Hoka shoes in a store in Krakow, Poland, on February 1, 2023.
Jakub Porzycki | Nurfoto | fake images
Stocks of the shoe manufacturer. Deckers Brands plunged 15% on Friday after the company cut its sales forecasts for Hoka and Ugg, the two brands driving its growth, over concerns that tariffs are causing a drop in demand.
Hoka, an up-and-coming running shoe brand, is now expected to grow in the low-teens percentage in fiscal 2026 after growing 24% in the prior-year period, while boot brand Ugg is expected to grow in the low- to mid-single-digit percentage range, after growing 13% in the prior-year period.
In May, the company said Hoka and Ugg were expected to grow in the mid-teens and mid-single digits, respectively, in fiscal 2026, but cautioned that forecast by saying it was conceived before the introduction of President Donald Trump's tariffs. At the time, it quantified the expected impact on its costs, but said it was yet to be determined what kind of impact the new tariffs might have on demand.
Reporting fiscal second-quarter earnings Thursday, Chief Financial Officer Steven Fasching said the impacts that tariffs and higher prices are having on demand are now clearer.
“Part of the framework we gave at the beginning of the year really said that if the tariffs didn't have an impact on consumers, how did we see some growth, and we still believe that, right? But we know that and we're currently seeing some impacts on the American consumer,” Fasching told analysts on the company's conference call. “So American consumers are starting to see some price increases. This is impacting their purchasing behavior within the consumer discretionary space.”
He added that the guidance is not far from what the company originally thought, but acknowledged that there is a “small reduction” in its forecast.
The slower pace of growth for Deckers' two top-performing lines, along with cutting its sales forecasts, indicate the two brands could be losing momentum after years of outperformance. Together, Hoka and Ugg account for the vast majority of Deckers' revenue and have been instrumental in offsetting weaknesses in other categories.
However, CEO Dave Powers downplayed fears of a long-term slowdown, telling investors that both brands remain strong among mainstream consumers.
“We are confident in the long-term trajectory of our portfolio,” Powers said. “While tariffs and inflation are creating short-term pressure, Hoka and Ugg continue to lead brand popularity and market share gains across all of their categories.”
Beyond Hoka and Ugg, Deckers' full-year revenue guidance fell short of analyst expectations. In fiscal 2026, the company expects revenue of about $5.35 billion, missing Wall Street's $5.45 billion forecast, according to LSEG. It expects earnings per share to be between $6.30 and $6.39, roughly in line with the estimate of $6.32 per share, according to LSEG.
In the company's call to analysts, Fasching warned that tariff costs could total about $150 million this fiscal year. Executives said they hope to offset about half of those costs through price adjustments and cost sharing with factory partners.
Deckers shares have fallen more than 55% so far this year, leaving investors nervous about any sign of slowing demand.
