Deckers Stock Recovers on Strong Earnings—More Upside Ahead?

Key Points

• In 2025, the market hit shares of Deckers Outdoor hard, but the company's latest results were a big win.
• Early figures show signs of resilience for the company as trade wars persist.
• Is it time to get bullish on Deckers Outdoor, or is it too early to say that a recovery will continue?

For Deckers Outdoor NYSE: DECK, 2025 has been a very bad year so far, but things may be turning the corner. On July 24, the shoemaker reported fiscal Q1 2026 financials, and the results were exactly what the stock needed.

Shares surged by more than 11% on July 25, helping stem the stock’s more than 48% drop in 2025 through July 24.

So, what exactly happened last quarter for Deckers Outdoor, and do the results mark the beginning of a big-time recovery in shares? Let’s dive in to understand what's next.

DECK Surges Past Expectations as International Sales Lead

In fiscal Q1, Deckers posted revenue growth of 17%, nearly double the 9.2% growth rate forecasted by analysts. However, it is important to note that more than half of this beat came from abnormal changes in revenue generation timing. Still, this helped the consumer discretionary stock post 24% adjusted earnings per share (EPS) growth, with the absolute figure increasing to 93 cents. This was a huge surprise, as analysts expected adjusted EPS to fall by around 10%. The company also announced guidance for next quarter that was in line with expectations.

International revenue spiked by 50% from the previous year's quarter, with the company’s flagship HOKA and UGG brands leading the charge. This marked the firm’s fastest international sales growth over at least the last six quarters. The growth was certainly needed, as U.S. sales fell nearly 3% last quarter in a consumer environment that management called “choppy.” HOKA also generated its most fiscal Q1 revenue ever at $653 million, an increase of 20% compared to the prior year.

A notable downside was that gross margin declined by 110 basis points to 55.8%. However, the operating margin moved up by 105 basis points to over 17.1%. Overall, investors can take solace in the fact that Decker’s gross margin remains in the middle of the pack among big footwear stocks, and its operating margin is in the top half.

DECK Shows Strength Amid Tariffs, But Next Quarter Will Be Key

Much of the downtrodden sentiment around Deckers in 2025 has been due to tariffs. The company withdrew its full-year guidance because of the uncertain impact of trade wars on its business. Markets have expressed concerns that the company’s already relatively expensive products might face reduced demand growth due to higher prices. This situation is particularly relevant as most of the company’s production occurs in Vietnam.

Latest trade developments put the United States' tariffs on Vietnam at 20%, but the deal is not final. This would be a significant improvement compared to the 46% rate Trump first proposed. In Q2, tariffs didn’t seem to negatively impact demand at Deckers. However, the firm only started increasing prices on July 1, meaning that impacts wouldn’t have shown up in the latest results.

Still, management noted that it has not seen initial price increases result in worse performance one month into fiscal Q2. This is a highly positive sign for investors, indicating that Deckers can increase prices while not hurting demand. Still, the results are early and next quarter should really shed some light on just how true this is.

Lagging direct-to-consumer (DTC) sales, which barely increased last quarter, are also a concern. Wholesale sales grew strongly at 26.7%. DTC sales, which have higher margins, are more attractive to investors. However, strong wholesale growth signals a potential rebound in DTC growth. Consumers often first become aware of a brand by seeing it in-store. If they like the product, they are more likely to buy directly in the future.

DECK Looks Undervalued Versus Historical Metrics; Continued Rebound Is In Play

As of the July 28 close, DECK is down 45% in 2025. The stock also trades at a forward price-to-earnings (P/E) multiple of 18x. That’s around 26% below its average figure of over 24x during the last three years.

This suggests there is a solid opportunity for the stock’s forward P/E to rise, benefiting shares. The MarketBeat consensus price target on Deckers is around $137, implying upside potential of more than 22% versus July 28.

Overall, Deckers has done a solid job of assuaging some fears around its business. Tariff rates on Vietnam are likely to come down from previous proposals, a good sign for Deckers.

Absent unexpected tariff changes or a recession, shares of Deckers Outdoor have a solid opportunity to continue their recovery. Still, next quarter will be key to determining if the strong results are sustainable as price increases fully kick in.