Investing№ 52NYSE: DECK

Deckers Outdoor

Deckers sells UGG and HOKA at an 18.7% net margin with $1.2B of cash and no debt. The price, 11 times earnings, assumes the brands fade; my base value is above it, my bear value below.

Updated Fiscal year ends 31 March43 min readPedrum Shokouhi

Can be disrupted

Research, not investment advice. Figures as of .

Key numbers

  • Revenue$5.47B (reported)Fiscal 2026, to 31 March; up 9.8%. First half of fiscal 2027 up 4.4% [2][3]
  • Operating margin23.1% (calculated)Fiscal 2026. The fiscal 2027 outlook is about 21.5% once tariff refunds are taken out [2][4]
  • Owner cash$0.92B (estimate)Twelve months to September 2026, after stock pay, the refund and interest; 8.4% of market value [2][3]
  • HOKA growth7.3% (reported)First half of fiscal 2027, against 15.9% in fiscal 2026 [3][2]
  • Net cash$1.21B (reported)30 September 2026; no borrowings and an undrawn $500M revolver [3][5]
  • Buybacks$1.71B (calculated)Since April 2025: $1.08B at $102.43 in fiscal 2026 and $637M at $98.77 this year [6][3]

(reported)Reported in a filing (calculated)Calculated from reported figures (estimate)My estimate

The answer

  1. Deckers owns two footwear brands, UGG and HOKA, that together made $5.47B of sales and $1.26B of operating profit in the year to March 2026, and it has $1.21B of cash and no debt.23
  2. I value it at $116 a share, in a range of $69 to $152, on a 10% required return, with sales growth fading from 4% to 3% and the operating margin held at 21%. That is below the 23.6% of the last twelve months, which includes a one-off tariff refund, and about the 21.5% management’s outlook implies without the refunds (estimate).43
  3. At $81.99 the price is 29% below my base value and 19% above my bear value, so the market is pricing a real argument about whether these two brands fade, and I can’t tell you it is wrong; my margin-of-safety price is $69 (estimate).1

Six questions, one line each

Why
It turns two brands people pay full price for into an 18.7% net margin, and spends almost nothing on factories because contractors in Vietnam and Indonesia make every shoe (calculated).2 →
The moat
Brand heat and tight distribution, which show up as 57.7% gross margin and 6.2% more units sold in fiscal 2026; but heat is rented from fashion, and UGG sales fell 2.7% in fiscal 2023.27 →
The advantage
Against Nike, Deckers earns far more on each dollar ($0.19 of net income per dollar of sales against $0.07), but On grew 21.6% in constant currency last quarter while HOKA grew 6.8% (calculated).2894 →
Management
Stefano Caroti, CEO since August 2024, earned $11.9M in fiscal 2026, paid on revenue and operating income, and holds 187,984 shares; no insider bought on the open market in the last year.1011 →
Margin of safety
Below $69, 40% under my base value, which is also about my bear value; the price is 19% above that, so the cushion is thin, and the stock last closed below it in March 2023 (estimate).1 →
Risks
Both brands cool at once, tariffs squeeze a company that makes nearly everything in two countries, or wholesale partners stop paying promptly: receivables are up 25% in a year against wholesale sales up 5.5% (calculated).2312 →

The business

Deckers sells shoes under two brands that could hardly be less alike. UGG makes sheepskin boots and slippers for people who want to be warm and comfortable, and the brand has spent decades turning a surfers’ boot into a fashion staple. HOKA makes running shoes with thick, soft soles, designed originally for ultra-runners and now sold to what the company calls world champions, tastemakers and everyday athletes.2 In fiscal 2026, which ended on 31 March, UGG was $2.74B of sales and HOKA $2.59B. A third group, mostly the Teva sandal, was $146M.2

The company owns no factories. Independent contractors make every product, mostly in Vietnam and Indonesia, with less than 5% from China or any other single country.2 Deckers designs the shoe, buys the materials from suppliers it designates, pays the contractor and ships the result. The sheepskin for UGG comes mainly from Australia and is processed by two tanneries in China.2 That asset-light shape is why capital spending was only $85M in fiscal 2026, 1.5% of sales, and why $1.18B of operating cash flow came from a business with $3.7B of total assets.213

Net sales, fiscal 2017 to 2026

Fiscal years ending 31 March, US$ billions.

  • Net sales, fiscal 2026 $5.47B
Net sales, fiscal 2017 to 2026Net sales rose from $1.79B in fiscal 2017 to $5.47B in fiscal 2026, about 13.2% a year. Every year after 2017 was higher than the one before.$0$2B$4B$6B’17’19’21’23’25Net sales, 2017: $1.79BNet sales, 2018: $1.90BNet sales, 2019: $2.02BNet sales, 2020: $2.13BNet sales, 2021: $2.55BNet sales, 2022: $3.15BNet sales, 2023: $3.63BNet sales, 2024: $4.29BNet sales, 2025: $4.99BNet sales, 2026: $5.47BNet sales, fiscal 2017 to 2026Net sales rose from $1.79B in fiscal 2017 to $5.47B in fiscal 2026, about 13.2% a year. Every year after 2017 was higher than the one before.$0$2B$4B$6B’17’18’19’20’21’22’23’24’25’26Net sales, 2017: $1.79BNet sales, 2018: $1.90BNet sales, 2019: $2.02BNet sales, 2020: $2.13BNet sales, 2021: $2.55BNet sales, 2022: $3.15BNet sales, 2023: $3.63BNet sales, 2024: $4.29BNet sales, 2025: $4.99BNet sales, 2026: $5.47BNet sales, fiscal 2017 to 2026Net sales rose from $1.79B in fiscal 2017 to $5.47B in fiscal 2026, about 13.2% a year. Every year after 2017 was higher than the one before.$0$2B$4B$6B’17’18’19’20’21’22’23’24’25’26Net sales, 2017: $1.79BNet sales, 2018: $1.90BNet sales, 2019: $2.02BNet sales, 2020: $2.13BNet sales, 2021: $2.55BNet sales, 2022: $3.15BNet sales, 2023: $3.63BNet sales, 2024: $4.29BNet sales, 2025: $4.99BNet sales, 2026: $5.47B
Sales grew 16.5% a year over the last five years, and 9.8% in fiscal 2026. The fiscal 2027 outlook is for about 4.4%. Source 10-K FY2026; 10-K FY2022; 10-K FY2019; XBRL company facts [2][14][15][13]. Figures as reported.
Show the numbers
Net sales, fiscal 2017 to 2026
2017201820192020202120222023202420252026
Net sales (reported)$1.79B$1.90B$2.02B$2.13B$2.55B$3.15B$3.63B$4.29B$4.99B$5.47B
Operating income (reported)−$2M$223M$327M$338M$504M$565M$653M$928M$1,179M$1,263M
Net income (reported)$6M$114M$264M$276M$383M$452M$517M$760M$966M$1,024M

How it reaches the customer

Wholesale was 58.6% of fiscal 2026 sales, $3.21B, and direct-to-consumer (DTC), meaning its own websites and stores, was 41.4%, $2.26B.6 Wholesale partners are specialty running stores, outdoor and sporting-goods retailers and department stores for HOKA, and fashion retailers and department stores for UGG.2 DTC runs websites in 54 countries and 203 stores at the end of March 2026, 141 UGG and 62 HOKA. By 30 September there were 223, 148 UGG and 75 HOKA, so HOKA alone added 13 stores in six months.23

The split matters because the two channels earn different money. Deckers keeps the retail margin on a DTC sale and gives it to the retailer on a wholesale one. The 10-K says it wants DTC to become a larger share over time, and also that its wholesale channel may be a larger share in some years as it widens HOKA distribution.2 In the quarter to September 2026, wholesale grew 5.5% and DTC fell 1.8%, with comparable DTC sales down 6.4%.4 The company blames softer traffic and conversion in the US and shoppers waiting for promotions at multi-brand retailers.3

Where it sells

This is the part of the story that changed most in two years. In fiscal 2026 the US was flat, up 0.2% to $3.19B, and the rest of the world grew 26.8% to $2.28B.2 International was 41.7% of sales, against 31% in fiscal 2022 (calculated).214 In the quarter to September 2026 the US fell 0.4% and international grew 9.0%.4 Most of the company’s growth is now abroad, and it is slowing there too.

HOKA and UGG net sales

US$ billions. Brand totals include wholesale and direct-to-consumer.

  • HOKA, fiscal 2026 $2.59B
  • UGG, fiscal 2026 $2.74B
HOKA and UGG net salesHOKA net sales rose from $0.15B in fiscal 2018 to $2.59B in fiscal 2026. UGG rose from $1.51B to $2.74B. HOKA was 47% of sales in 2026, against 8% in 2018.$0$1B$2B$3B’18’20’22’24’26HOKA, 2018: $0.15BHOKA, 2019: $0.22BHOKA, 2020: $0.35BHOKA, 2021: $0.57BHOKA, 2022: $0.89BHOKA, 2023: $1.41BHOKA, 2024: $1.81BHOKA, 2025: $2.23BHOKA, 2026: $2.59BUGG, 2018: $1.51BUGG, 2019: $1.53BUGG, 2020: $1.52BUGG, 2021: $1.72BUGG, 2022: $1.98BUGG, 2023: $1.93BUGG, 2024: $2.24BUGG, 2025: $2.53BUGG, 2026: $2.74BHOKA and UGG net salesHOKA net sales rose from $0.15B in fiscal 2018 to $2.59B in fiscal 2026. UGG rose from $1.51B to $2.74B. HOKA was 47% of sales in 2026, against 8% in 2018.$0$1B$2B$3B’18’19’20’21’22’23’24’25’26HOKA, 2018: $0.15BHOKA, 2019: $0.22BHOKA, 2020: $0.35BHOKA, 2021: $0.57BHOKA, 2022: $0.89BHOKA, 2023: $1.41BHOKA, 2024: $1.81BHOKA, 2025: $2.23BHOKA, 2026: $2.59BUGG, 2018: $1.51BUGG, 2019: $1.53BUGG, 2020: $1.52BUGG, 2021: $1.72BUGG, 2022: $1.98BUGG, 2023: $1.93BUGG, 2024: $2.24BUGG, 2025: $2.53BUGG, 2026: $2.74BHOKA and UGG net salesHOKA net sales rose from $0.15B in fiscal 2018 to $2.59B in fiscal 2026. UGG rose from $1.51B to $2.74B. HOKA was 47% of sales in 2026, against 8% in 2018.$0$1B$2B$3B’18’19’20’21’22’23’24’25’26HOKA, 2018: $0.15BHOKA, 2019: $0.22BHOKA, 2020: $0.35BHOKA, 2021: $0.57BHOKA, 2022: $0.89BHOKA, 2023: $1.41BHOKA, 2024: $1.81BHOKA, 2025: $2.23BHOKA, 2026: $2.59BUGG, 2018: $1.51BUGG, 2019: $1.53BUGG, 2020: $1.52BUGG, 2021: $1.72BUGG, 2022: $1.98BUGG, 2023: $1.93BUGG, 2024: $2.24BUGG, 2025: $2.53BUGG, 2026: $2.74B
HOKA grew 15.9% in fiscal 2026 and 35% a year over five years. In the first half of fiscal 2027 it grew 7.3%, and UGG 3.9%. Source 10-K FY2026, FY2023, FY2022, FY2021 and FY2019; 10-Q Q2 FY2027 [2][7][14][16][15][3]. Figures as reported; brand totals for 2017 UGG not shown.
Show the numbers
HOKA and UGG net sales
201820192020202120222023202420252026
HOKA (reported)$0.15B$0.22B$0.35B$0.57B$0.89B$1.41B$1.81B$2.23B$2.59B
UGG (reported)$1.51B$1.53B$1.52B$1.72B$1.98B$1.93B$2.24B$2.53B$2.74B

HOKA’s curve is the one that built the stock. It was $105M of sales in fiscal 2017 and $2.59B nine years later.152 It is now 47% of the company, against 8% in fiscal 2018 (calculated). UGG, meanwhile, was flat for three years from fiscal 2018 to fiscal 2020 at about $1.5B, grew to $1.98B in 2022, fell 2.7% in 2023, and then grew again.1516147 It is a large brand with a long record, and its record includes pauses.

Where the profit comes from

Profit by brand

Segment income from operations before shared costs, and the margin on each brand’s sales.

Profit by brand
FY2024FY2025FY2026H1 FY2027H1 FY2026
HOKA operating income$719M2$849M2$911M2$492M3$475M3
HOKA margin39.8%238.0%235.2%235.6%336.9%3
UGG operating income$805M2$1,003M2$1,045M2$380M3$326M3
UGG margin35.9%239.6%238.2%235.7% (includes refunds)331.8%3
Shared costs not charged to a brand$620M (calculated)2$707M (calculated)2$710M (calculated)2$332M3$320M3
Operating income, total$928M2$1,179M2$1,263M2$545M3$492M3
Shared costs are the gap between segment income and total operating income, mostly warehouses, IT and 3PL fees. The H1 FY2027 UGG margin includes tariff refunds. Source 10-K FY2026, Note 13; 10-Q Q2 FY2027, Note 12 [2][3]. Calculated where marked.

Read the HOKA margin line. In fiscal 2024 HOKA kept 39.8 cents of profit from each dollar of sales before shared costs. In fiscal 2026 it kept 35.2 cents, 4.6 points less, because gross margin slipped 0.8 points and costs rose: advertising from 9.7% to 10.2% of its sales, payroll from 4.2% to 5.0%, rent from 0.9% to 1.8% as it opened stores, and other selling costs from 2.9% to 4.3% (calculated).2 HOKA grew 43% in two years and its profit grew 27% (calculated).2 That is still excellent. It is also what growth bought, and the next dollar of HOKA growth is not as profitable as the last.

UGG is the profit engine. It earns a margin above 38% and it is 50% of sales, 53% of brand profit (calculated).2 Its edge is not the boot alone. UGG has pushed year-round styles, sneakers and men’s lines to spread a business that used to live in the winter. It still does: the December quarter was $1.96B of the year’s $5.47B of sales and $614M of its $1263M of operating income, 49% of the year’s profit in three months (calculated).172

Tariffs, and the refund

The US charged tariffs on Deckers’ imports under the International Emergency Economic Powers Act. Deckers paid about $119M of them. In February 2026 the Supreme Court struck those tariffs down, a trade court ordered refunds in March, and customs began a phased refund process in April.3 By the end of September Deckers had filed claims for about $106M and was assessing $13M more.3 Through 8 October it had received $87.9M of net refunds, plus $4.7M of interest.3 Net, because Deckers shared some of the cost of the tariffs with its manufacturers, and shares the refund back with them.3

Accounting matters here. Deckers books a refund when it is received, not before, and had booked no receivable for refunds not yet received at 30 September.3 So $46.0M landed in the quarter to September, as a cut to cost of sales, which lifted both the gross margin and the operating margin by about 3.1 points in that quarter.4 The other $41.9M arrives in the December quarter. For the full year, management says the refunds add about 1.5 points to the margin and $0.52 to earnings per share.4 I come back to this in Section VI, because it is the center of the dispute about this stock.

The moat

A durable advantage is something a rival with money and talent can’t copy in a reasonable time. For a shoe company the candidates are the brand, the way the product is rationed, the technology in it and the cost to make it. I look at each, and at the evidence that it is getting wider or narrower.

The advantage, source by source

What protects the business, the evidence for each, and how a rival would attack it.

The advantage, source by source
SourceEvidenceHow durableHow a rival attacks it
Brand heat and full-price sellingGross margin 57.7% in fiscal 2026 against 46.7% in fiscal 2017 (calculated)13; units up 6.2% while sales rose 9.8%, so price and mix added about 3.4 points (calculated)2Medium. It is real, but it lasts only while the product is wantedDiscounting by rivals, which already pushed shoppers to wait for sales in the US3
Rationed distributionDeckers manages which retailers get which styles and keeps promotions low; it says promotions were “exceptionally low” in fiscal 2025 and only slightly higher in 20262Medium. Discipline has to be repeated every seasonA weaker partner takes the stock and discounts it
HOKA product and specialty runningThe 10-K calls HOKA a leading brand in run and outdoor specialty wholesale; 75 own stores23Medium. Running shoes are a technical purchase, but runners change shoes oftenOn, Nike and others pitch cushioned running shoes; On’s net sales grew 21.6% in constant currency in its June quarter9
UGG icon statusDecades of brand; segment margin above 38%2Medium to strong. Hard to copy the name; the style has paused beforeCheaper lookalikes, and a change in what people want to wear
Intellectual property201 design and utility patents plus 29 pending; trademarks for HOKA, UGG and Teva in the US and key markets2Narrow. It protects the name and some designs, not the idea of a soft shoeArgue the UGG name is generic: that worked in Australia, and courts in the US, China, Türkiye and the Netherlands rejected it2
Asset-light contract manufacturingCapital spending $85M in fiscal 2026, 1.5% of sales; all products made by independent contractors2Cuts both ways. Low cost and flexible, but anyone can hire the same factoriesSame factories, same tariffs, lower prices
Source 10-K FY2026; Q2 FY2027 10-Q; On Q2 2026 release [2][3][9][13]. Durability is my judgement.

The honest summary is that Deckers has one strong, scarce thing, which is the attention of consumers for two brands, and everything else is a way of keeping it. That attention can’t be locked up. A patent can’t stop a shopper from preferring somebody else’s shoe next year. What Deckers has done well is to manage supply so that its shoes are rarely on sale, which keeps the brand feeling scarce and keeps the margin up. That is a habit of the management, not a legal right.

Evidence it is widening

  • Gross margin rose from 46.7% in fiscal 2017 to 57.7% in 2026, through a pandemic, a supply-chain crisis and a tariff shock (calculated).13
  • HOKA grew from $105M to $2.59B in nine years.152
  • UGG became a year-round brand in part. Its sales rose from $1.93B in fiscal 2023 to $2.74B in 2026, 12% a year (calculated).72
  • Its own websites and stores are 41% of sales, and it launched a US HOKA loyalty programme in fiscal 2026.26

Evidence it is narrowing

  • HOKA’s sales growth fell from 15.9% in fiscal 2026 to 7.3% in the first half of fiscal 2027, and management now guides to high single digits for the year, down from low double digits in July.23184
  • HOKA’s margin before shared costs fell from 39.8% to 35.2% in two years, as it spent more to keep growing.2
  • Comparable DTC sales fell 6.4% in the September quarter, after rising 6.8% in the June quarter, and the company says the athletic category became more promotional.1843
  • On, a direct rival in running, reported a 65.4% gross margin and 21.6% constant-currency growth in its June quarter. A competitor with a higher margin and faster growth is the clearest sign that HOKA’s position isn’t guaranteed.9
  • UGG’s sales were flat for three years before and fell in fiscal 2023. A boot is not a franchise like a credit card.15167

On balance the advantage is real and medium-width. It has been wider than it is now, if I judge by how fast HOKA grows and what it costs to keep growing it. It is wider than a typical fashion brand, because the company has run two brands at an operating margin of 21.6% or better for three years.192 The market is arguing about whether that is a position or a moment.

The competitive advantage

The best test of an advantage is a comparison with the people trying to take it. Deckers’ two main rivals in athletic footwear are far larger, Nike, or faster-growing and more profitable on gross margin, On. I can’t measure market share from filings, so I compare what they report. The periods differ, so read the table as a sketch.

Deckers against Nike and On

Latest reported period for each company, as filed.

Deckers against Nike and On
Deckers, fiscal 2026Nike, fiscal 2026On, June quarter 2026
Period ends31 March 2026231 May 2026830 June 20269
Net sales$5.47B2$46.4B8CHF 850.3M in the quarter9
Sales growth9.8%; first half of fiscal 2027 4.4%230.2% (calculated)813.5%; 21.6% in constant currency9
Gross margin57.7%242.9% (calculated)865.4%9
Profit marginOperating 23.1%; net 18.7% (calculated)2Net 6.7% (calculated)8Net 12.3%; adjusted EBITDA 19.8%9
Brand mixUGG 50%, HOKA 47% of sales (calculated)2Not shown hereRunning, apparel; DTC 45.7% of quarter sales9
Nike’s and On’s profit lines are not defined as Deckers’ operating margin, so I compare net margin where I can. On reports in Swiss francs. Growth for Nike is fiscal 2026 revenue against fiscal 2025. Source 10-K FY2026; Nike 10-K FY2026; On Q2 2026 release; Q2 FY2027 10-Q [2][8][9][3]. Calculated where marked.

Three things stand out. First, Deckers earns far more of each sales dollar than Nike, 18.7 cents of net income to 6.7. Nike is about eight times as large, but the gap shows how profitable a tightly run premium brand can be. Second, the growth sits with On, not with Deckers: On grew 21.6% in constant currency, while HOKA grew 6.8% in the same period.94 Third, On earns a gross margin of 65.4%, higher than HOKA’s 59.9% in the quarter, which already includes a boost from the tariff refunds.93 On’s margin is a sign that it can charge more for similar shoes, and it carries more DTC, which is where margins are highest.

I don’t read this as a verdict on HOKA. Running is a large category, and several brands can grow in it for years. What it does say is that HOKA no longer has the field to itself. HOKA grew 15.9% in fiscal 2026 and 7.3% in the first half of fiscal 2027. Its growth is now slower than a rival’s, its margin is falling, and the company is spending more to keep the pace.239

Where Deckers wins

  • Pricing. It sells at full price more than most, which is how it earns 58 cents of gross profit on each dollar of sales. Units rose 6.2% in fiscal 2026 and sales rose 9.8%.2
  • Two brands that rarely overlap. UGG is warm, casual and seasonal; HOKA is technical and year-round. A weak winter hurts UGG far more than HOKA.2
  • Cash and cost. A company with $1.2B of cash, no debt and capital spending of 1.5% of sales can ride out a bad season that would break a weaker rival.23

Where it loses

  • Scale in running. Nike has $46.4B of sales against Deckers’ $5.5B, and On is growing faster from a smaller base.892
  • Direct reach. DTC is 41% of Deckers’ sales and was 45.7% of On’s quarter. Comparable DTC sales fell 6.4% at Deckers in the September quarter.49
  • Dependence on wholesale shelves. One customer was 18.5% of receivables at March 2026, and retailers choose what to put in front of the shopper.2

Management

I start with how they are paid, because pay shows what the board wants done. Stefano Caroti has been chief executive since August 2024 and a director since September 2024. Steve Fasching has been chief financial officer since July 2018, Anne Spangenberg has led UGG since July 2022, Robin Spring-Green has led HOKA since February 2024, and Thomas Garcia has been chief administrative and legal officer since February 2021.10 The chair, Cindy Davis, is independent, and Caroti is the only director who is not.10

What they are paid to do

The annual cash bonus is based on consolidated operating income and revenue, plus brand-level operating income and revenue for the two brand presidents. The long-term plan pays out in stock on consolidated pre-tax income and revenue over three years, with a modifier for total shareholder return against peers. About 60% of the equity awarded in fiscal 2026 vests on performance and the rest over time.10 Pay is set against the median of a peer group.10

That design pays for growth in dollars of revenue and profit. It does not pay for return on capital, for cash, or for per-share results: pre-tax income ignores buybacks, which is a good feature, because it means the repurchase programme doesn’t inflate pay. But it also means a dollar of revenue earned at a lower margin still counts. In fiscal 2026 revenue rose 9.8% and operating income 7.1%, operating margin fell half a point, and the consolidated part of the bonus paid 173% of target. The three-year plan that ended in March 2026 vested at 200% of target.210 I can’t tell how hard the targets were, because I did not test them against the plan’s disclosed ranges.

Pay and stock held, named officers

Fiscal 2026 pay as reported, and shares owned on 30 June 2026 valued at the Q4 2026 close.

Pay and stock held, named officers
Total pay, fiscal 2026Shares ownedValue at the close
Stefano Caroti, CEO$11.90M10187,98410$15.4M (calculated)
Steven Fasching, CFO$4.76M1092,84710$7.6M (calculated)
Anne Spangenberg, UGG$4.22M1030,59310$2.5M (calculated)
Robin Spring-Green, HOKA$3.17M108,47410$0.7M (calculated)
Thomas Garcia, legal$3.15M1040,00110$3.3M (calculated)
All 16 directors and officersn/a549,704, or 0.4%10$45M (calculated)
Shares owned are beneficial holdings as the proxy counts them. The CEO pay ratio to the median employee, whose pay was $51,638, was about 231 to 1. Source Proxy statement 2026; Nasdaq close [10][1]. Calculated where marked.

How much of their own money is in

The whole group owns about $45M of stock at today’s price, 0.4% of the company.10 Caroti’s holding is worth about $15M, a little more than a year of his pay. That is the usual pattern for a US company of this size, and it is a thin stake. The company bans hedging and pledging.10 I read the 64 Forms 4 filed from October 2025 to October 2026. Most were stock awards and share withholding for taxes. There were five small sales, of 347 to 4,682 shares, and no purchase on the open market.11 A cheap stock does not seem to tempt the people who run it, or they are barred from trading around results; I can’t tell which.

What they did with capital over a full cycle

The record has three parts. The first is buybacks. Deckers spent $3.96B on repurchases from fiscal 2017 to the first half of fiscal 2027, and the diluted share count fell from 194M to about 134M, down 31% (calculated).133 By my arithmetic from yearly average prices the cumulative buyback retired about 67M shares at an average of about $59, and those shares would cost $5.5B at the Q4 2026 close (estimate).113 Over the whole decade, buying back stock worked.

The second part is the recent pace, which is less flattering. In fiscal 2026 Deckers bought $1.08B of stock at an average of $102.43, and in the first half of fiscal 2027 $637M at $98.77.63 That is about $1.71B for 16.9M shares, worth $1.39B at today’s price, a paper loss of 19% (calculated). Buying more as the price fell was the right instinct if the stock is worth more than $100, and my base value says it is. If it is worth less, as the market suggests, it cost money. Authorization was raised by $3.5B in May and $4.4B remained at 30 September, and the October outlook assumes $1.0B for the year.34

The third is the brand portfolio. Deckers took a $114M impairment on Sanuk in fiscal 2017, sold the brand in August 2024, and wound down Koolaburra and AHNU in fiscal 2025 and 2026.152 The Other brands, mainly Teva, are 2.7% of sales.2 Management has been willing to close brands that did not work. That is a good habit, though it costs money, and it leaves a company that rests on two brands and a small third.

Governance

Shareholders are not rubber stamps. At the annual meeting on 14 September 2026, Lauri Shanahan, a director for more than ten years, received 15.4M votes against and 94.4M for, about 86% support, the weakest of any nominee, and on 22 October the company said she will retire on 1 December.2021 Say on pay got 98.6M for and 11.2M against, about 90%, and the audit firm KPMG drew 11.1M against.20 These aren’t large protests. The 8-K does not say why holders voted against her. The board is replacing her with Rati Sahi Levesque.21 The auditor’s opinion on internal controls was clean for fiscal 2026.2

My overall read is a competent, stable team that has delivered two years of record results under a new chief executive and has been plain about the tariff refund: the October release states its effect on margin and on EPS. The things I would watch are the pay design that rewards revenue growth at falling margins, the thin stock ownership, and a buyback that has been bought largely above where the stock is now.

Financials

Deckers’ accounts are plain. There is one class of stock, no debt, no large acquisitions, and operating leases that sit on the balance sheet at $540M but are paid through operating costs.3 The auditor, KPMG, gave a clean opinion on the accounts and on internal control for fiscal 2026.2 Fiscal years end on 31 March, so fiscal 2026 ended in March 2026 and the latest 10-Q covers the first half of fiscal 2027. The six-for-one stock split of September 2024 is applied to every per-share figure.13

Gross and operating margin

Percent of net sales. Fiscal 2017 operating income includes the Sanuk impairment.

  • Gross margin, 2026 57.7%
  • Operating margin, 2026 23.1%
Gross and operating marginGross margin rose from 46.7% in fiscal 2017 to 57.7% in 2026. Operating margin went from -0.1% to 23.1%, with a peak of 23.6% in 2025.0%20%40%60%’17’19’21’23’25Gross margin, 2017: 46.7%Gross margin, 2018: 48.9%Gross margin, 2019: 51.5%Gross margin, 2020: 51.8%Gross margin, 2021: 54.0%Gross margin, 2022: 51.0%Gross margin, 2023: 50.3%Gross margin, 2024: 55.6%Gross margin, 2025: 57.9%Gross margin, 2026: 57.7%Operating margin, 2017: -0.1%Operating margin, 2018: 11.7%Operating margin, 2019: 16.2%Operating margin, 2020: 15.9%Operating margin, 2021: 19.8%Operating margin, 2022: 17.9%Operating margin, 2023: 18.0%Operating margin, 2024: 21.6%Operating margin, 2025: 23.6%Operating margin, 2026: 23.1%Gross and operating marginGross margin rose from 46.7% in fiscal 2017 to 57.7% in 2026. Operating margin went from -0.1% to 23.1%, with a peak of 23.6% in 2025.0%20%40%60%’17’18’19’20’21’22’23’24’25’26Gross margin, 2017: 46.7%Gross margin, 2018: 48.9%Gross margin, 2019: 51.5%Gross margin, 2020: 51.8%Gross margin, 2021: 54.0%Gross margin, 2022: 51.0%Gross margin, 2023: 50.3%Gross margin, 2024: 55.6%Gross margin, 2025: 57.9%Gross margin, 2026: 57.7%Operating margin, 2017: -0.1%Operating margin, 2018: 11.7%Operating margin, 2019: 16.2%Operating margin, 2020: 15.9%Operating margin, 2021: 19.8%Operating margin, 2022: 17.9%Operating margin, 2023: 18.0%Operating margin, 2024: 21.6%Operating margin, 2025: 23.6%Operating margin, 2026: 23.1%Gross and operating marginGross margin rose from 46.7% in fiscal 2017 to 57.7% in 2026. Operating margin went from -0.1% to 23.1%, with a peak of 23.6% in 2025.0%20%40%60%’17’18’19’20’21’22’23’24’25’26Gross margin, 2017: 46.7%Gross margin, 2018: 48.9%Gross margin, 2019: 51.5%Gross margin, 2020: 51.8%Gross margin, 2021: 54.0%Gross margin, 2022: 51.0%Gross margin, 2023: 50.3%Gross margin, 2024: 55.6%Gross margin, 2025: 57.9%Gross margin, 2026: 57.7%Operating margin, 2017: -0.1%Operating margin, 2018: 11.7%Operating margin, 2019: 16.2%Operating margin, 2020: 15.9%Operating margin, 2021: 19.8%Operating margin, 2022: 17.9%Operating margin, 2023: 18.0%Operating margin, 2024: 21.6%Operating margin, 2025: 23.6%Operating margin, 2026: 23.1%
The fiscal 2027 outlook is 58.5% gross and 23% operating, but about 1.5 points of both are one-off tariff refunds. Without them, 57.0% and 21.5%. Source 10-K FY2026; 10-K FY2022; 10-K FY2019; XBRL company facts [2][14][15][13]. Calculated from reported figures.
Show the numbers
Gross and operating margin
2017201820192020202120222023202420252026
Gross margin (calculated)46.7%48.9%51.5%51.8%54.0%51.0%50.3%55.6%57.9%57.7%
Operating margin (calculated)-0.1%11.7%16.2%15.9%19.8%17.9%18.0%21.6%23.6%23.1%

Ten years ago the company made 46.7 cents of gross profit on each dollar of sales and lost its profit on write-downs. It now makes 57.7 and kept 23 cents of operating profit in fiscal 2026. The path wasn’t smooth: operating margin was 17.9% and 18.0% in fiscal 2022 and 2023, then 21.6% in 2024 and 23.6% in 2025.13 The margin in fiscal 2026, 23.1%, was already tariff-burdened. Management said gross margin fell 20 basis points in the year mainly because of tariffs on domestic goods and a slightly worse channel mix.2

Ten years in one table

US$ millions except per share. Fiscal years end 31 March; per-share figures adjusted for the 6-for-1 split.

Ten years in one table
2017201820192020202120222023202420252026
Net sales1,7901,9032,0202,1332,5463,1503,6274,2884,9865,472
Growthn/a6.3%6.2%5.6%19.4%23.8%15.1%18.2%16.3%9.8%
Gross margin46.7%48.9%51.5%51.8%54.0%51.0%50.3%55.6%57.9%57.7%
Operating income−22233273385045656539281,1791,263
Operating margin−0.1%11.7%16.2%15.9%19.8%17.9%18.0%21.6%23.6%23.1%
Net income61142642763834525177609661,024
Diluted EPS$0.03$0.60$1.47$1.60$2.25$2.71$3.23$4.86$6.33$7.02
Diluted shares, millions194192179172170167160156153146
Operating cash flow1993273602865961725371,0331,0451,182
Capital spending44352932325181898685
Stock-based pay6141514232727373845
Buybacks13150161190993572974155671,075
Cash at year end2924305906491,0898449821,5021,8891,907
Fiscal 2017 included an impairment of about $114M on Sanuk goodwill, so its operating income and EPS are not normal. Source 10-K filings FY2017 to FY2026; XBRL company facts [2][15][13]. As reported, margins calculated.

Net income and owner cash

US$ billions. Owner cash = operating cash flow less capital spending less stock-based compensation, as reported, with interest income left in.

  • Net income, 2026 $1.02B
  • Owner cash, 2026 $1.05B
Net income and owner cashOwner cash, meaning operating cash flow less capital spending and stock pay, rose from $0.15B in fiscal 2017 to $1.05B in 2026. Net income rose from $0.01B to $1.02B.$0$0.5B$1B$1.5B’17’19’21’23’25Net income, 2017: $0.01BNet income, 2018: $0.11BNet income, 2019: $0.26BNet income, 2020: $0.28BNet income, 2021: $0.38BNet income, 2022: $0.45BNet income, 2023: $0.52BNet income, 2024: $0.76BNet income, 2025: $0.97BNet income, 2026: $1.02BOwner cash, 2017: $0.15BOwner cash, 2018: $0.28BOwner cash, 2019: $0.32BOwner cash, 2020: $0.24BOwner cash, 2021: $0.54BOwner cash, 2022: $0.09BOwner cash, 2023: $0.43BOwner cash, 2024: $0.91BOwner cash, 2025: $0.92BOwner cash, 2026: $1.05BNet income and owner cashOwner cash, meaning operating cash flow less capital spending and stock pay, rose from $0.15B in fiscal 2017 to $1.05B in 2026. Net income rose from $0.01B to $1.02B.$0$0.5B$1B$1.5B’17’18’19’20’21’22’23’24’25’26Net income, 2017: $0.01BNet income, 2018: $0.11BNet income, 2019: $0.26BNet income, 2020: $0.28BNet income, 2021: $0.38BNet income, 2022: $0.45BNet income, 2023: $0.52BNet income, 2024: $0.76BNet income, 2025: $0.97BNet income, 2026: $1.02BOwner cash, 2017: $0.15BOwner cash, 2018: $0.28BOwner cash, 2019: $0.32BOwner cash, 2020: $0.24BOwner cash, 2021: $0.54BOwner cash, 2022: $0.09BOwner cash, 2023: $0.43BOwner cash, 2024: $0.91BOwner cash, 2025: $0.92BOwner cash, 2026: $1.05BNet income and owner cashOwner cash, meaning operating cash flow less capital spending and stock pay, rose from $0.15B in fiscal 2017 to $1.05B in 2026. Net income rose from $0.01B to $1.02B.$0$0.5B$1B$1.5B’17’18’19’20’21’22’23’24’25’26Net income, 2017: $0.01BNet income, 2018: $0.11BNet income, 2019: $0.26BNet income, 2020: $0.28BNet income, 2021: $0.38BNet income, 2022: $0.45BNet income, 2023: $0.52BNet income, 2024: $0.76BNet income, 2025: $0.97BNet income, 2026: $1.02BOwner cash, 2017: $0.15BOwner cash, 2018: $0.28BOwner cash, 2019: $0.32BOwner cash, 2020: $0.24BOwner cash, 2021: $0.54BOwner cash, 2022: $0.09BOwner cash, 2023: $0.43BOwner cash, 2024: $0.91BOwner cash, 2025: $0.92BOwner cash, 2026: $1.05B
Owner cash has tracked net income over the decade, with big swings in the years inventory was built (2022) or released (2021). Over ten years the two sum to similar totals. Source 10-K FY2026; 10-K FY2022; 10-K FY2019; XBRL company facts [2][14][15][13]. Calculated from reported figures.
Show the numbers
Net income and owner cash
2017201820192020202120222023202420252026
Operating cash flow (reported)$199M$327M$360M$286M$596M$172M$537M$1,033M$1,045M$1,182M
Capital spending (reported)$44M$35M$29M$32M$32M$51M$81M$89M$86M$85M
Stock-based pay (reported)$6M$14M$15M$14M$23M$27M$27M$37M$38M$45M
Owner cash (calculated)$0.15B$0.28B$0.32B$0.24B$0.54B$0.09B$0.43B$0.91B$0.92B$1.05B
Net income (reported)$0.01B$0.11B$0.26B$0.28B$0.38B$0.45B$0.52B$0.76B$0.97B$1.02B

Cash has followed profit. Net income rose from $6M in fiscal 2017 to $1.02B in fiscal 2026. Owner cash, meaning operating cash flow less capital spending and the stock pay that I treat as a real cost, went from $149M to $1.05B.13 In between come years when inventory built up and cash lagged, fiscal 2022 at $95M the worst, and years when it came back.13 Over the decade the two lines add to similar totals, which is what I want to see in a business with inventory risk.

The year in quarters

The fiscal 2027 story is easier to see quarter by quarter. Compare each with the same quarter a year before, since the business is seasonal.

Operating margin by quarter

Four quarters to 30 September 2026, with and without the tariff refund.

Operating margin by quarter, against the same quarter a year earlier
QuarterSales growthOperating marginSame quarter last yearChange, basis pointsMargin without refundChange without refund, basis points
Q3 FY2026 (Dec 2025)7.2%31.4%31.1%+33n/an/a
Q4 FY2026 (Mar 2026)9.5%14.0%17.0%-301n/an/a
Q1 FY2027 (Jun 2026)5.7%15.2%17.1%-191n/an/a
Q2 FY2027 (Sep 2026)3.5%26.3%22.8%+34923.2%+38
The refund of $46.0M is taken out of the September quarter only. No refund was recognized before then. Margins in the three earlier quarters are as reported. Source Earnings releases for Q3 and Q4 FY2026, Q1 and Q2 FY2027 [17][6][18][4]. Calculated.

The pattern is not what the headline says. The margin fell 300 basis points in the March quarter and 191 in the June quarter. In the September quarter it rose 349 points as reported, but without the refund the rise was 38. Before the refund, then, the business was giving back margin, and the quarter of September was merely flat to slightly better.176184 I count a basis point as one hundredth of a percentage point.

Operating margin, with and without the tariff refunds

Percent of net sales. FY27 is management’s outlook of 22 October 2026, not a result.

  • Fiscal 2027 outlook without refunds 21.5%
Operating margin, with and without the tariff refundsOperating margin was 23.6% in fiscal 2025 and 23.1% in 2026. The fiscal 2027 outlook is about 23%, of which about 1.5 points is tariff refunds, leaving 21.5%.0%10%20%30%FY25FY26FY27 guideEx refundsOperating margin, FY25: 23.6%Operating margin, FY26: 23.1%Operating margin, FY27 outlook: 23.0%Operating margin, Outlook without refunds: 21.5%Operating margin, with and without the tariff refundsOperating margin was 23.6% in fiscal 2025 and 23.1% in 2026. The fiscal 2027 outlook is about 23%, of which about 1.5 points is tariff refunds, leaving 21.5%.0%10%20%30%FY25FY26FY27 guideEx refundsOperating margin, FY25: 23.6%Operating margin, FY26: 23.1%Operating margin, FY27 outlook: 23.0%Operating margin, Outlook without refunds: 21.5%Operating margin, with and without the tariff refundsOperating margin was 23.6% in fiscal 2025 and 23.1% in 2026. The fiscal 2027 outlook is about 23%, of which about 1.5 points is tariff refunds, leaving 21.5%.0%10%20%30%FY25FY26FY27 guideEx refundsOperating margin, FY25: 23.6%Operating margin, FY26: 23.1%Operating margin, FY27 outlook: 23.0%Operating margin, Outlook without refunds: 21.5%
The refunds total $87.9M against sales of about $5.71B, or 1.54% of sales. Source Q2 FY2027 release and 10-Q; 10-K FY2026 [4][3][2]. Calculated from the company’s outlook.
Show the numbers
Operating margin, with and without the tariff refunds
FY25FY26FY27 outlookOutlook without refunds
Operating margin (calculated)23.6%23.1%23.0%21.5%

What management said, and how it moved

Management gave a first outlook for fiscal 2027 in May, raised the EPS range in July, and raised it again in October. The October raise is where the care is needed.

The fiscal 2027 outlook, three times

As stated by management, and the October outlook without the tariff refunds that management itself quantified.

The fiscal 2027 outlook, three times
21 May 202623 July 202622 October 2026, as stated22 October 2026, without refunds
Net sales$5.86B to $5.91B6$5.86B to $5.91B18$5.700B to $5.725B4$5.700B to $5.725B4
Growth on fiscal 20267.1% to 8.0% (calculated)7.1% to 8.0% (calculated)4.2% to 4.6% (calculated)4.2% to 4.6% (calculated)
HOKA growthLow double digits6Low double digits18High single digits4High single digits4
UGG growthMid single digits6Mid single digits18Low single digits4Low single digits4
Gross marginAbout 56.5%6Slightly better than 56.5%18About 58.5%4About 57.0% (calculated)
SG&A, share of salesAbout 35%6About 35%18About 35.5%4About 35.5%4
Operating marginAbout 21.5%6Slightly better than 21.5%18About 23%4About 21.5% (calculated)
Diluted EPS$7.30 to $7.456$7.35 to $7.5018$7.80 to $7.954$7.28 to $7.43 (calculated)
Buybacks assumedAbout 80% of free cash flow6About 80% of free cash flow18$1.0B4$1.0B4
The last column subtracts the $0.52 of EPS and 150 basis points that the company says the refunds add. Sales and brand growth are the company’s own numbers. Source Releases of 21 May, 23 July and 22 October 2026 [6][18][4]. Last column calculated.

Read the last two columns together. In July management expected $5.86B to $5.91B of sales and EPS of $7.35 to $7.50. In October it expected $5.70B to $5.725B and EPS of $7.80 to $7.95, which looks like a raise of 45 cents.184 But $0.52 of that is tariff refunds. Without them the range is $7.28 to $7.43, seven cents below July at both ends (calculated).4 Sales growth for the year halved, from 7% to 8% to 4% to 5%, and the HOKA and UGG growth rates each came down a notch.184 The operating margin without refunds stayed about 21.5%, so the profit cut came from sales and not from cost.

The second half is where the pressure shows. To reach 23% for the year, with $545M of operating income in the first half, the second half needs about $769M of operating income on $3,212M of sales, a 23.9% margin. Take out the $41.9M of refunds due in the December quarter and the underlying margin is 22.6% (calculated).4 In the second half of fiscal 2026 the margin was 25.1% (calculated).23 So the outlook assumes the margin on a like-for-like basis falls about 2.4 points year on year in the half that earns most of the profit. Outlooks are not forecasts, and Deckers raised its EPS range in each of the last two quarters. But on the company’s own numbers, the second half is a year-on-year fall in underlying margin.

The balance sheet, and what to watch in it

Working capital at the September quarter-end

US$ millions, from the balance sheets.

Working capital at the September quarter-end
30 Sep 202630 Sep 2025Change31 Mar 2026
Trade receivables$675.2M3$538.8M1225% (calculated)$319.0M3
Inventories$860.8M3$835.6M123% (calculated)$487.0M3
Wholesale sales in the quarter$1,093M4$1,036M45.5% (calculated)n/a
Receivables as days of the quarter’s wholesale sales57 days (calculated)48 days (calculated)n/a
Cash$1,209.7M3$1,414.5M3-14% (calculated)$1,907.2M3
Days are receivables divided by the quarter’s wholesale sales, times 92, a rough measure. The 10-Q does not break receivables out by channel. Source 10-Q Q2 FY2027 and Q2 FY2026 [3][12][4]. Calculated where marked.

Inventory looks healthy: 3% above a year ago on sales 3.5% higher. Receivables do not. They were 25% higher than a year before, against wholesale sales up 5.5%, which stretches the days outstanding from about 48 to about 57 (calculated).3124 The 10-Q also says a switch of European third-party logistics partner disrupted shipments in a peak period and led to higher reserves for customer chargebacks.3 That might explain some of it: goods shipped late in the quarter sit unpaid at quarter-end. It does not prove it. Operating cash flow for the half was minus $9M against plus $44M a year earlier, and receivables swallowed $367M against $223M.3 I can’t judge this from the 10-Q. It is an item I want to see reversed by March, and it sits in my table of things to track.

Share repurchases

US$ billions of cash paid. The last bar is the six months to 30 September 2026.

  • Fiscal 2026 $1.08B
Share repurchasesDeckers spent $3.96B on buybacks from fiscal 2017 to the first half of fiscal 2027, $1.08B of it in fiscal 2026 and $0.64B in the first half of fiscal 2027.$0$0.4B$0.8B$1.2B’17’19’21’23’25H1 ’27Repurchases, 2017: $0.01BRepurchases, 2018: $0.15BRepurchases, 2019: $0.16BRepurchases, 2020: $0.19BRepurchases, 2021: $0.10BRepurchases, 2022: $0.36BRepurchases, 2023: $0.30BRepurchases, 2024: $0.41BRepurchases, 2025: $0.57BRepurchases, 2026: $1.08BRepurchases, H1 ’27: $0.64BShare repurchasesDeckers spent $3.96B on buybacks from fiscal 2017 to the first half of fiscal 2027, $1.08B of it in fiscal 2026 and $0.64B in the first half of fiscal 2027.$0$0.4B$0.8B$1.2B’17’18’19’20’21’22’23’24’25’26H1 ’27Repurchases, 2017: $0.01BRepurchases, 2018: $0.15BRepurchases, 2019: $0.16BRepurchases, 2020: $0.19BRepurchases, 2021: $0.10BRepurchases, 2022: $0.36BRepurchases, 2023: $0.30BRepurchases, 2024: $0.41BRepurchases, 2025: $0.57BRepurchases, 2026: $1.08BRepurchases, H1 ’27: $0.64BShare repurchasesDeckers spent $3.96B on buybacks from fiscal 2017 to the first half of fiscal 2027, $1.08B of it in fiscal 2026 and $0.64B in the first half of fiscal 2027.$0$0.4B$0.8B$1.2B’17’18’19’20’21’22’23’24’25’26H1 ’27Repurchases, 2017: $0.01BRepurchases, 2018: $0.15BRepurchases, 2019: $0.16BRepurchases, 2020: $0.19BRepurchases, 2021: $0.10BRepurchases, 2022: $0.36BRepurchases, 2023: $0.30BRepurchases, 2024: $0.41BRepurchases, 2025: $0.57BRepurchases, 2026: $1.08BRepurchases, H1 ’27: $0.64B
Average price paid: $102.43 in fiscal 2026 and $98.77 in the first half of fiscal 2027. The close in Q4 2026 is $81.99. Source 10-K FY2026; Q4 FY2026 release; Q2 FY2027 10-Q [13][6][3]. Figures as reported.
Show the numbers
Share repurchases
2017201820192020202120222023202420252026H1 ’27
Repurchases (reported)$0.01B$0.15B$0.16B$0.19B$0.10B$0.36B$0.30B$0.41B$0.57B$1.08B$0.64B

Cash fell from $1.91B in March to $1.21B in September because the company bought back $637M of stock and built seasonal inventory. It has no borrowings and in August extended a $500M revolving credit facility to 2031, with the net leverage covenant raised to 4.0 times.35 That facility is not drawn. It is a cushion for the working capital swing, and the swing is large: operating cash flow was minus $9M in the first half of this year and plus $44M in the first half of last year, and the second half carries the year: $1.14B of the $1.18B in fiscal 2026 (calculated).32

Valuation

Start with what would go wrong

Before any numbers, I ask what would most likely make this a poor investment from here, and work back from that. For Deckers the three most likely ways are these, in the order I think most likely.

  1. Both brands cool together and the margin falls back. Fashion demand turns on little. UGG sales were flat for three years to fiscal 2020 and fell 2.7% in fiscal 2023.15167 HOKA has slowed from 15.9% to 7.3% and faces a rival growing at 21.6%.239 If sales stall and the operating margin returns to 16%, where it stood in fiscal 2019 and 2020, my bear case value is $69 a share (estimate).13 If the damage is worse, with sales down a few percent a year for three years and the margin at 12%, about where it was in fiscal 2018 (11.7%), the value is about $50 (estimate). The bear case is not the floor.
  2. Tariffs and sourcing squeeze the margin. Nearly everything is made in Vietnam and Indonesia, so one change in trade policy hits the whole company.2 Deckers paid about $119M of tariffs that were later struck down, 2.2% of fiscal 2026 sales (calculated).32 The 10-Q says it does not expect to offset fully the incremental tariff costs it faces this year.3 I can’t see the size of those costs in the filings. Each point of steady-state operating margin is worth about $4.8 a share in my model (estimate).
  3. The reported numbers flatter the cash, and the buybacks could pay too much. The refunds add 1.5 points to the margin this year, and receivables are growing more than four times faster than wholesale sales.4312 The company is also spending $1.7B on stock at around $100 a share while the market pays $82. If the stock is worth less than $100, that money is gone.63

I can’t put honest odds on the second and third. I can show what the first does, and I do below.

Owner cash: what an owner can really take out

Reported profit is a poor guide to what an owner can take out. I start from the last twelve months to 30 September 2026 and ask four things. Did the business generate the cash? What did it have to spend to stand still? How much of the pay went in stock? And how much is a one-off?

From operating cash flow to owner cash

The twelve months to 30 September 2026. US$ millions.

From operating cash flow to owner cash
AmountComment
Operating cash flow1,128.5 (calculated)23Fiscal 2026 plus the first half of 2027 less the first half of 2026
Capital spending−75.9 (calculated)23Depreciation was 72.6; I treat all capex as standing still
Free cash flow as the company defines it1,052.6 (calculated)Before stock pay
Stock-based pay−46.1 (calculated)23A real cost: it is paid in shares I would otherwise own
Free cash flow less stock pay1,006.5 (calculated)The measure both screens started from
Tariff refund received, after tax−37.7 (calculated)3$46.0M plus $3.0M of interest, taxed at 23%
Interest on the cash pile, after tax−44.4 (calculated)32Removed because I add the cash itself
Owner cash from operations924.4 (estimate)What the businesses earn, before any benefit from the cash
Net income, for comparison1,059.8 (calculated)23Owner cash is 87% of it
About $18M a year more leaves in taxes paid on shares withheld and the 1% buyback excise tax. I leave it out because it is a cost of buying back stock, not of running the business. Source 10-K FY2026; 10-Q Q2 FY2027 and Q2 FY2026 [2][3][12]. Calculated, then my estimate.

Owner cash is about $924M, 87% of reported net income. The gap is stock pay, a refund that won’t repeat, and the interest earned on a cash pile that I count separately. Capital spending is close to depreciation, so the business needs little to stand still. Most of the money it spends to grow, on stores and on lease commitments, shows up as rent and staff in the operating costs and not as capex.3 At today’s price that is a yield of 8.4% on the market value, or 9.5% on the value net of cash (calculated).

Two screens, one company

Deckers came to me from a screen for shares that look cheap. Two earlier passes disagreed about it. One said the price already assumes a decline of about 5% a year in owner cash for ten years. The other put it on a watch list because it failed a margin test. I re-derived both from the filings.

The two views

What each screen said, and what I find in the filings.

The two views
The cheapness screenThe margin screenWhat the filings show
Starting cashFree cash flow less stock pay of about $1.0B3About $0.94B, after an adjustment of $68M for one-offs$1,006M before adjusting; $924M after the refund and interest on cash (estimate)
Margin23.6% over the last twelve months, as reported323.1% in fiscal 2026; the outlook of 23% includes about 150 basis points of refunds, so about 21.5%422.8% over the last twelve months without the refund; 21.5% in the outlook; 22.6% implied for the second half (calculated)43
What the price impliesOwner cash falling about 4.6% a year at a 9% discount rateFalling about 2% a year at 10%Sales falling 4.2% a year at 9% and 2.0% at 10%, at base margins (estimate)
VerdictCheapMargins not held, so a watch nameRight about the price, right about the margin; the two do not cancel
Both screens are my own working notes, not published sources. Every figure in the last column comes from the filings cited elsewhere on this page. Source 10-K FY2026; 10-Q Q2 FY2027; Q2 FY2027 release [2][3][4]. Last column calculated or estimated.

Where my numbers differ from the first screen: its margin base of 23.6% includes the refund; without it the last twelve months were 22.8%. Its cash base of $1,007M includes $38M of one-off refund and $44M of interest on the cash pile, which I count separately as cash, so using both would double-count. I take $924M. Where I differ from the second: its base was close to mine, so it didn’t depend on the margin. I trust my numbers over both, and the differences are small, about 8% of the starting cash.

The two screens agree on the facts and differ on the verdict. The refunds are real, but they are small in value. Together they are $88M before tax, about $0.52 a share after tax, or 0.6% of the price (calculated).4 They flatter the margin by 1.5 points this year, and that is why the margin matters more than the cash. The right question is not whether the cash is flattered. It is what margin the business keeps.

So test the margin directly. If sales never grew again for ten years, then grew 3% after, and the margin held at 21%, the business would be worth $90 a share (estimate). The price of $81.99 equals no growth at all for ten years and an operating margin of 18.6% (estimate). That is 2.9 points below today’s underlying 21.5%, and it needs both brands to stop growing and to give up about an eighth of their margin. That is possible, but it is a lot to ask in one go. Neither screen proves that Deckers is cheap. Both show that the price needs a fade, and they differ on how likely one is.

What the price implies

Ways to read the price

At $81.99, the close in Q4 2026.

Ways to read the price
MeasureValueComment
Market value$10.98B (calculated)13133.9M shares, including unvested awards
Enterprise value$9.77B (calculated)3Less $1.21B of cash and no debt; $9.03 a share
Price to trailing earnings10.9 times (calculated)13On $7.52, twelve months to September 2026
Price to earnings without the refund11.3 times (calculated)4On $7.24, less $0.28 of refund in the period
Price to the fiscal 2027 outlook, without refunds11.0 to 11.3 times (calculated)4On $7.28 to $7.43
Enterprise value to operating income8.0 times (calculated)4On the fiscal 2027 outlook without refunds, $1,226M
Owner cash yield8.4% (estimate)$924M of owner cash
Dividend yield0%Deckers pays no dividend; it returns cash through buybacks
Ten-year Treasury4.94% (reported)22Close in Q4 2026
Source Nasdaq; 10-Q Q2 FY2027; Q2 FY2027 release; Treasury [1][3][4][22]. Calculated.

The stock is down 63% from its closing high of $223.11 on 30 January 2025, and it has traded between $77.51 and $120.94 in the last year.123 A decline like that is a sign that holders changed their minds about something. The multiple tells you what: the price is 10.9 times trailing earnings, below any year-end multiple of the last ten years.

What the market paid for a dollar of earnings

Year-end close over the year’s diluted EPS; the last point is the Q4 2026 close over earnings for the 12 months to 30 September 2026. Fiscal 2017 omitted: EPS was $0.03.

  • Now 10.9x
What the market paid for a dollar of earningsPrice at 31 March divided by that fiscal year’s diluted earnings per share: 25.1 in 2018, a high of 32.3, and 10.9 now on trailing twelve month earnings.0x10x20x30x’18’20’22’24’26Price to earnings, 2018: 25.1xPrice to earnings, 2019: 16.6xPrice to earnings, 2020: 13.9xPrice to earnings, 2021: 24.5xPrice to earnings, 2022: 16.8xPrice to earnings, 2023: 23.2xPrice to earnings, 2024: 32.3xPrice to earnings, 2025: 17.7xPrice to earnings, 2026: 14.3xPrice to earnings, Now: 10.9xWhat the market paid for a dollar of earningsPrice at 31 March divided by that fiscal year’s diluted earnings per share: 25.1 in 2018, a high of 32.3, and 10.9 now on trailing twelve month earnings.0x10x20x30x’18’19’20’21’22’23’24’25’26NowPrice to earnings, 2018: 25.1xPrice to earnings, 2019: 16.6xPrice to earnings, 2020: 13.9xPrice to earnings, 2021: 24.5xPrice to earnings, 2022: 16.8xPrice to earnings, 2023: 23.2xPrice to earnings, 2024: 32.3xPrice to earnings, 2025: 17.7xPrice to earnings, 2026: 14.3xPrice to earnings, Now: 10.9xWhat the market paid for a dollar of earningsPrice at 31 March divided by that fiscal year’s diluted earnings per share: 25.1 in 2018, a high of 32.3, and 10.9 now on trailing twelve month earnings.0x10x20x30x’18’19’20’21’22’23’24’25’26NowPrice to earnings, 2018: 25.1xPrice to earnings, 2019: 16.6xPrice to earnings, 2020: 13.9xPrice to earnings, 2021: 24.5xPrice to earnings, 2022: 16.8xPrice to earnings, 2023: 23.2xPrice to earnings, 2024: 32.3xPrice to earnings, 2025: 17.7xPrice to earnings, 2026: 14.3xPrice to earnings, Now: 10.9x
Over ten years the multiple ranged from 10.9 to 32.3. Without the tariff refund, trailing earnings are about $7.24 and the multiple 11.3. Source Nasdaq historical; 10-K filings; 10-Q Q2 FY2027 [1][13][3]. Calculated.
Show the numbers
What the market paid for a dollar of earnings
201820192020202120222023202420252026Now
Closing price (reported)$15.01$24.50$22.33$55.07$45.63$74.92$156.88$111.81$100.09$81.99
Price to earnings (calculated)25.1x16.6x13.9x24.5x16.8x23.2x32.3x17.7x14.3x10.9x

Over ten years the price rose 9.4 times from the end of October 2016 while earnings per share went from $0.03, in a year of write-downs, to $7.02.113 The multiple was 14 to 25 times at most year-ends, and 32 times at the top, in March 2024.113 Now it is 11. For the multiple to be 11 on a business with an 18.7% net margin, someone expects those earnings to fall.

Reverse DCF: what the price needs

Reverse DCF: the inputs

Everything held at my base case except the sales growth rate, which is solved so that value equals the price.

Reverse DCF: the inputs
InputValue
Valuation date30 September 2026; cash taken at each fiscal year-end from March 2027
Discount rate10.0% (estimate)
YearsSecond half of fiscal 2027, then fiscal 2028 to 2036; after that growth for ever
Fiscal 2027Sales $5.70B to $5.725B, operating margin 21.5% without refunds, as management guides
Operating margin21.3% in 2028 easing to 21.0% (estimate)
Tax rate23% (estimate)
Capital spending and depreciation1.4% and 1.3% of sales (estimate)
Working capital7.7% of added sales, its level in March 2026 (calculated)
After 20363.0% growth, 25% return on new capital (estimate)
Cash$1.21B, plus $34M of refunds still to arrive (calculated)
Shares133.9M
Source 10-Q Q2 FY2027; Q2 FY2027 release [3][4]. Assumptions are my estimates.

On those inputs, the price needs sales to shrink about 2.0% a year for ten years, from $5.71B to about $4.8B by fiscal 2036, with the margin held at 21% (calculated). The last ten years gave 13.2% a year and the last five 16.5% (calculated).13 Management’s framework in May was high single digits a year through fiscal 2030, and in October it cut this year’s growth to 4% to 5%.64 The market is saying that the business has peaked.

What growth the price implies, by discount rate

Yearly sales growth for ten years that makes my base value equal the price, base margins.

What growth the price implies, by discount rate
Discount rateImplied yearly sales growth
8%-6.6% (calculated)
9%-4.2% (calculated)
10%-2.0% (calculated)
11%+0.0% (calculated)
12%+1.9% (calculated)
At 11% the price assumes flat sales; at 12%, about 2% growth. Source My model [3][4]. Calculated.

The table is the most honest way to show what I can’t know, which is the right discount rate. Anyone who requires 9% sees a price that assumes a steady decline. Anyone who requires 12% sees a price that assumes modest growth and no more. The truth about this stock is in the range of the table, not in a single row.

The discount rate

I discount at 10%. The capital asset pricing model with the 4.94% ten-year Treasury and a 4.20% implied equity risk premium gives 9.0% on Deckers’ beta against the market over 119 months, 9.7% over 60 and 11.0% over 36 (calculated).2224251 The shorter the window, the riskier the stock looks. I take 10%, between the five- and three-year results, because a fashion brand can fade faster than its beta shows. On my other pages I use 8.5% to 9.5%. At 9.0%, my base is $132, and at 11%, $103 (estimate).

My base case at other rates

Value per share, every other input as in my base case.

My base case at other rates
Discount rateGrowth after 2036: 2.5%3.0%3.5%
9%$128$132$137
10%$113$116$119
11%$101$103$105
12%$92$93$95
At 12% and 2.5% growth, the harshest corner, the base is $92, still above the price. Source My model [3][4]. Values are my estimates.

Margin and growth together

Value per share at a 10% discount rate. Each row holds the operating margin from fiscal 2028; each column scales my base yearly sales growth.

Margin and growth together
Operating margin from 2028No growth for ten yearsHalf my base growthMy base growthOne and a half times base growth
15%$69$77$87$98
17%$76$86$96$109
19%$83$94$106$120
21%$90$102$115$131
23%$98$110$125$142
After fiscal 2036, growth is 3% in every cell. Fiscal 2027 is as management guides. Source My model [3][4]. Values are my estimates.

Read across the second table. At a 15% margin with no growth, the business is worth $69 a share, less than the price. At 17% with half my growth it is $86, about the price. The price lives in the lower left of the table, and my base lives in the middle. The decision comes down to which margin and which growth you believe, and I can narrow them but not remove them.

Three cases

Three cases

The drivers of each case, from fiscal 2028 to 2036 unless stated.

Three cases
DriverBearBaseBull
HOKA sales growth, first year to last3% to 0%9% to 3%12% to 4%
UGG sales growth, first year to last0%, then −3%, −3%, −2%, −1%, then 0%4% to 2%6% to 3%
Sales growth, yearly average from fiscal 20260.3%4.3%5.9%
Operating margin, first year to last19.0% easing to 16.0%21.3% easing to 21.0%22.2% rising to 24.0%
Revenue in 2036$5.6B$8.3B$9.7B
Operating income in 2036$0.90B$1.75B$2.33B
Owner cash in 2036$0.68B$1.32B$1.76B
Capital spending, share of sales1.5%1.4%1.4%
Growth after 2036; return on new capital2.5%; 12%3.0%; 25%3.5%; 40%
Value per share$69$116$152
Yearly return at the price8.4%13.5%16.3%
Fiscal 2027 is the same in all three: management’s outlook without refunds. Values at 10%; returns are the rate that equates the price to each case. Source 10-K FY2026; Q2 FY2027 release [2][4]. All drivers and values are my estimates.

My base case is Deckers carrying on, but slower. HOKA grows 9% in fiscal 2028, below the low double digits in management’s framework, and fades to 3%. UGG grows 4% and fades to 2%. Sales reach $8.3B in fiscal 2036, 4.3% a year from fiscal 2026 against 16.5% a year in the last five (estimate). The margin is 21.0%, lower than fiscal 2026’s 23.1% and in line with the outlook for this year without refunds. Management’s own framework is high-single-digit growth through fiscal 2030 and an operating margin in the low 20s.6 My base gives it about half the growth and about the margin.

The bull case has Deckers meet that framework and then some: HOKA 12% in fiscal 2028, UGG 6%, a margin that rises to 24% as DTC and international grow, which is the 23.6% of fiscal 2025 plus a bit (estimate). The bear case is the fade: HOKA stalls, UGG shrinks for four years, and the margin drops to 16%, where it was in fiscal 2019 and 2020. That case is worth $69, and the price is 19% above it. This is a business with a cash cushion and low capital needs, so even the fade doesn’t cut the value by half. The stress case does.

Owner cash in my three cases

US$ billions a year after tax and after the capital the business needs. “Now” is the trailing twelve months to 30 September 2026. Everything after it is my estimate.

  • Bear to bull, 2036 $0.68B to $1.76B
  • Base, 2036 $1.32B
Owner cash in my three casesOwner cash reaches $1.32B in fiscal 2036 in my base case, $0.68B in the bear and $1.76B in the bull, from about $0.92B over the last twelve months before refunds and interest.$0$0.5B$1B$1.5B$2BNow’28’30’32’34’36Base, Now: $0.92BBase, 2027: $0.92BBase, 2028: $0.96BBase, 2029: $1.02BBase, 2030: $1.07BBase, 2031: $1.11BBase, 2032: $1.16BBase, 2033: $1.21BBase, 2034: $1.25BBase, 2035: $1.29BBase, 2036: $1.32BOwner cash in my three casesOwner cash reaches $1.32B in fiscal 2036 in my base case, $0.68B in the bear and $1.76B in the bull, from about $0.92B over the last twelve months before refunds and interest.$0$0.5B$1B$1.5B$2BNow’27’28’29’30’31’32’33’34’35’36Base, Now: $0.92BBase, 2027: $0.92BBase, 2028: $0.96BBase, 2029: $1.02BBase, 2030: $1.07BBase, 2031: $1.11BBase, 2032: $1.16BBase, 2033: $1.21BBase, 2034: $1.25BBase, 2035: $1.29BBase, 2036: $1.32BOwner cash in my three casesOwner cash reaches $1.32B in fiscal 2036 in my base case, $0.68B in the bear and $1.76B in the bull, from about $0.92B over the last twelve months before refunds and interest.$0$0.5B$1B$1.5B$2BNow’27’28’29’30’31’32’33’34’35’36Base, Now: $0.92BBase, 2027: $0.92BBase, 2028: $0.96BBase, 2029: $1.02BBase, 2030: $1.07BBase, 2031: $1.11BBase, 2032: $1.16BBase, 2033: $1.21BBase, 2034: $1.25BBase, 2035: $1.29BBase, 2036: $1.32B
Fiscal 2027 here is the full year; the first half was seasonally negative, so the cash left to come from 30 September is larger than a quarter of the year. Source 10-K FY2026; 10-Q Q2 FY2027 [2][3]. Assumptions and values are my estimates.
Show the numbers
Owner cash in my three cases
Now2027202820292030203120322033203420352036
Bear (estimate)$0.92B$0.91B$0.83B$0.77B$0.72B$0.69B$0.69B$0.68B$0.68B$0.68B$0.68B
Base (estimate)$0.92B$0.92B$0.96B$1.02B$1.07B$1.11B$1.16B$1.21B$1.25B$1.29B$1.32B
Bull (estimate)$0.92B$0.92B$1.02B$1.13B$1.25B$1.37B$1.46B$1.55B$1.62B$1.69B$1.76B

The case for the market being right

The price reflects a debate, and the market’s side of it is serious. Here is the case, as strongly as I can put it.

  • The growth is slowing in both brands at once. HOKA from 15.9% to 7.3%, UGG from 8.2% to 3.9%, in the first half of fiscal 2027.23 The company cut its full-year sales outlook by about $170M in October.184
  • The profit growth came before the costs. HOKA’s margin before shared costs fell 4.6 points in two years. Marketing, staff and stores are being added to defend growth, and they don’t go away if growth does.2
  • The recent record is flattered. The headline EPS outlook rose in October while the underlying one fell by seven cents. The margin fell 300 basis points in the March quarter and 191 in the June quarter, with no refund in either.618
  • A rival is taking the growth. On grew 21.6% in constant currency with a higher gross margin.9
  • It has faded before. Operating income went from $224M in fiscal 2015 to a loss of $2M in fiscal 2017, the year of the Sanuk write-down.15

If these are right, the best use of this table is the bear column. I give the market side real weight, which is why my required return is 10% and why my margin-of-safety price is as low as it is.

What I can’t judge

Some inputs I can’t know, and I would rather say so than pretend. I can’t see how large the tariff costs are now, since the filings give only the 2025 and 2026 IEEPA figures and say that incremental costs remain. I don’t know whether the extra refunds, up to the $119M gross paid, will arrive; the company assumes none beyond what it has received, and the value is small either way, at most a few dollars a share. I can’t tell whether the receivables are timing or something worse. I don’t know whether HOKA is a franchise like a major running brand or a fashion phase. I have no reliable market-share data. And I can’t know what multiple the market will pay in 2036, so I show several.

What the price returns at different multiples in 2036

Yearly return from the Q4 2026 price, cash flows from each case, exit at a multiple of after-tax operating profit per share.

What the price returns at different multiples in 2036
Exit multiple of operating profit after taxBase cash flowsBear cash flows
20 times20.0% (estimate)11.3% (estimate)
16 times18.1% (estimate)9.5% (estimate)
13 times16.4% (estimate)7.9% (estimate)
11 times15.2% (estimate)6.6% (estimate)
9 times13.8% (estimate)5.3% (estimate)
7 times12.1% (estimate)3.7% (estimate)
Base operating profit after tax per share in fiscal 2036 is about $10.06. The price paid is $72.96 after the cash of $9.03 a share, which I count at face value. Today’s multiple on the same basis is about 10 times. Source My model; Nasdaq [1][3]. Estimates.

A buyer who gets my base cash flows and sells in 2036 at nine times earnings earns about 14% a year. A buyer who gets the bear cash flows and sells at nine times earns about 5%. The range of outcomes, from my bear to my base, is wide, but most of it sits above the Treasury yield of 4.94%. That is the argument for the price. The argument against is that my bear is a modest fade and not a collapse.

Multiply it out

My base needs several things at once. HOKA growth averaging 7% or more for five years: I would give that 40%. UGG sales not falling in a normal year: 75%. Operating margin staying at or above 20%: 55%. No lasting tariff or sourcing shock beyond today’s: 75%. Wholesale partners keep the shelf space: 85%. Multiplied, that is about 11% (estimate). They overlap, since good HOKA growth helps the margin and the shelf space, so the true figure is higher, perhaps a fifth. Missing one doesn’t ruin the case either, since the price sits well below the base. That is the useful point. The price doesn’t need my base to come true. It is matched by no growth for ten years and an 18.6% margin. So the odds that my base is exactly right are low, about a tenth to a fifth, and that is why I show a range.

Quality and price are two questions

How good is the business? Good, but not a certainty. An 18.7% net margin, no debt, capital needs of 1.5% of sales and two brands in demand are rare. Against that, its sales record has pauses, it rents the attention of shoppers, and its profit comes in one quarter. How good is the price? It is 29% below my base value and 19% above my bear value, so it sits inside my range, nearer the bear. Those are two different answers. A good business can be a poor purchase at the wrong price, and a so-so one a good purchase at the right one. This looks like a good but unproven business at a price below my base and above my bear, which is another way of saying it is a debate and not an obvious mistake.

It helps to compare it with the next best use of the same dollar. A ten-year Treasury pays 4.94% with no risk to the dollars promised.22 Deckers returns about 13.5% a year on my base and 8.4% on my bear, with all the risk of a share (estimate). On this site, LVMH, the closest brand business, is priced 3% above my base value on that page, with a price that needs 5.8% cash growth a year; Adyen is priced 22% below its base and needs 8.4% cash growth a year. Those pages use rates of 8.5% for LVMH and 10.5% for Adyen, either side of my 10% here, so the rate does not explain the gap. At 9% my base would be $132. Deckers’ price asks less of the future than theirs does. Whether its business can deliver even that is the debate.

The margin of safety

My margin-of-safety price is $69, 40% below my base value. It is 40% and not the 30% I use for steadier businesses, because the range here is wider and the margin less predictable. At $69, my bear case returns about 10.0% a year, close to the 10% I require, and the base returns about 16.0% (calculated). The stock last closed below $69 in March 2023. The price is 19% above it.1

What it is worth, against the price

Value per share, my estimates, against the close in Q4 2026

  • Bear to bull $69 to $152
  • Base $116
  • Price $81.99
  • Margin of safety below $69
What it is worth, against the priceValue per share: bear $69, base $116, bull $152. Price in Q4 2026: $81.99, 29% below the base value. Margin-of-safety price $69.BEAR$69BASE$116BULL$152Price $82What it is worth, against the priceValue per share: bear $69, base $116, bull $152. Price in Q4 2026: $81.99, 29% below the base value. Margin-of-safety price $69.BEAR$69BASE$116BULL$152Price $82What it is worth, against the priceValue per share: bear $69, base $116, bull $152. Price in Q4 2026: $81.99, 29% below the base value. Margin-of-safety price $69.Margin-of-safety zone: below $69$0$50$100$150$200Bear to bull: $69 to $152Bear case: $69 per shareBEAR$69Base case: $116 per shareBASE$116Bull case: $152 per shareBULL$152Price in Q4 2026: $81.99Price $81.99Close, Q4 2026
The price is 19% above my bear value and 29% below my base value. Source Nasdaq historical; 10-K FY2026; 10-Q Q2 FY2027 [1][2][3]. Values are my estimates.

Where this could be in 5 and 10 years

The cases above value Deckers today. This asks what each would be worth later, after cash has gone out. Interest on the cash is left out, so the figures lean low.

Value per share in five and ten years

Dollars per share, my three cases at a 10% required return; every figure is my estimate (estimate).

Value per share in five and ten years
CaseValue, Sept 2031Value, Sept 2036Cash paid out to 2036Return a year to 2036
Bear$66$68$565.9%
Base$131$146$8614.7%
Bull$183$213$10419.1%
Value in a year is the present value then of the owner cash that comes after it, plus today’s $1.21B of net cash at face, $9.03 a share. Per today’s share count, in that year’s dollars. The return is the rate that turns $81.99 into the cash paid out plus the year-10 value. Source My model. Values are my estimates.

My base is $131 in five years and $146 in ten. Five years needs sales near $7.1B, a 21% operating margin and about $1.1B a year of owner cash, with HOKA growth easing from 9% toward 3% and UGG from 4% toward 2%. For ten years it needs $8.3B of sales and the same margin, and a buyer in 2036 who pays about 13 times operating profit after tax, which is what 3% growth and a 25% return on new capital are worth at 10% (calculated). Value rises only 12% from year 5 to year 10 because $47 a share is paid out in those years.

The cases differ on two numbers. Operating margin ends at 16%, 21% or 24%, and sales grow 0.3%, 4.3% or 5.9% a year. In the bear, HOKA stalls, UGG shrinks for four years and sales stay near $5.6B, so value sits at $66 to $68 and the return is the cash alone, 5.9% a year. In the bull, HOKA grows 12% fading to 4% and sales reach $9.7B. At a 9% required return my base is $168 in year 10, at 11% $129 (estimate).

The most likely way my base is wrong is the margin. The first half ran at 19.9% without refunds and the outlook is 21.5%. Each point is worth about $6 a share at year 5 and $6.50 at year 10, so a 19% margin gives $119 and $133 (estimate).

A reader’s guide. These are estimates of value, not forecasts of the share price. The market can sit above or below value for years; it has already moved 63% from the January 2025 high.

The case for the price

What most people miss

First, the quarter that grabbed the headlines was better than it looks underneath, in one respect. In the September quarter the operating margin was 26.3%, but without the $46.0M refund it was 23.2%, up from 22.8% a year before, even though a change of European logistics partner disrupted shipments in the quarter (calculated).43 The base business did not slip in that quarter. Second, the shrinking of the share count is faster than the growth: shares outstanding fell from 150.2M in March 2025 to 133.7M in September 2026, down 11% in eighteen months, and $9.03 a share of the price, 11%, is cash (calculated).263 Third, Deckers is much less a US business than it was: international sales were 42% of the total in fiscal 2026, against 31% in fiscal 2022, and they grew 26.8% in the year (calculated).214

The bull case

In plain words: Deckers has built two brands that people pay full price for, and it is early in taking both to the rest of the world. HOKA is a $2.6B brand that opened 13 stores in six months and is still growing outside the US.23 UGG is fixing its seasonality with year-round styles. The business needs little capital, the cash is returned through buybacks, and the share count is shrinking fast. Management’s version, from the fourth-quarter release on 21 May 2026, is a framework through fiscal 2030: sales up high single digits a year, HOKA up low double digits, UGG up mid single digits, an operating margin in the low 20s, and earnings per share growing at a low double-digit rate with buybacks.6 The chief executive said in the October release that he is “confident in the significant global opportunities ahead for both HOKA and UGG.”4

If earnings per share grew 11% a year from the middle of this year’s underlying range, they would reach about $10.05 in fiscal 2030 (estimate). At today’s 11 times earnings that is a price near $111, and at 16 times about $161 (estimate). I have not found a named investor with a public case on Deckers that I can verify, and I did not check fund holdings for this page, so I cite none. The proxy lists two holders of 5% or more: BlackRock at 10.5% and Vanguard at 7.8%.10

Against reality

If Deckers does what its framework says, my bull case, the business is worth $152 a share (estimate), and the price would be a fraction of that. But the framework was written in May. Since then, the company cut this year’s sales growth from 7% to 8% to 4% to 5%, and HOKA’s from low double digits to high single digits.64 The October release did not repeat the fiscal 2028 to 2030 framework, and I don’t know if the call did.4 So today’s numbers are about half what the case needs: HOKA at 7% against low double digits, total sales at 4% against high single digits, and an underlying margin of 21.5% against a low-20s promise that it just about meets.

That matters less for the price than it does for the bull. The price does not need the bull. It is below my base value of $116, which has half the growth, and above my bear value of $69. So the right reading is this: the case for the price is that Deckers only has to be a decent business, not a great one. The case against it is that the last two quarters were not decent by the company’s own measure.

What a 10x would take. Ten times $81.99 is $820 a share, about $110B of market value on today’s share count (calculated). At 15 times earnings that needs about $7.3B of net income. At the 18.7% net margin of fiscal 2026 that means about $39B of revenue, 7 times the last twelve months, and nearly as much as Nike’s $46.4B (calculated).8 Even at a generous 20 times earnings it needs $29B of revenue, a growth rate near 18% a year for ten years, against the 13.2% Deckers managed in the last ten (calculated).13 Buybacks would shave some of this. Deckers itself rose 9.4 times in the last ten years, but from a company worth about $1.7B, not $11B (calculated).113 From here, tenfold in a decade is close to impossible, and I would not build a case on it.

What they have to hit

Six numbers a reader can check. The thresholds are my base case, and they agree with the signposts below.

What they have to hit
IndicatorTodayWhat the case needsWhere to track itNext check
HOKA net sales growth7.3% in the first half of fiscal 2027; 6.8% in the September quarter34High single digits in fiscal 2027, 9% in fiscal 2028 in my base; low double digits in management’s framework (estimate)Quarterly release, brand section; 10-Q Note 12Q3 fiscal 2027 release, expected late January 2027
UGG net sales growth3.9% in the first half; 3.5% in the September quarter34Low single digits in fiscal 2027, 4% in fiscal 2028 (estimate)Quarterly release, brand section; 10-Q MD&AQ3 fiscal 2027 release, expected late January 2027
Operating margin without refunds19.9% in the first half (calculated)3; 21.5% in the outlook421.5% or better in fiscal 2027, about 21% a year after (estimate)Income from operations in the income statement, less refunds in 10-Q Note 7Q3 release in January 2027; fiscal 2027 10-K, expected May 2027
Gross margin without refunds57.0% in the outlook, against 57.7% in fiscal 20264257% or better each year (estimate)Quarterly release and 10-Q MD&A, gross profit discussionQ3 fiscal 2027 release, expected late January 2027
Direct-to-consumer comparable salesDown 6.4% in the September quarter; down 0.8% for the half43Positive again by fiscal 2028, with DTC a rising share (estimate)Quarterly release, DTC comparable net sales lineQ3 fiscal 2027 release, expected late January 2027
Receivables against wholesale sales$675M, up 25%, against wholesale sales up 5.5%3124Growth within five points of wholesale growth at the year-end (estimate)Balance sheet, trade receivables, in the 10-Q and 10-KQ3 10-Q, expected February 2027; fiscal 2027 10-K, expected May 2027
Next-check dates follow the pattern of the last year’s filings: the Q3 release on 29 January 2026, the Q3 10-Q on 3 February 2026 and the 10-K on 22 May 2026. Source 10-Q Q2 FY2027; Q2 FY2027 release; 10-Q Q2 FY2026 [3][4][12]. Thresholds are my estimates.

Where I come down

Two things moved me. The refunds are worth about $0.52 a share once and nothing after that, so they matter for the margin and not for the value, and the price still sits below my base after I take them out. The cut in underlying earnings in October also moved me, and it is why my base margin is 21% and not 23.6%. What did not move me is the plain arithmetic: the price equals no growth for ten years and a margin of 18.6%. What would raise my values is HOKA growth back at low double digits with the margin above 21%, DTC comparable sales turning positive, and receivables growing in step with wholesale sales.

Risks, and what would change my view

The three ways this goes badly wrong are at the start of Valuation. These are the rest.

  • Two countries make nearly everything. Production is predominantly in Vietnam and Indonesia, and a tariff, a port closure or a conflict in the region hits all of it at once.2 The 10-K names prolonged conflict in the Middle East as a possible driver of shipping and energy costs.2
  • Sheepskin. UGG’s main material comes mostly from Australia and is processed by two tanneries in China. The company buys on fixed contracts but cannot switch quickly.2
  • Wholesale shelf space. Wholesale was 58.6% of fiscal 2026 sales, and one customer was 18.5% of receivables.62 If a large partner trims orders or stretches payment, Deckers feels it first in receivables and returns.
  • Consumer and promotions. The company says traffic and conversion fell in the US, that shoppers waited for promotions, and that these conditions may persist.3
  • Logistics. A change of European logistics partner caused a disruption in the September quarter and higher reserves for chargebacks. It may leave residual effects in the near term.3
  • Trademark and copies. A claim that the UGG name is generic succeeded in Australia, and the company runs a standing legal programme against counterfeits.2
  • Legal. Two purported consumer class actions allege tariff-related pricing and government reimbursements, which Deckers says it will defend.3 The 10-K also flags the OECD’s 15% global minimum tax as a possible increase in its tax bill.2
  • Leadership. Caroti has been chief executive for two years, and a board member retires on 1 December.1021

What would change my view

Signals that move my values, in either direction.

Signposts
SignalTodayRaises my valueLowers my value
HOKA growth7.3% in the first half3Low double digits for two quartersBelow 5% for two quarters
UGG growth3.9% in the first half35% or more for two quartersFalling year on year in a quarter
Operating margin without refunds19.9% in the first half; 21.5% in the outlook (calculated)3422.5% or more in fiscal 2028Below 20% in fiscal 2028
DTC comparable salesDown 6.4% in the September quarter4Positive for two quartersDown more than 5% for two more quarters
Receivables against wholesale salesUp 25% against 5.5%3124Gap under five points at March 2027Gap over 15 points again at September 2027
Use of cash$1.0B of buybacks planned for fiscal 2027; $4.4B authorized43Buybacks made below my base value of $116Large buybacks above $116, or a large acquisition
Source 10-Q Q2 FY2027; Q2 FY2027 release [3][4][12]. Thresholds are my judgement.

What would raise my base value: the January 2027 quarter, the one that earns half the year’s profit, showing underlying margin near last year’s 31%, HOKA growth at or above 10%, and DTC comparable sales turning positive.17 What would lower it: a second consecutive cut to sales growth, an underlying margin below 20%, or receivables still outrunning wholesale sales by March.43

Sources

  1. 1DECK daily closes, Nasdaq.com historical API, 31 October 2016 to 30 October 2026 (opens in a new tab)PriceNasdaq · 30 Oct 2026 · Close/Last on 10/30/2026 = $81.99 (NYSE: DECK); split-adjusted history used for 52-week range, fiscal year-end prices and betas · Accessed 30 Oct 2026↩︎
  2. 2Deckers Outdoor Form 10-K, fiscal year ended 31 March 2026 (opens in a new tab)FilingSEC EDGAR · 22 May 2026 · Business, risk factors, MD&A, statements, Note 13 segments; tariffs, sourcing, customers, repurchases · Accessed 30 Oct 2026↩︎
  3. 3Deckers Outdoor Form 10-Q, quarter ended 30 September 2026 (opens in a new tab)FilingSEC EDGAR · 29 Oct 2026 · Statements, Note 5 credit facility, Note 7 tariff refunds, Note 10 repurchases, Note 12 segments, MD&A · Accessed 30 Oct 2026↩︎
  4. 4Deckers Brands reports second quarter fiscal year 2027 financial results (Ex. 99.1 to 8-K) (opens in a new tab)ReleaseSEC EDGAR · 22 Oct 2026 · Q2 results, IEEPA refunds of $46.0M, FY2027 outlook with about $0.52 of refunds, repurchases · Accessed 30 Oct 2026↩︎
  5. 5Deckers Outdoor Form 8-K, item 1.01: first amendment to the credit agreement (opens in a new tab)FilingSEC EDGAR · 31 Aug 2026 · $500M unsecured revolver to August 2031; net leverage covenant 4.0 times · Accessed 30 Oct 2026↩︎
  6. 6Deckers Brands reports fourth quarter and full fiscal year 2026 financial results (Ex. 99.1 to 8-K) (opens in a new tab)ReleaseSEC EDGAR · 21 May 2026 · FY2026 results, initial FY2027 outlook, FY2028 to FY2030 framework, repurchases at $102.43 average · Accessed 30 Oct 2026↩︎
  7. 7Deckers Outdoor Form 10-K, fiscal year ended 31 March 2023 (opens in a new tab)FilingSEC EDGAR · 26 May 2023 · FY2023 brand and channel tables · Accessed 30 Oct 2026↩︎
  8. 8NIKE, Inc. Form 10-K, fiscal year ended 31 May 2026 (opens in a new tab)FilingSEC EDGAR · 15 Jul 2026 · Revenue $46.4B, gross profit $19.9B, net income $3.1B (from XBRL facts of this filing) · Accessed 30 Oct 2026↩︎
  9. 9On Reports Results for the Second Quarter and Six-Month Period Ended June 30, 2026 (Ex. 99.3 to 6-K) (opens in a new tab)ReleaseSEC EDGAR · 11 Aug 2026 · On net sales CHF 850.3M, up 21.6% in constant currency; gross margin 65.4%; adjusted EBITDA margin 19.8% · Accessed 30 Oct 2026↩︎
  10. 10Deckers Outdoor definitive proxy statement, 2026 annual meeting (opens in a new tab)FilingSEC EDGAR · 24 Jul 2026 · Pay of named officers for FY2026, bonus and LTIP metrics, ownership table, pay ratio · Accessed 30 Oct 2026↩︎
  11. 11SEC EDGAR Forms 4 for Deckers Outdoor, October 2025 to October 2026 (opens in a new tab)DataSEC EDGAR · 30 Oct 2026 · 64 Forms 4 read; no open-market purchase (code P); five sales (code S) of 347 to 4,682 shares by officers and one director · Accessed 30 Oct 2026↩︎
  12. 12Deckers Outdoor Form 10-Q, quarter ended 30 September 2025 (opens in a new tab)FilingSEC EDGAR · 31 Oct 2025 · Balance sheet at 30 September 2025: receivables $538.8M, inventories $835.6M · Accessed 30 Oct 2026↩︎
  13. 13Deckers Outdoor XBRL company facts (all filings) (opens in a new tab)DataSEC EDGAR · 30 Oct 2026 · Ten-year revenue, costs, operating income, net income, EPS, cash flow, repurchases and balance sheet items; pre-split per-share figures divided by six · Accessed 30 Oct 2026↩︎
  14. 14Deckers Outdoor Form 10-K, fiscal year ended 31 March 2022 (opens in a new tab)FilingSEC EDGAR · 27 May 2022 · FY2022 brand and channel tables · Accessed 30 Oct 2026↩︎
  15. 15Deckers Outdoor Form 10-K, fiscal year ended 31 March 2019 (opens in a new tab)FilingSEC EDGAR · 30 May 2019 · FY2017 to FY2019 brand sales; Sanuk impairment of about $114M recognised in fiscal 2017 · Accessed 30 Oct 2026↩︎
  16. 16Deckers Outdoor Form 10-K, fiscal year ended 31 March 2021 (opens in a new tab)FilingSEC EDGAR · 28 May 2021 · FY2021 and FY2020 HOKA and UGG sales · Accessed 30 Oct 2026↩︎
  17. 17Deckers Brands reports third quarter fiscal year 2026 financial results (Ex. 99.1 to 8-K) (opens in a new tab)ReleaseSEC EDGAR · 29 Jan 2026 · Q3 FY2026 results, nine-month repurchases at $101.44 average · Accessed 30 Oct 2026↩︎
  18. 18Deckers Brands reports first quarter fiscal year 2027 financial results (Ex. 99.1 to 8-K) (opens in a new tab)ReleaseSEC EDGAR · 23 Jul 2026 · Q1 results and the July FY2027 outlook: sales $5.86B to $5.91B, EPS $7.35 to $7.50 · Accessed 30 Oct 2026↩︎
  19. 19Deckers Outdoor Form 10-K, fiscal year ended 31 March 2024 (opens in a new tab)FilingSEC EDGAR · 24 May 2024 · FY2024 statements; HOKA and UGG sales by channel; Sanuk · Accessed 30 Oct 2026↩︎
  20. 20Deckers Outdoor Form 8-K, item 5.07: results of the 14 September 2026 annual meeting (opens in a new tab)FilingSEC EDGAR · 15 Sep 2026 · Director votes (Shanahan 15.4M against), say on pay 98.6M for and 11.2M against · Accessed 30 Oct 2026↩︎
  21. 21Deckers Outdoor Form 8-K, items 2.02, 5.02, 7.01: director appointment and retirement (opens in a new tab)FilingSEC EDGAR · 22 Oct 2026 · Rati Sahi Levesque to join the board on 1 December 2026; Lauri Shanahan retires · Accessed 30 Oct 2026↩︎
  22. 22U.S. Treasury daily par yield curve rates, 2026 (opens in a new tab)DataU.S. Department of the Treasury · 30 Oct 2026 · Row 10/30/2026: 10 Yr 4.94 · Accessed 30 Oct 2026↩︎
  23. 23DECK daily closes, Yahoo Finance chart feed, ten years (opens in a new tab)PriceYahoo Finance · 30 Oct 2026 · Cross-check of the Nasdaq close: also $81.99 on 30 Oct 2026; 52-week closing range $77.51 to $120.94 · Accessed 30 Oct 2026↩︎
  24. 24Aswath Damodaran, NYU Stern: implied equity risk premium (opens in a new tab)DataNYU Stern · 1 Oct 2026 · 4.20% implied premium on 1 October 2026, the figure used on my other pages; carried over, not re-opened for this page · Accessed 30 Oct 2026↩︎
  25. 25SPY daily closes, Nasdaq.com historical API, 2016 to 2026 (opens in a new tab)PriceNasdaq · 30 Oct 2026 · Used with DECK closes for monthly betas to September 2026: 1.44 over 36 months, 1.12 over 60, 0.98 over 119; price returns · Accessed 30 Oct 2026↩︎
  26. 26Deckers Outdoor Form 10-K, fiscal year ended 31 March 2025 (opens in a new tab)FilingSEC EDGAR · 23 May 2025 · FY2025 statements and brand tables · Accessed 30 Oct 2026↩︎

How the figures are labelled

(reported)Reported: taken from a filing or a price feed, as printed.

(calculated)Calculated: arithmetic on reported figures, such as a margin or a growth rate.

(estimate)Estimate: my judgement, such as a case value or a growth assumption.

The price

Close in Q4 2026: $81.99, from Nasdaq [1] and cross-checked against Yahoo Finance [23]. Retrieved in Q4 2026. Per-share figures before the September 2024 six-for-one split are divided accordingly.

Fiscal years end on 31 March. Fiscal 2026 ended on 31 March 2026. The latest filing is the 10-Q for the quarter that ended on 30 September 2026, the second quarter of fiscal 2027.

The valuation

Discounted cash flow on owner cash, valued at 30 September 2026 at a 10% discount rate. Fiscal 2027 uses management’s October outlook of $5.70B to $5.725B of sales and an operating margin of 21.5% once the tariff refunds are taken out; only the second half counts, as the first half is already in the cash. Fiscal 2028 to 2036 grow HOKA and UGG separately; the Other brands are held at $97M. I tax operating profit at 23%, add depreciation at 1.3% of sales, deduct capital spending at 1.4% to 1.5%, and deduct working capital at 7.7% of added sales. Stock pay stays deducted, since it is already in operating costs. After 2036 the cash grows at 2.5% to 3.5% with reinvestment set by a return on new capital of 12% to 40%. Each year’s cash is taken at the year end. Net cash is $1.21B of cash with no debt, plus $34M of refunds not yet received at 30 September. Operating leases are treated as operating costs and not as debt. Per-share values divide by 133.9M shares, which includes unvested awards. Yearly returns are the rate that equates the price to each case. The odds in Section VI are my guesses and are not used in the values.

The margin-of-safety price is $69, 40% below my base value, about where my bear case returns the 10% I require. No rating: the page states a range and the price, and leaves the decision to the reader.

Research, not investment advice. Figures as of .

Legal information and disclosures

These are my own views as of the update shown on this page. They can change without notice, and I have no duty to update them. Past performance does not indicate future results, and any investment can lose money.

This is for education only. It is not investment, legal, tax or accounting advice, and it is not an offer to sell or a solicitation to buy any security in any jurisdiction. It does not consider your goals or circumstances.

Figures from company filings and other third parties are believed to be reliable, but I have not independently verified them and cannot guarantee them. Bear, base and bull values, and anything marked as an estimate, are my own and rest on assumptions that may prove wrong.

Please do not copy or republish this material without my written consent.