Deckers Steps Up With a Massive $2.25 Billion Stock Buyback
Buyback Wednesdays
This month, we stumbled upon a fascinating case of a company firing on all cylinders – and yet facing brutal market backlash. Deckers Outdoor Corporation (DECK), the powerhouse behind billion-dollar brands HOKA and UGG, announced a massive $2.25 billion boost to its share repurchase program, which was approximately 12% of its market cap at announcement. With $2 billion in cash and zero debt (we are excluding capital leases in our calculation of debt), this is a textbook example of a well-capitalized, well-run business. Together, HOKA and UGG generate over 90% of Deckers’ revenue. However, despite strong earnings and margin expansion, the stock plummeted by more than 20%.
Why? Tariff fears. The company, heavily reliant on Vietnam for manufacturing, was blindsided by escalating trade tensions and withdrew its fiscal 2026 guidance, citing $150 million in potential tariff costs. The market didn’t take kindly to the uncertainty. When a business this well-run trades at a sudden discount, it’s time to dig in and ask: Are the fears overblown?
Deckers Outdoor Corporation (DECK): $105.83
Market Cap: $15.69B
EV: $14.08B
Key Insights
Deckers is a fundamentally strong company with high profitability, a strong balance sheet and consistent growth metrics, demonstrating resilience even during the pandemic.
Fiscal year 2025 marked the fifth consecutive year of double-digit revenue and EPS growth, with 5-year CAGRs of 19% (revenue) and 32% (EPS).
The company’s impressive 19.1% average annual revenue growth is largely driven by its two core brands: UGG (up 11.3%) and HOKA (up 46.7%).
Despite strong financial performance, Deckers’ stock dropped nearly 20% after the company issued weaker-than-expected guidance and cited tariff-related risks.
The company announced an additional $2.25 billion share repurchase program, roughly 12% of its market cap at the time of announcement.
Deckers Brands sells its products in over 50 countries and territories through a mix of department stores, specialty retailers, company-owned stores, and online platforms, including its own websites. Its brand portfolio includes UGG, HOKA, Teva, Koolaburra, and AHNU. The company has a strong global presence, with 36.1% of total net sales for the fiscal year ending March 31, 2025, coming from international markets. Currently, Deckers operates 50 retail stores in the U.S. and 129 international stores across countries such as Austria, Belgium, Canada, China, France, Germany, Japan, the Netherlands, Switzerland, and the UK.
In Q4 FY2025, Deckers restructured its reportable segments to align with how management now evaluates the business. As of March 31, 2025, it reports under three segments: UGG, HOKA, and Other Brands (including Teva, AHNU, and Koolaburra). Previously, it had six segments split by brand and channel. The company also plans to wind down Koolaburra’s wholesale operations by the end of 2025 and has shut down its website to focus on core brands. Koolaburra was a cheaper sub-brand of UGG.
UGG
UGG, iconic for its sheepskin boots, remains one of the most iconic and recognizable names in the footwear industry. Although UGG has consistently been the company’s largest brand, its share of revenue has steadily declined from 75.9% in FY2019 to 50.8% in FY2025. Historically, UGG’s business has been highly seasonal, with the bulk of sales occurring in the second and third fiscal quarters. To reduce this seasonality, Deckers has expanded UGG’s product lineup to include more versatile, year-round offerings.
HOKA
HOKA, often called the “Rolls Royce of Running shoes” is a premium, year-round performance footwear brand known for its lightweight design, superior cushioning, and built-in stability. Initially created for ultra-runners, it has since expanded its appeal to elite athletes, trendsetters, and everyday fitness enthusiasts. A friend who was suffering from heel pain on account of plantar fasciitis was recommended HOKA shoes and he felt a lot of relief after wearing them.
Acquired by Deckers in 2013 for just $1.1 million, HOKA has become one of the company’s most successful acquisitions, growing from under $3 million in revenue to over $2.3 billion by FY2025. It is now Deckers’ fastest-growing brand.
HOKA’s share of Deckers’ total revenue has more than tripled from FY2021 to FY2025, rising from 13.8% to 44.8%. This growth underscores the brand’s expanding influence and successful transition from a niche running label to a mainstream global performance powerhouse.
A key driver of this growth is its expanding product line, like the launch of the Bondi 9 in Q4 FY2025 and increasing brand awareness. According to the latest internal survey, U.S. brand awareness reached 50% (up from 25% last year), while international awareness climbed from 20% to 30%. With significant headroom for global market penetration, the brand is also building momentum through selective retail expansion in high-impact locations.
Today, HOKA boasts five franchise lines, each generating over $100 million in global revenue.
Stock Performance
From March 31, 2020, to March 31, 2025, Deckers significantly outperformed both the S&P 500 and the S&P 500 Apparel, Accessories & Luxury Goods Index in cumulative total return. While returns dipped in the most recent year (as seen from the graph below) due to tariff concerns and cautious guidance, Deckers’ long-term performance remains strong and well above its industry benchmarks.
Source: Deckers (10K Report)
Valuation
Deckers currently trades at 17.6x forward P/E and 12x forward EV/EBITDA. This marks the company’s lowest valuation in the last three years. The primary driver behind this low multiple appears to be concerns around tariffs and the management has made good use of the potential undervaluation by announcing a significant boost to its share repurchase plan.
Financials
Historically, Deckers has delivered exceptional revenue and earnings growth within a relatively slow-growing sector. From FY2021 to FY2025, revenue nearly doubled from $2.5 billion to almost $5 billion, reflecting a strong 18.5% CAGR. This growth was largely driven by HOKA, which contributed an additional $1.9 billion, and UGG, which added around $1 billion in revenue.
Source: InsideArbitrage
Net income grew even faster, with a CAGR of 28.5% over the same period. After brief margin contraction in FY2022 and FY2023, gross margin rebounded sharply, reaching 57.9% in FY2025, an expansion of 400 basis points over five years.
The company ended FY2025 with $1.9 billion in cash and equivalents, despite repurchasing $567 million worth of shares during the year. This was supported by two consecutive years of generating over $900 million in free cash flow.
Source: InsideArbitrage
Capital Allocation
Deckers does not pay a dividend, instead opting to return capital to shareholders primarily through aggressive share repurchases.
In FY2025, the company bought back approximately 3.8 million shares for a total of $567 million, at an average price of $149.21 per share. In Q1 FY2026, it repurchased an additional 765,000 shares for $84 million, at an average price of $109.75. As of May 9, 2025, $290.7 million remained under the existing buyback authorization.
To further its capital return strategy, the Board approved a $2.25 billion increase to the stock repurchase program, bringing the total authorization to approximately $2.5 billion, equivalent to around 12% of the company’s market cap at the time of announcement. Over the past four years, Deckers has reduced its outstanding share count by 10% through consistent buybacks.
Source: InsideArbitrage
Peers Comparison
Key competitors to Deckers include NIKE, Inc. (NKE), On Holding AG (ONON), Skechers U.S.A., Inc. (SKX), and Crocs, Inc. (CROX). Over the past five years, Deckers’ stock consistently outpaced these peers, but in the last 12 months, that trend has reversed – Deckers is now the weakest performer, while ONON leads the group.
In terms of revenue growth, Deckers ranks second only to ONON. Its margins remain stronger than all peers except CROX, reflecting an industry-leading profitability profile. From a valuation standpoint, Deckers appears reasonably priced compared to Nike and ONON, both of which trade at notably higher multiples. Deckers’ balance sheet is debt-free, giving it a clear advantage over peers that carry leverage (except ONON, which is also debt-free).
With strong financials, disciplined capital deployment, solid profitability, and a compelling growth trajectory, Deckers outperforms its peers across most key metrics. However, the swift rise and growing popularity of ONON present a competitive challenge that Deckers cannot afford to overlook.
Recent Market Trends and Survey Insights
The global footwear market grew from $382.9 billion in 2023 to $404.6 billion in 2024 and is projected to reach $571 billion by 2030, growing at a CAGR of 5.87%. While modest, this growth is notable for a traditionally slow-moving sector and positions Deckers well to capitalize on the industry’s upward trajectory. In terms of revenue generation, the United States leads the global market with $101.36 billion in 2025. Considering that the US contributes two-thirds of Deckers’ revenue, this domestic strength is a tailwind for the footwear giant.
According to Piper Sandler’s 49th semi-annual teen survey, Nike remains the top clothing brand among U.S. teens. In footwear, UGG has surged in popularity and is now ranked as the No. 1 fashion trend among upper-income teen girls, overtaking Lululemon (LULU) for the first time since 2018. This underscores UGG’s strong brand presence and growing appeal.
The Tariff Challenge
Deckers faces significant exposure to global trade dynamics due to its reliance on overseas manufacturing, particularly in Asia. With more than two-thirds of its revenue generated in the U.S. and virtually no domestic production, the company is vulnerable to tariff-related disruptions. This vulnerability was on full display during Trump’s “Liberation Day,” when Deckers’ stock plunged over 14% in a single day.
Vietnam, now the second-largest apparel and footwear supplier to the U.S. after China, plays a crucial role in Deckers’ supply chain. The company has already shifted the majority of its production from China to Vietnam, where it operates 14 Tier 1 footwear factories (finished goods manufacturers), compared to just three in China.
Source: Deckers
Additionally, Deckers’ strong cash position offers a buffer against unexpected cost spikes. Currently, less than 5% of its footwear is sourced from China, and some of that is not intended for U.S. sales.
Adding further uncertainty, a recent ruling by the U.S. Court of International Trade declared President Trump’s tariffs under the International Emergency Economic Powers Act (IEEPA) unlawful, calling for their permanent suspension. However, economists at Goldman Sachs caution that the administration may still find alternative ways to impose tariffs, suggesting continued complexity ahead for import-reliant firms like Deckers.