Deckers Posts Strong Q2 Sales, Net Income Growth

TL;DR

**DECK is crushing it with double-digit sales and profit growth, but watch those cash levels after heavy buybacks.**

AI Summary

DECKERS OUTDOOR CORP reported robust financial performance for the three and six months ended September 30, 2025. Net sales increased by 9.1% to $1.43 billion for the three months ended September 30, 2025, up from $1.31 billion in the prior year, and by 12.1% to $2.39 billion for the six months, compared to $2.13 billion in 2024. Gross profit also saw significant growth, reaching $803.8 million for the quarter, a 9.6% increase from $733.3 million, and $1.34 billion for the six months, up 11.5% from $1.20 billion. Net income rose by 10.7% to $268.2 million for the quarter, from $242.3 million, and by 13.8% to $407.4 million for the six months, from $357.9 million. The company is phasing out the Koolaburra and AHNU brands, expected to be completed by Q3 FY2026, following the sale of the Sanuk brand in August 2024. Cash and cash equivalents decreased to $1.41 billion from $1.89 billion at March 31, 2025, primarily due to significant common stock repurchases totaling $465.0 million for the six months ended September 30, 2025. Operating lease assets increased to $305.4 million from $237.4 million, indicating expansion in physical footprint or lease commitments.

Why It Matters

Deckers' continued growth in net sales and net income, driven by brands like HOKA and UGG, signals strong consumer demand in a competitive footwear market. This performance could attract investors seeking stable growth in the consumer discretionary sector, potentially boosting DECK's stock price. For employees, the brand's success may lead to job security and opportunities, while customers benefit from popular and innovative products. The strategic phasing out of underperforming brands like Koolaburra and AHNU, following the Sanuk sale, demonstrates a focus on core profitable brands, which could enhance long-term profitability and market share against rivals like Nike and Adidas.

Risk Assessment

Risk Level: medium — The company's cash and cash equivalents decreased significantly by $474.7 million for the six months ended September 30, 2025, primarily due to $465.0 million in common stock repurchases. While repurchases can boost shareholder value, this substantial cash outflow, coupled with a $340.4 million increase in inventories, could limit financial flexibility if market conditions deteriorate or unexpected capital needs arise.

Analyst Insight

Investors should consider DECK's strong top-line and bottom-line growth as a positive indicator, but closely monitor future cash flow statements for continued heavy share repurchases. Evaluate if the inventory build-up of $340.4 million is a strategic move for anticipated demand or a potential risk of obsolescence, especially with the phasing out of Koolaburra and AHNU brands.

Financial Highlights

revenue

$2.39B

total Assets

$3.78B

net Income

$407.4M

eps

$1.82

gross Margin

56.0%

cash Position

$1.41B

revenue Growth

+12.1%

Revenue Breakdown

Key Numbers

• $1.43B — Net sales for Q2 2025 (Increased by 9.1% from $1.31 billion in Q2 2024)
• $2.39B — Net sales for six months ended Sept 30, 2025 (Increased by 12.1% from $2.13 billion in 2024)
• $268.2M — Net income for Q2 2025 (Increased by 10.7% from $242.3 million in Q2 2024)
• $407.4M — Net income for six months ended Sept 30, 2025 (Increased by 13.8% from $357.9 million in 2024)
• $1.82 — Basic EPS for Q2 2025 (Increased from $1.59 in Q2 2024)
• $1.41B — Cash and cash equivalents as of Sept 30, 2025 (Decreased from $1.89 billion as of March 31, 2025)
• $465.0M — Common stock repurchases for six months ended Sept 30, 2025 (Significant cash outflow impacting cash balance)
• $835.6M — Inventories as of Sept 30, 2025 (Increased from $495.2 million as of March 31, 2025)
• $305.4M — Operating lease assets as of Sept 30, 2025 (Increased from $237.4 million as of March 31, 2025)
• 146,090 — Shares issued and outstanding as of Sept 30, 2025 (Decreased from 150,201 shares as of March 31, 2025 due to repurchases)

Key Players & Entities

• DECKERS OUTDOOR CORP (company) — registrant
• HOKA (company) — proprietary brand
• UGG (company) — proprietary brand
• Teva (company) — proprietary brand
• Koolaburra by UGG (company) — proprietary brand being phased out
• AHNU (company) — proprietary brand being phased out
• Sanuk (company) — brand sold in August 2024
• New York Stock Exchange (regulator) — exchange where common stock is registered
• SEC (regulator) — Securities and Exchange Commission
• Bloomberg (company) — publisher

FAQ

Risk Factors

• Brand Portfolio Management [medium — operational]: The company is actively managing its brand portfolio by phasing out the Koolaburra and AHNU brands, expected to be completed by Q3 FY2026. This follows the sale of the Sanuk brand in August 2024. Such strategic shifts can impact future revenue streams and require careful execution to minimize disruption.
• Stock Repurchases and Cash Position [medium — financial]: Deckers repurchased $465.0 million of common stock in the six months ended September 30, 2025, leading to a decrease in cash and cash equivalents from $1.89 billion to $1.41 billion. While share repurchases can enhance shareholder value, significant outflows can reduce liquidity.
• Inventory Management [medium — operational]: Inventories increased significantly to $835.6 million as of September 30, 2025, from $495.2 million as of March 31, 2025. This substantial increase requires careful management to avoid obsolescence, markdowns, or carrying costs, especially given the brand divestitures.
• Lease Commitments and Footprint Expansion [low — operational]: Operating lease assets have grown to $305.4 million from $237.4 million, indicating an expansion in the company's physical footprint or increased lease commitments. This requires ongoing management of lease obligations and associated costs.

Industry Context

The athletic and lifestyle footwear and apparel market remains competitive, with strong brand loyalty and evolving consumer preferences. Companies like Deckers benefit from strong brand equity in niche markets (UGG, HOKA) while navigating shifts in consumer demand and the need for continuous product innovation. The industry is also influenced by global supply chain dynamics and e-commerce growth.

Regulatory Implications

Deckers operates under standard SEC reporting requirements for publicly traded companies, including the timely filing of 10-Q and 10-K reports. Compliance with accounting standards (e.g., ASC 842 for leases) is crucial. There are no specific new regulatory risks highlighted in this filing beyond general compliance.

What Investors Should Do

1. Monitor inventory levels closely.
2. Evaluate the impact of brand divestitures.
3. Assess the balance between share repurchases and liquidity.

Key Dates

• 2024-08-15: Sanuk Brand Sale Completion — Marks a strategic divestiture, impacting the 'Other brands' segment and allowing focus on core brands.
• 2025-09-30: End of Second Quarter Fiscal Year 2025 — Reporting period for the 10-Q, showing strong revenue and net income growth.
• 2026-03-31: Expected Completion of Koolaburra and AHNU Brand Phase-out — Indicates a further strategic shift in brand portfolio management, impacting future financial reporting.

Glossary

Reportable Operating Segments

The segments of a business that are reported separately in financial statements, typically based on how management organizes the business for operating purposes. (Deckers has updated its reportable segments to HOKA, UGG, and Other brands, recasting prior periods for consistency.)

Accumulated Other Comprehensive Loss

A component of equity that includes unrealized gains and losses on certain investments, foreign currency translation adjustments, and pension adjustments that have not yet been realized in net income. (Shows a negative balance of ($49.1 million) as of September 30, 2025, indicating cumulative unrealized losses.)

Operating Lease Assets

Assets recognized under accounting standards for leases, representing the right to use an underlying asset for the lease term. (Increased to $305.4 million, suggesting expansion in physical footprint or increased leasing activity.)

Common Stock Repurchases

The company buying back its own shares from the open market or directly from shareholders. (Deckers spent $465.0 million on repurchases in six months, impacting cash balance and shares outstanding.)

Year-Over-Year Comparison

Compared to the prior fiscal year's filings, Deckers has demonstrated robust top-line growth, with net sales increasing by 12.1% for the six months ended September 30, 2025. Gross profit and net income have also seen healthy increases, reflecting improved operational efficiency and strong brand performance. However, cash and cash equivalents have decreased due to significant share repurchases, and inventory levels have risen substantially, indicating potential areas for investor scrutiny.

Key Financial Figures

• $0.01 — ich registered Common Stock, par value $0.01 per share DECK New York Stock Exchange

Filing Documents

• deck-20250930.htm (10-Q) — 1344KB
• deck9302025exhibit311.htm (EX-31.1) — 10KB
• deck9302025exhibit312.htm (EX-31.2) — 10KB
• deck9302025exhibit321.htm (EX-32.1) — 8KB
• 0000910521-25-000044.txt ( ) — 6300KB
• deck-20250930.xsd (EX-101.SCH) — 38KB
• deck-20250930_cal.xml (EX-101.CAL) — 63KB
• deck-20250930_def.xml (EX-101.DEF) — 129KB
• deck-20250930_lab.xml (EX-101.LAB) — 490KB
• deck-20250930_pre.xml (EX-101.PRE) — 327KB
• deck-20250930_htm.xml (XML) — 1060KB

- Financial Information

PART I - Financial Information Item 1.

Financial Statements

Financial Statements Condensed Consolidated Balance Sheets (Unaudited) 4 Condensed Consolidated Statements of Comprehensive Income (Unaudited) 5 Condensed Consolidated Statements of Stockholders' Equity (Unaudited) 6 Condensed Consolidated Statements of Cash Flows (Unaudited) 8 Notes to Condensed Consolidated Financial Statements (Unaudited) 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 34 Item 4.

Controls and Procedures

Controls and Procedures 35

- Other Information

PART II - Other Information Item 1.

Legal Proceedings

Legal Proceedings 36 Item 1A.

Risk Factors

Risk Factors 36 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 37

Defaults Upon Senior Securities *

Item 3. Defaults Upon Senior Securities *

Mine Safety Disclosures *

Item 4. Mine Safety Disclosures * Item 5. Other Information 38 Item 6. Exhibits 39

Signatures

Signatures 40 *Not applicable. 1 T able of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q for our second fiscal quarter ended September 30, 2025 (Quarterly Report), and the information and documents incorporated by reference within this Quarterly Report, contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), which statements are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements other than statements of historical fact contained in, or incorporated by reference within, this Quarterly Report. We have attempted to identify forward-looking statements by using words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "will," or "would," and similar expressions or the negative of these expressions. Specifically, this Quarterly Report, and the information and documents incorporated by reference within this Quarterly Report, contain forward-looking statements relating to, among other things: global geopolitical tensions and conflicts, including the impact of economic sanctions on our supply chain costs, such as those related to United States (US) and foreign trade policies and the enactment of tariffs and retaliatory tariffs; changes in consumer preferences and the purchasing behavior of wholesale partners and consumers impacting our brands and products, and the footwear and fashion industries; global economic trends, including foreign currency exchange rate fluctuations, changes in interest rates, inflationary pressures, changes in commodity pricing, and recessionary concerns; the

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION References within this Quarterly Report to "Deckers," "we," "our," "us," "management," or the "Company" refer to Deckers Outdoor Corporation, together with its consolidated subsidiaries. HOKA (HOKA), UGG (UGG), Teva (Teva), Koolaburra by UGG (Koolaburra), and AHNU (AHNU) are some of our trademarks. Other trademarks or trade names appearing elsewhere within this Quarterly Report are the property of their respective owners. The trademarks and trade names within this Quarterly Report are referred to without the and symbols, but such references should not be construed as any indication that their respective owners will not assert their rights to the fullest extent under applicable law. Unless otherwise indicated, all figures herein are expressed in thousands, except for per share and share data. During the fourth quarter of our fiscal year ended March 31, 2025 (prior fiscal year), we updated our reportable operating segments to include the worldwide operations of the HOKA brand, UGG brand, and Other brands (primarily consisting of the Teva brand, Koolaburra brand, and AHNU brand) (collectively, our reportable operating segments). Reportable operating segment results for all prior periods presented in this Quarterly Report have been recast to reflect the change in reportable operating segments. We completed the sale of the Sanuk brand during the second quarter of our prior fiscal year. The financial results for our reportable operating segments present the former Sanuk brand within the Other brands reportable operating segment through the brand's sale date, August 15, 2024 (Sanuk Brand Sale Date). Further, we have begun phasing out the standalone operations of the Koolaburra brand and AHNU brand, which we expect to complete during the third quarter of our fiscal year ending March 31, 2026 (current fiscal year). Refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Note 1,

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollar and share data amounts in thousands, except par value) September 30, 2025 March 31, 2025 ASSETS (AUDITED) Cash and cash equivalents $ 1,414,479 $ 1,889,188 Trade accounts receivable, net of allowances ($ 63,457 and $ 32,883 as of September 30, 2025, and March 31, 2025, respectively) 538,764 332,872 Inventories 835,595 495,226 Prepaid expenses 48,652 39,294 Other current assets 125,919 67,282 Income tax receivable 8,066 36,613 Total current assets 2,971,475 2,860,475 Property and equipment, net of accumulated depreciation ($ 433,876 and $ 402,964 as of September 30, 2025, and March 31, 2025, respectively) 333,495 325,599 Operating lease assets 305,362 237,352 Goodwill 13,990 13,990 Other intangible assets, net of accumulated amortization ($ 26,065 and $ 25,014 as of September 30, 2025, and March 31, 2025, respectively) 15,659 15,699 Deferred tax assets, net 90,814 77,591 Other assets 53,484 39,546 Total assets $ 3,784,279 $ 3,570,252 LIABILITIES AND STOCKHOLDERS' EQUITY Trade accounts payable $ 590,316 $ 417,955 Accrued payroll 65,590 125,417 Operating lease liabilities ( Note 5) 75,916 54,453 Other accrued expenses 151,969 142,120 Income tax payable 65,985 23,299 Value added tax payable 19,022 6,697 Total current liabilities 968,798 769,941 Long-term operating lease liabilities ( Note 5) 274,756 222,522 Income tax liability 15,623 13,587 Other long-term liabilities 59,072 51,189 Total long-term liabilities 349,451 287,298 Commitments and contingencies ( Note 5) Stockholders' equity Common stock ($ 0.01 par value per share; 750,000 shares authorized; 146,090 and 150,201 shares issued and outstanding as of September 30, 2025, and March 31, 2025, respectively) 1,461 1,502 Additional paid-in capital 267,907 253,466 Retained earnings 2,245,773 2,307,699 Accumulated other comprehensive loss ( Not

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