Williams Trading cuts Deckers Outdoor stock price target on weak DTC trends

Williams Trading cut its Deckers Outdoor price target to $100 from $135 while maintaining a Buy rating, lowering fiscal 2027 and 2028 revenue and EPS estimates after management cited weak domestic, e-commerce-driven DTC trends. Fiscal 2027 revenue growth guidance for HOKA was reduced from low-double-digit to high-single-digit growth, and UGG’s from mid-single-digit to low-single-digit growth. Deckers raised reported fiscal 2027 EPS guidance to $7.80–$7.95 from $7.35–$7.50, including a $0.52 IEEPA tariff-refund benefit; excluding refunds, guidance was cut to $7.28–$7.43. Recent fiscal second-quarter revenue grew 3.5%, below the 5% market expectation, while EPS exceeded guidance partly due to a $0.28 tariff refund.

Analysis

The key signal is not the lower analyst target; it is the divergence between reported EPS support and underlying demand. Tariff refunds lift the headline outlook while the ex-refund EPS range is lower, making near-term earnings beats less informative about run-rate profitability. Domestic e-commerce weakness and promotional pressure also raise the possibility of margin erosion if Deckers must use discounts to protect sell-through. A European shipment recovery could help next quarter’s reported revenue, but would not resolve the more persistent U.S. demand concern.

Over the next 1–3 months, watch U.S. full-price sell-through, direct-to-consumer trends, gross margin, and whether management revises brand growth expectations again. In 6–18 months, sustained weakness would challenge the premium-growth assumptions supporting HOKA and UGG and could weigh on valuation; conversely, stable full-price demand would make the current reset look excessive. The stock’s proximity to its $77.20 52-week low may attract dip buyers, but that level is not a fundamental floor. The contrarian risk to a bearish stance is that shipment timing and refund-adjusted comparisons make current results look worse than underlying demand.

Key Decisions for Investors

• Maintain an underweight in DECK rather than add on the low alone; the current guidance’s tariff benefit makes organic EPS momentum weaker than the headline range suggests.
• For a relative-value expression, consider short DECK against a diversified footwear/apparel peer basket, sized modestly given the risk of a shipment-timing rebound and HOKA/UGG resilience. Avoid treating any single competitor as a clean hedge.
• Use the next results and trading updates as the catalyst check: improving U.S. full-price sell-through and stabilizing gross margin would falsify the cautious thesis; further guidance cuts or heavier promotions would strengthen it.
• Treat a sustained break below $77.20 as a risk-control alert, not a price target. Before using options, verify implied volatility and skew; the supplied information does not establish attractive option pricing.