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Deckers (DECK +13%) is stepping sharply higher with a big gain today after reporting Q1 (Jun) results last night. The footwear company reported a huge EPS beat while revenue rose a robust 16.9% yr/yr to $964.5 mln, well ahead of $890-910 mln prior guidance. Also, its in-line Q2 (Sep) guidance was a nice change from several recent quarters where DECK provided downside guidance. This has caused the stock to be under pressure since late January.

• The company started of FY26 on the right foot, with both of its major footwear brands (HOKA and UGG) outperforming expectations set on tis last call. Both brands gained market share while maintaining a high degree of full-price integrity. HOKA delivered the largest quarter in its history, driving strong sell-throughs of key model transitions.
• HOKA brand revenue rose 19.8% yr/yr to $653.1 mln, with global wholesale sales up 30%. This was driven primarily by international regions, especially EMEA and APAC, although the US also contributed to this growth. DTC increased 3% globally. However, that was partially offset by ongoing pressure in the US online channel. DECK says the consumer is showing a strong affinity for updates made to HOKA brand's three largest franchises.
• What is really driving DECK's results is remarkable growth in its international markets, with HOKA and UGG both contributing to DECK's 50% increase in international revenue in Q1. This is welcome news as DECK navigates a choppy US consumer environment.
• UGG brand revenue grew 18.9% yr/yr to $265.1 mln. UGG wholesale increased 30% yr/yr while DTC decreased 1% with similar regional dynamics as HOKA. On DTC, Deckers is seeing pressure in the US related to consumer sentiment and in-store shopping preferences. International drove the bulk of growth for UGG in Q1, with EMEA and China contributing the largest gains. Also, Men's footwear grew at nearly 2x the overall brand rate. UGG is best known for its women's luxury winter boots. However, the brand has made headway in its goal to expand the brand for year-round appeal, including sandals, sneakers and it has been expanding its men's offerings.

Given all the negativity seen in recent quarters/guidance, we think sentiment was quite low heading into its Q1 report. Investors were thrilled to see the strong upside and in-line guidance. We suspect there were fears of another guidance cut, especially given the state of the US consumer and the high price points for its brands. Also, DECK is not known for discounting. The US was not great, but not horrible. However, the international side of the business was impressive. Investors were pleasantly surprised to DECK kick off FY26 on a good note.