%
operatingProfitMargin
31%
netProfitMargin
25%
returnOnAssets
11.5%
returnOnEquity
17.4%
debtEquityRatio
0.1
operatingCashFlowPerShare
$7.22
freeCashFlowPerShare
$7.05
priceToBookRatio
11.72
priceEarningsRatio
16.88
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management Insights:
- Revenue Growth: "...UGG and HOKA continued to drive our success, as both brands are creating unique and innovative products... highlights of our record third quarter performance include revenue growing 17% over last year to $1.8 billion..." - Stefano Caroti, CEO.
- Market Management: "Once again, our brands were able to maintain a high degree of full price business while competing with more promotional brands in the global marketplace, choosing to prioritize brand health..." - Stefano Caroti, CEO.
"...it’s great to be here with you today to discuss our superb third quarter, the largest and most profitable in Deckers’ history." - Stefano Caroti, CEO
— Stefano Caroti
"We are focused on maintaining our long-term strategies while ensuring that our brands retain their identity and market strength. We seek to build HOKA as a leading performance brand through disruptive innovation." - Steve Fasching, CFO},
— Steve Fasching
Forward Guidance
Management has raised full-year revenue expectations to approximately $4.9 billion, reflecting a growth rate of 15% for the year. UGG is now projected to grow about 10% due to stronger global demand, while HOKA is expected to achieve around 24% growth. Management noted a likely constraint in Q4 growth for UGG due to limited inventory, stating, "...this demand was captured in Q3..." For future growth, execution on the HOKA brand’s new product launches such as the Bondi 9 are anticipated to enhance performance significantly in the upcoming quarters.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
DECK Focus
60.35%
31.00%
17.40%
16.88%
ONON
60.60%
11.40%
2.41%
117.78%
SKX
52.10%
9.94%
4.43%
13.15%
NKE
41.50%
6.99%
5.67%
37.20%
SHOO
41.80%
12.00%
6.63%
15.69%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Deckers Outdoor Corporation demonstrates a strong investment case with its combination of historical performance, strong cash reserves, and effective brand management strategies. The elevated demand for its products, underpinned by innovative growth strategies, particularly in its HOKA segment, suggests continued momentum. With management guiding for strong revenue growth and maintaining substantial gross margins, investors can expect Deckers to sustain its growth trajectory while navigating potential headwinds. The robust performance metrics against competitive peers signal a favorable position within the Consumer Cyclical sector, making DECK a compelling candidate for long-term investment.
Key Investment Factors
Growth Potential
Deckers Outdoor Corporation presents significant growth potential due to the strong positioning of its brands, particularly UGG’s expansion into new market segments and HOKA’s robust growth trajectory in performance footwear. International growth represented 28% year-over-year, indicating a strong global demand particularly in APAC regions.
Profitability Risk
Potential risks include reliance on consumer discretionary spending, possible supply chain disruptions, competitive pressures, and the impact of foreign exchange fluctuations as noted in the guidance for the upcoming quarter, which could affect profitability margins.
Financial Position
Deckers maintains a strong financial position with $2.24 billion in cash and equivalents, indicating strong liquidity and flexibility for investment and growth. The absence of debt further enhances its financial stability, allowing for continued strategic investments.
SWOT Analysis
Strengths
Strong brand equity and market presence in both premium and performance segments through UGG and HOKA.
Robust financial performance with record revenue and profit margins, reflecting effective management and strategic foresight.
Significant cash position that supports growth investment and shareholder returns.
Weaknesses
Dependency on consumer discretionary spending, particularly in a potentially adverse economic environment.
Limited diversification outside of footwear and apparel, which may expose the company to market fluctuations.
Opportunities
Expansion of product lines and market penetration internationally, particularly for HOKA in growing markets like Asia.
Increased focus on direct-to-consumer sales to enhance margins and build customer loyalty.
Potential growth through collaborations and partnerships that elevate brand visibility and consumer engagement.
Threats
Intense competition from other consumer cyclical brands, particularly in footwear, which could place pressure on pricing and market share.
Global economic uncertainties and fluctuating consumer confidence impacting discretionary spending.
Supply chain challenges including rising freight costs could pressure margins moving forward.