EPS of $1.59 increased by 39.1% from previous year
Gross margin of 55.9%
Net income of 242.32M
""Our brands are well-positioned for the holiday season and on track to achieve an increased outlook for the full fiscal year." - Stefano Caroti, CEO" - Stefano Caroti, CEO
Deckers Outdoor Corporation (DECK) Q2 2025 Financial Results: Strong Growth Driven by HOKA and UGG Brands
Executive Summary
Deckers Outdoor Corporation reported impressive results for the second quarter of fiscal 2025, achieving revenue of $1.311 billion, representing an increase of 20.1% year-over-year, driven primarily by strong sales in its HOKA and UGG brands. HOKA's revenue surged by 35%, reflecting robust consumer demand and successful product launches, while UGG posted a respectable 13% growth by evolving its iconic product lines. Despite challenges in the macroeconomic environment, the company maintained healthy gross margins of 55.9%, supported by strategic pricing and cost management. As Deckers navigates through dynamic market conditions, management has raised its full-year revenue guidance to $4.8 billion, underscoring the company's optimistic outlook for continued growth in both domestic and international markets.
Key Performance Indicators
Revenue
1.31B
QoQ: 58.88% | YoY:20.09%
Gross Profit
733.27M
55.92% margin
QoQ: 62.06% | YoY:25.77%
Operating Income
305.09M
QoQ: 129.72% | YoY:35.82%
Net Income
242.32M
QoQ: 109.57% | YoY:35.72%
EPS
1.59
QoQ: 110.13% | YoY:39.06%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $1,311,320,000, up 20.1% YoY (Q2 2025 vs Q2 2024)
**Gross Profit:** $733,272,000
**Gross Profit Margin:** 55.9%, up from 53.4% YoY
**Operating Income:** $305,086,000, representing an operating margin of 23.2%
**Net Income:** $242,321,000, a 35.7% increase compared to Q2 2024
Financial Highlights
Financial Performance Metrics
- Revenue: $1,311,320,000, up 20.1% YoY (Q2 2025 vs Q2 2024)
- Gross Profit: $733,272,000
- Gross Profit Margin: 55.9%, up from 53.4% YoY
- Operating Income: $305,086,000, representing an operating margin of 23.2%
- Net Income: $242,321,000, a 35.7% increase compared to Q2 2024
- EPS (Diluted): $1.59, a growth of 39% YoY
- Cash & Equivalents: $1.226 billion
- Total Liabilities: $1.175 billion, leading to a debt-to-equity ratio of 0.116.
Performance Indicators
- Inventory Turnover: 0.743
- Days of Sales Outstanding: 39.19
- Operating Cash Flow: -$90.55 million (reflects working capital changes)
- Current Ratio: 3.08, indicating strong liquidity and ability to cover short-term obligations.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.31B
20.09%
58.88%
Gross Profit
733.27M
25.77%
62.06%
Operating Income
305.09M
35.82%
129.72%
Net Income
242.32M
35.72%
109.57%
EPS
1.59
39.06%
110.13%
Key Financial Ratios
currentRatio
3.08
grossProfitMargin
55.9%
operatingProfitMargin
23.3%
netProfitMargin
18.5%
returnOnAssets
7.13%
returnOnEquity
10.9%
debtEquityRatio
0.12
operatingCashFlowPerShare
$-0.6
freeCashFlowPerShare
$-0.75
priceToBookRatio
10.92
priceEarningsRatio
25.04
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key Management Insights from the Earnings Call
- Stefano Caroti, CEO: "We are executing our long-term strategy established throughout my tenure with Deckers. Our consumer-first mindset harnesses insights to create distinctive products."
- Revenue Drivers: Mentioned that HOKA achieved a remarkable milestone, eclipsing $2 billion in revenue over the trailing 12-month period for the first time, driven by a full-price demand strategy.
- Product Innovations: Caroti highlighted several successful product launches, including the new HOKA styles that have resonated well with consumers.
- International Growth Strategy: Emphasis on HOKA's international market growth, with a specific focus on expanding in under-penetrated markets leading to a growth of 32% compared to the previous year.
"Our brands are well-positioned for the holiday season and on track to achieve an increased outlook for the full fiscal year." - Stefano Caroti, CEO
— Stefano Caroti, CEO
"We expect this incremental benefit in the second quarter will impact some of our third quarter growth as we continue to manage the marketplace tightly to maintain a pull model." - Steve Fasching, CFO.
— Steve Fasching, CFO
Forward Guidance
Management increased the full-year revenue guidance for fiscal 2025 to approximately $4.8 billion, up from previous guidance of $4.7 billion, reflecting strengthened demand particularly in HOKA brands. HOKA is expected to grow approximately 24%, while UGG is projected to maintain mid-single digit growth. Management remains cautious about freight costs which could affect gross margins in the second half, yet they are confident in reaching a gross margin range of 55% to 55.5% for the year. They are urging investors to monitor the impacts of consumer sentiment and potential market challenges.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
DECK Focus
55.92%
23.30%
10.90%
25.04%
ONON
59.90%
8.33%
2.50%
90.89%
SKX
54.90%
9.57%
3.32%
18.35%
NKE
43.60%
11.20%
8.29%
25.18%
SHOO
40.50%
10.20%
4.38%
21.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given the solid performance metrics exhibited in Q2 2025, including strong revenue growth, improved gross margins, and enhanced forecasts, Deckers presents a promising investment opportunity. The strategic management direction under Caroti combined with innovative approaches to product design and marketplace management positions Deckers well for continued growth. However, investors should remain watchful of macroeconomic factors and industry competition that may pose risks to achieving projected targets.
Key Investment Factors
Growth Potential
Deckers is well positioned for growth, particularly through its innovative HOKA brand and the continued evolution of UGG’s product lines. Both brands are expected to capture increased market share and drive revenue higher on a global scale.
Profitability Risk
Risks include macroeconomic challenges such as inflation, potential supply chain disruptions, and the volatility of consumer demand. Increasing promotional environments may affect margins and profitability.
Financial Position
Overall, Deckers maintains a strong balance sheet with significant liquidity and manageable debt levels. The current ratio of 3.08 indicates robust short-term financial health.
SWOT Analysis
Strengths
Strong brand recognition and loyalty across HOKA and UGG lines
Diverse and innovative product offerings that drive customer engagement
Solid financial performance with a healthy balance sheet
Weaknesses
Reliance on a few key product lines (HOKA and UGG)
Sensitivity to macroeconomic conditions which could affect consumer spending
High dependence on wholesale channels for revenue
Opportunities
Expanding market presence internationally, particularly in Asia
Growth in direct-to-consumer channels
Introduction of new styles and collaborations to attract different consumer demographics
Threats
Increasing competition in the athletic footwear sector from established brands
Supply chain constraints and rising freight costs impacting margins
Potential economic downturns affecting consumer discretionary income