Third-quarter growth returned to 18.5%. Has HOKA broken the "slowdown curse"?

As sports footwear and apparel brands collectively enter the cyclical game of "de-stocking" and "expectation adjustment," Deckers, which owns HOKA and UGG, seems to still be operating at its own pace.

Deckers recently released its financial results for the third quarter of fiscal year 2026 (ending December 31, 2025). During the three months covering the traditional peak season for consumption in Europe and the United States, the company achieved net sales of $1.958 billion, a year-on-year increase of 7.1%.

Among them, UGG showed a steady performance with net sales of $1.305 billion for the quarter, up 4.9% year-on-year.

Meanwhile, HOKA, which has been the growth engine in recent years, achieved net sales of $628.9 million, with year-on-year growth rebounding to 18.5%.

Compared with last quarter’s growth rate of 11.1%, HOKA’s above-expectation rebound was largely driven by growth in DTC (direct-to-consumer) channels and international markets.

This quarter, Deckers' growth in international markets reached 15%, far exceeding the 2.7% growth in the US domestic market.

According to previous Deckers meeting minutes, China has become the core driver of HOKA’s international business growth.

Unlike its early days when it attracted fans mainly through “hardcore running shoes,” HOKA is now achieving deep penetration among new middle-class consumers in China by using a channel strategy that integrates both direct and partner operations.

According to previous disclosures by management, HOKA's sales achievement rate in partner stores in China far exceeded expectations, providing solid data support for subsequent expansion of store density.

At the same time, by opening flagship stores in key commercial districts and supplementing them with frequent offline community events, the brand has successfully maintained a very high full-price sales rate.

In 2025, HOKA will continue to strengthen its strategic presence through directly operated stores, focusing on Shanghai, Beijing, Chengdu, and Shenzhen, and expanding into the East China, North China, Southwest, and South China markets.

Currently, HOKA’s store numbers in China have surpassed any other global market.

Performance on the profit side also validates the success of this strategy.

Despite slight declines in gross margin this season to 59.8% due to currency exchange rates and product mix, diluted earnings per share still increased from $3.00 in the same period last year to $3.33.

This profit flexibility is largely attributed to the continuous increase in proportion of DTC sales. This quarter, DTC accounted for over 55% of Deckers’ total sales, meaning the brand’s control over end pricing and inventory management has reached a historical high.

The market was previously highly concerned about tariff impacts, but Chief Financial Officer Steve Fasching revealed that, due to timing differences in inventory turnover and pricing strategy offsetting, the actual negative tariff effects this quarter were below expectations.

As a result, Deckers updated its performance guidance for fiscal 2026 in its financial report, projecting full-year net sales to reach $5.4 billion to $5.425 billion, and raising HOKA’s full-year growth expectations to about 15%.

On the flip side of growth, cautious signals still lurk.

As competitors such as On (On Running) step up direct competition in China’s tier-one cities, the professional running shoe track in which HOKA operates is becoming increasingly crowded.

Deckers’ inventory levels increased by 10% year-on-year this quarter. Although management explained this was mainly due to provision for tariffs and logistics reserve, given global trade volatility and the segmented domestic consumer market, how to balance “premium positioning” and “scale expansion” will continue to test management’s precision in operations.

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