Ugg Season Is Here, But Some Market Watchers Are Concerned About the Brand’s DTC Slowdown

After several years of upward momentum, some analysts are growing concerned about Ugg and Hoka parent company Deckers Brands after its latest earnings report on Thursday.

One of those voices is Tom Nikic, senior analyst at Needham, who said the Goleta, Calif.-based company is “poised” for negative reaction by investors despite a second quarter 2026 revenue beat.

And he isn’t wrong. On Friday, shares for Deckers Brands were down over 13 percent to $88.83 a share.

“The issues largely stem from the Ugg brand, which saw a major deterioration of DTC trends, overshadowing positivity around Hoka (accelerating DTC trends, solid wholesale order books, etc.),” Nikic wrote in a research note. “Though we feel better about Hoka than we did earlier in the year, we’re getting concerned about the Ugg brand, as they may be hitting a wall after several strong years.”

As a result, Needham lowered its stock price target to $113 from $128, and tweaked its fiscal year 2026 earnings per share to be in the range of $6.36 to $7.00, down from $6.28 to $7.10.

Ashley Helgans, equity analyst at Jefferies, added in a separate note that Ugg sales were up 10 percent year-over-year and beat consensus by 3 percent, although the beat was driven entirely by wholesale, which was up 17 percent, compared to DTC, which was down 10 percent.

“Management attributed the DTC slowdown to improved wholesale inventory in-stocks, weaker consumer sentiment, and consumer shift towards multi-brand in-store shopping experiences,” Helgans wrote. “We view the DTC slowdown as disappointing to investors given expectations for quarter-over-quarter improvement. Moreover, wholesale benefited from earlier European shipments due to a warehouse transition. [The] company expects these factors will continue to weigh on total DTC growth.”

However, Stefano Caroti, president and chief executive officer of Deckers Brands, worked to debunk investor concerns on the company’s Q2 earnings call with analysts on Thursday. The CEO noted that Deckers has two of the “healthiest brands in the global marketplace” with a “very strong and loyal consumer base and a growing global demand.”

“Our first half demonstrates the strength of these brands,” Caroti said. “For the back half, we are anticipating a more cautious consumer as the full impact of tariffs and price increases will be felt here in the U.S. Having said that, our brands are well-positioned when the consumer shows up for the holidays. And as always said, we don’t manage our business month-to-month and quarter-to-quarter. We build brands for long-term profitable, sustainable growth.”

Steven Fasching, chief financial officer of Deckers Brands, also chimed in, stating that the company is “not going to try to chase growth” in a current period that could be detrimental to the brand.

“That is what our guidance reflects is we are going to maintain these brands,” Fasching said. “We’re going to manage them in the marketplace that allows us to grow these – grow these meaningful over a sustainable longer period of time.”

Williams Trading analyst Sam Poser largely agrees with Deckers management and remains “very confident” that fiscal 2026 guidance. In his recent note, Poser wrote that he believes Ugg sales will increase low-single digits to mid-single digits, Hoka sales will increase low-teens, and gross margin of approximately 56 percent will all be exceeded in the end.

Poser also called the company’s “bluff” on management’s gross margin guidance – which calls for it to be down approximately 300 basis points in the second half of fiscal 2026 – as it relates to a more normalized promotional environment, and the concern about the U.S. consumer’s decline in discretionary spending.

“Management’s guidance reflects the current trends, even though [execs] acknowledged that back-to-school sales were strong,” Poser wrote. “One day of sales for Ugg from Black Friday through Christmas represents more volume than a week of sales from July through early October. [If you take into account] clean inventory [coupled] with the strict scarcity model it adheres to, second half 2026 sales and margins are positioned to beat guidance, and the current consensus expectations.”