Global Athleisure Trends Will Fuel HOKA And UGG Expansion

Key Takeaways

• Rapid international growth of HOKA and DTC store expansion could drive stronger earnings and margin gains than currently projected by the market.
  
• Premiumization, innovation, and exposure to global athleisure trends position Deckers for sustained top-line and earnings outperformance despite macroeconomic uncertainty.
  
• Cost headwinds, brand concentration risk, evolving consumer demands, intense competition, and international expansion challenges threaten Deckers' revenue growth, margin stability, and long-term profitability.

Catalysts

Designs, markets, and distributes footwear, apparel, and accessories for casual lifestyle use and high-performance activities in the United States and internationally.

• While analyst consensus expects HOKA's international expansion to drive sustained revenue growth, the current run-rate suggests Deckers may materially outperform these expectations, as international sales surged 50% year over year in Q1, with record sell-through rates and robust wholesale reorders; this points to possible earnings upside as global demand and market share accelerate faster than projected.
  
• Analyst consensus sees margin accretion from the expansion of Direct-to-Consumer channels, but this may understate the longer-term impact as Deckers has just begun to scale retail doors globally, with DTC stores demonstrating significantly better sales trends than e-commerce, creating an underappreciated margin expansion lever as store counts ramp from still-nascent levels.
  
• Deckers' deepening focus on premiumization and product innovation-evident in HOKA's persistent launch of high-price-point footwear and advanced technical franchises-should support above-industry average selling prices and reinforce long-term pricing power, which could meaningfully increase both net margins and overall earnings power as demand for premium lifestyle and performance products rises.
  
• Structural shifts toward athleisure and the casualization of apparel globally are still in their early stages, and Deckers' multi-brand portfolio (spanning both performance and lifestyle) positions it to capture a disproportionate share of this multi-year secular tailwind, supporting sustained top-line growth well beyond current market forecasts.
  
• The company's debt-free balance sheet and $2.4 billion buyback authorization offer exceptional capital allocation flexibility; with ongoing stock buybacks at depressed valuations, Deckers is positioned to drive substantial per-share earnings growth even in periods of macro uncertainty, creating a structural EPS growth floor not fully reflected in current valuations.

Deckers Outdoor Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Deckers Outdoor compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Deckers Outdoor's revenue will grow by 11.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 19.3% today to 17.1% in 3 years time.
• The bullish analysts expect earnings to reach $1.2 billion (and earnings per share of $8.99) by about August 2028, up from $989.7 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 22.7x on those 2028 earnings, up from 15.6x today. This future PE is greater than the current PE for the US Luxury industry at 19.4x.
• Analysts expect the number of shares outstanding to decline by 2.7% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.39%, as per the Simply Wall St company report.

Deckers Outdoor Future Earnings Per Share Growth

Risks

• Deckers faces ongoing pressure from rapidly rising tariffs, elevated freight costs, upgraded materials, and increased promotional activity, all of which are expected to drive gross margins and operating margins lower for fiscal year 2026, making net earnings less predictable and more vulnerable to cost headwinds.
  
• The company's historical dependence on the UGG brand exposes it to concentration risk; any downturn in UGG's fashion appeal, changing consumer preferences, or negative press around sustainability may create significant volatility in revenue and profitability, especially if HOKA's momentum slows.
  
• As consumers become more focused on sustainability and ethical sourcing, Deckers may be required to accelerate investments in eco-friendly materials, supply chain transparency, and regulatory compliance, leading to structurally higher costs and downward pressure on long-term margins.
  
• The intense competition from digital-native direct-to-consumer brands, fast-shifting athleisure trends, and the commoditization of performance lifestyle footwear threaten Deckers' pricing power and its ability to sustain historic growth rates, potentially impacting both revenue growth and margin stability.
  
• Deckers' international expansion, especially outside North America, is inherently risky due to fierce competition and the challenge of establishing lasting brand resonance, creating the possibility that global revenue growth and earnings could disappoint if these markets fail to scale efficiently.

Valuation

• The assumed bullish price target for Deckers Outdoor is $158.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Deckers Outdoor's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $158.0, and the most bearish reporting a price target of just $97.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $7.0 billion, earnings will come to $1.2 billion, and it would be trading on a PE ratio of 22.7x, assuming you use a discount rate of 8.4%.
• Given the current share price of $103.86, the bullish analyst price target of $158.0 is 34.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.