Hoka shoes are seen at a store in Krakow, Poland, February 1, 2023.
Jakub Porzycki | Nuphoto | Getty Images
Shoe maker actions Deckers Brands plunged 15% on Friday after the company cut its sales forecast for Hoka and Ugg – the two brands driving its growth – due to concerns that the tariffs would lead to lower demand.
Hoka, a growing running shoe brand, is now expected to see low-percentage growth in fiscal 2026, following 24% growth in the year-ago period, while boot brand Ugg is expected to see low- to mid-single-digit percentage growth, following 13% growth in the year-ago period.
In May, the company said Hoka and Ugg were expected to grow between 15% and 50%, respectively, in fiscal 2026, but it cautioned against that forecast, saying it was designed before President Donald Trump’s tariffs were introduced. At the time, it quantified the expected impact on its costs, but said it remained unclear what kind of impact the new duties might have on demand.
When releasing second-quarter financial results on Thursday, Chief Financial Officer Steven Fasching said the impacts of tariffs and rising prices on demand were now clearer.
“Part of the framework that we gave at the beginning of the year actually said that if the tariffs didn’t have an impact on consumers, we could see some growth, and we still believe that, right? But we know that and we’re seeing some impacts on the U.S. consumer right now,” Fasching told analysts on the company’s conference call. “So, U.S. consumers are starting to see price increases. This is impacting their purchasing behavior in the consumer discretionary sector.”
He added that the forecast is not far off from what the company initially thought, but acknowledged there was a “slight reduction” in its forecast.
The slower growth rate of Deckers’ two top-performing lines, as well as their reduced sales forecasts, indicate that both brands could be losing momentum after years of outperformance. Together, Hoka and Ugg account for the vast majority of Deckers’ revenue and have played a critical role in offsetting weaknesses in other categories.
CEO Dave Powers, however, played down fears of a long-term slowdown, telling investors that both brands remain strong with core consumers.
“We are confident in the long-term trajectory of our portfolio,” Powers said. “While tariffs and inflation create near-term pressure, Hoka and Ugg continue to dominate in terms of popularity and market share gains in their categories.”
Beyond Hoka and Ugg, Deckers’ full-year revenue forecast fell short of analysts’ expectations. For fiscal 2026, the company expects revenue of about $5.35 billion, lower than Wall Street’s forecast of $5.45 billion, according to LSEG. He 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.
On the company’s call with analysts, Fasching warned that tariff costs could total about $150 million this fiscal year. Executives said they expect to offset about half of those costs through price adjustments and cost sharing with partner factories.
Deckers shares have fallen more than 55% since the start of the year, leaving investors worried about any signs of slowing demand.