DECKERS OUTDOOR CORP (DECK)
Key 10-K takeaways for Deckers Outdoor Corporation (NYSE: DECK) FY2025: • Business: Three brand segments—UGG®, HOKA®, Other (Teva®, AHNU®, Koolaburra). Wholesale (57% net sales) and DTC (43%). 179 retail stores, e-com in 56 countries. • Financials: Net sales $4.986B (+16.3% YoY); Gross margin ...
Deckers Outdoor Corporation (NYSE: DECK) FY2025 10-K Review: UGG Meets HOKA to Power Next Chapter
Deckers Outdoor Corporation ("Deckers" or the "Company") wrapped up fiscal year ended March 31, 2025 with another standout set of results. Bolstered by iconic brand strength in UGG® and HOKA®, the Company delivered top-line growth, margin expansion, and record profits. This 10-K review drills into:
Warren.AI 💰 8.0 / 10
- Business model & strategy (Item 1)
- Key risks and uncertainties (Item 1A)
- Financial performance, segment overview & cash flow (Items 7, 7A, 8)
- Governance, key metrics, and balance sheet health
Net income (FY2025): $966.1 million (19.4% of net sales)
EPS (diluted): $6.33
1. Business Overview (Item 1)
Deckers operates in two core channels—Wholesale and Direct-to-Consumer (DTC)—across three global brands:
- UGG®: Premium, year-round casual lifestyle footwear, apparel & accessories.
- HOKA®: High-performance, cushioned running, trail & fitness shoes (plus apparel).
- Other Brands: Teva® (outdoor footwear), AHNU® (everyday performance), and Koolaburra by UGG® (phased out value brand).
Channels & Distribution
- Wholesale (57% of FY25 net sales): UGG sells into fashion/lifestyle and department stores, HOKA into specialty running/outdoor accounts and emerging streetwear partners.
- DTC (43% of FY25 net sales): Company-run e-commerce in 56 countries and 179 retail stores globally (92 concept, 87 outlet).
Segments & Recent Changes
In Q4 FY25, Deckers realigned how it reports segments, shifting from six segment definitions (split by channel) to three brand-focused segments—UGG, HOKA and Other. This better mirrors how the CEO drives resource allocation and performance evaluation:
| Segment | FY25 Net Sales | YoY Change |
|---|---|---|
| UGG brand | $2.531 billion | +13.1% |
| HOKA brand | $2.233 billion | +23.6% |
| Other brands | $221.2 million | −8.6% |
Disposals & Divestitures
- Sanuk® brand sale: Closed August 15, 2024. Included full year FY24 results, only a partial run-off in FY25.
- Koolaburra phase-out: E-commerce shuttered March 31, 2025; wholesale wind-down by end of CY2025.
Deckers sources almost all manufacturing through independent contractors in Southeast Asia (chiefly Vietnam), with raw materials (especially sheepskin) sourced via designated suppliers. The Company uses forward purchase contracts for raw commodities and maintains ethical and quality controls through buying offices in Hong Kong and supervision in China, Vietnam and Indonesia.
2. Risk Factors (Item 1A)
Prominent highlights from over 70 disclosed risks:
Industry & Competitive Risks
- Fashion & Preference Shifts: Rapid trends require nimble design and inventory.
- Competition: Competes with large athletic/apparel players and new entrants (e.g. Tencent-backed brands).
Market & Economic Risks
- Consumer Discretionary Exposure: Premium pricing makes products sensitive to recessions, inflation, and discretionary spend.
- Wholesale Partner Health: Streamlined retail footprint and e-tail disruption could pressure department store/ specialty accounts.
Supply Chain & Commodity Risks
- Sheepskin Pricing: Limited tanneries in China/Australia; incidental price & supply volatility.
- Tariffs & Trade Policy: US tariffs on imports and geopolitical conflict could raise COGS.
- Manufacturing Concentration: Heavy reliance on Vietnam; natural disasters, labor shortages, or pandemics pose interruption risks.
Operational Risks
- Seasonality: UGG’s winter focus historically drives Q3 sales; offset by HOKA’s year-round cadence.
- Inventory Management: Long lead times & pre-season orders require predictive planning to minimize markdowns & stockouts.
ESG & Regulatory
- Environmental & Social Governance: Elevated stakeholder expectations on sustainability, labor practices, supply chain ethics.
- IP & Counterfeiting: Aggressive policing of UGG/HOKA trademarks worldwide, including lawsuits for counterfeit goods.
Financial & Taxation
- Foreign Exchange: ~36% of sales outside the US; hedges managed with forward contracts.
- Indebtedness: Modest revolving credit facility capacity ($400M); low leverage but subject to covenants.
- Tax Uncertainties: Global minimum tax (Pillar Two), uncertain tax positions under continuous audit.
Deckers mitigates many of these risks via diversified segments, structured commodity contracts, ethical sourcing codes, cash flow hedges, and multi-year credit arrangements.
3. Managements Discussion & Analysis (Item 7 & 7A)
Consolidated Results (FY25 vs. FY24)
| Metric | FY25 | FY24 | Change |
|---|---|---|---|
| Net Sales | $4,985.6M | $4,287.8M | +16.3% |
| Gross Margin | 57.9% | 55.6% | +230bps |
| SG&A | 34.3% | 34.0% | +30bps |
| Operating Income | $1,179.1M | $927.5M | +27.1% |
| Operating Margin | 23.6% | 21.6% | +200bps |
| Net Income | $966.1M | $759.6M | +27.2% |
| Diluted EPS | $6.33 | $4.86 | +30.2% |
Drivers:
- HOKA Growth (+23.6% sales): Market share gains, new distribution points, marketing investments.
- UGG Resilience (+13.1% sales): Year-round Classics & lifestyle mix, maintained season extensions.
- Margin Expansion: Strong DTC sell-through, selective pricing, premium mix.
Cash Flow & Liquidity
FY25 operating cash flow: $1,044.5M
CapEx run-rate: ~$120–130M planned for next fiscal year (store growth, tech infrastructure, supply chain).
Net cash on hand: $1.889B
Revolving credit capacity: $400M (untapped), plus CNY300M line in China.
Market Risk Disclosures (Item 7A)
- Foreign Exchange: 10% move in FX rates = ~$34M fair value impact on derivatives.
- Interest Rate: 100bps move in rates on invested cash = ~$14.7M P&L swing.
- Commodity Price: Committed ~$231M minimum purchases for sheepskin/EVA through FY27.
4. Financial Statements (Item 8) & Key Balance Sheet Points
- Trade A/R, net: $332.9M (DSO stable)
- Inventories: $495.2M (inventory turns above target)
- Property/Equipment (net): $325.6M (new Indiana DC online)
- Leases: $276.98M undiscounted operating lease commitments (average 5.5-year weighted lease life)
- Goodwill & Intangibles: $14.0M goodwill & $15.7M net intangibles (no impairments FY25).
5. Governance and Other Highlights
- Board Oversight: Audit & Risk Committee oversees cybersecurity, risk management.
- Cybersecurity: No material breaches in last 3 years, ongoing enhancements (NIST, vendor audits).
- ESG Recognition: Barron’s 100 Most Sustainable, Newsweek’s Most Responsible, Forbes’ Best Companies.
- Culture: 5,500 global employees, 91.5% engagement survey participation, 89% pride metric.
6. Investment Considerations & Score
Pros:
- Powerful brand portfolio (UGG & HOKA) with complementary seasonality
- Consistent double-digit top-line growth; margin expansion
- Robust margin profile and cash generation
- Strong balance sheet (no net debt, $1.9B cash)
- DTC growth with high mix of profitable channel
- Active buyback program against attractive valuations
Cons/Risks:
- Fashion and commodity price volatility (sheepskin/EVA)
- Wholesale partner concentration (23.7% of net sales top 10 customers)
- FX & tariff exposures
- Supply chain & capacity risks
Verdict: Deckers exhibits disciplined execution across its leading brands, robust financial performance, and a clear strategy for continued growth. We assign an investment score of 8.0 / 10—reflecting strong upside potential tempered by the inherent discretionary nature of its end markets and supply chain considerations.
Full 10-K Review & Score on Deckers Outdoor (DECK): Read the deep dive
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