06:26 AM EDT, 10/24/2025 (MT Newswires) -- Deckers Outdoor's ( DECK ) shares dropped early Friday as the footwear designer and distributor issued a full-year outlook below market estimates, even though it recorded an unexpected year-over-year increase in its fiscal second-quarter earnings.

The company anticipates earnings to be in a range of $6.30 to $6.39 per share and sales of roughly $5.35 billion for fiscal 2026, it said late Thursday. The midpoint of the profit guidance is below the current consensus on FactSet for EPS of $6.38, while the market projects sales to be at $5.42 billion for the fiscal year. The stock fell 11% in the most recent premarket activity.

"This guidance assumes a blended growth rate of approximately 9% from our two largest brands, as we have streamlined our brand portfolio to focus on our most profitable long-term opportunities," Chief Financial Officer Steven Fasching said during an earnings call, according to a FactSet transcript. Sales for the Hoka brand are expected to rise by a low-teens percentage for fiscal 2026, while UGG growth is pegged at low-to-mid-single-digit percentage.

Deckers saw a "slight delay" in tariff-related headwinds and didn't experience a "meaningful" negative impact in the second quarter due to the price hikes it introduced at the beginning of July, combined with its efforts to bring in additional inventory ahead of the implementation of increased rates, according to Fasching. The company's tariff headwind expectations in the second half of the fiscal year "remain largely unchanged," he added.

"With timing-related favorability seen in the second-quarter result and our expectation of tariff impact in the second fiscal half largely unchanged, we now expect the unmitigated tariff impact on fiscal year 2026 to be approximately $150 million," Fasching said. "We now estimate that our mitigation efforts for this fiscal year will offset approximately $75 million to $95 million of this pressure, including benefits from select, strategic and staggered pricing increases, as well as partial cost sharing with factory partners."

For the quarter ended September, Deckers' net income advanced to $1.82 a share from $1.59 the year before, defying the average analyst estimate for a decrease to $1.58. Sales improved 9% to $1.43 billion, ahead of the Street's view for $1.42 billion.

Revenue from the Hoka brand climbed 11% to $634.1 million, with wholesale remaining the "primary driver of growth," Fasching said on the call. Direct-to-consumer sales of the brand inclined 8% as "international momentum carried through from the previous quarter" along with improvements in the US, according to Fasching.

UGG sales moved 10% higher to $759.6 million, buoyed by a 17% wholesale gain, amid robust retail partner demand, which was partially offset by a 10% decline in the direct-to-consumer channel, Fasching told analysts. The brand's soft direct-to-consumer performance was due to persistent "pressures from better in-stock positions with our wholesale partners" and macroeconomic challenges for US consumers, with these factors expected to continue to have an impact on growth in the second half, the CFO said.

"In the US, consumer sentiment is still under pressure, but we are encouraged by the signs of progress we have seen in our business and have maintained our focus to ensure Hoka and UGG remain positioned for long-term success," Chief Executive Stefano Caroti said on the call. "The US marketplace remains dynamic, with recent consumer trends indicating a heightened preference for multi-brand shopping experiences."