HOKA's growth rate drops to single digits, and the logic of new product expansion has yet to be realized

HOKA's growth rate is clearly slowing down.

On July 23, HOKA’s parent company Deckers Brands disclosed its financial results for the first quarter of fiscal year 2027 ending in June. The company’s revenue increased by 5.7% year-on-year to $1.02 billion, while diluted earnings per share rose slightly from $0.93 to $0.94.

Specifically, HOKA’s revenue grew by 7.7% year-on-year to $704 million, marking the first time in recent years that its growth rate has fallen to single digits. In the same period last year, its revenue was still growing by 19.8%; in the previous quarter, the increase was 14.5%.

UGG’s revenue grew by 4.9% this quarter to $278 million, also slower than the 9.2% in the previous quarter.

HOKA still contributes nearly 70% of Deckers’ revenue, but it is now difficult to maintain the rapid growth of the past few years. The company expects HOKA’s growth to remain in the high single digits in the second fiscal quarter and maintain a low double-digit growth target for the full year.

Management attributed part of this quarter’s slowdown to the shipping schedule, rather than a clear weakening in end-user demand.

Deckers stated that the company adjusted the shipping rhythm for international wholesale and distributor businesses, delaying some revenue recognition from the first half to the second half of the year.

HOKA’s growth acceleration in the second half of the year will also mainly come from the centralized delivery of these orders.

Channel data provides some support for this explanation. This quarter, HOKA’s Direct-to-Consumer (DTC) revenue grew by 17%, significantly outpacing overall brand growth.

Management also emphasized that HOKA will not significantly increase supply to maintain quarterly growth rates; it still aims to control inventory and discounts, maintaining a sales model driven by end-user demand.

As of the end of June, Deckers’ inventory dropped by 5% year-on-year, and quarterly gross margin increased by 0.6 percentage points to 56.4%.

To reach a broader customer base, HOKA is simultaneously expanding its professional running and lifestyle product ranges, and focusing on launching different products into more segmented channels.

Clifton Pro targets professional running retailers, Clifton L enters the sports lifestyle channels, and some shoes are aimed at general sports goods and department store channels.

However, management also admitted that the current product portfolio is still in the early stage of strategic upgrading. The second half of the year will benefit from a richer product mix, but larger-scale new product launches will gradually take place in spring 2027 and beyond.

HOKA’s growth will also not be completely linear. Deckers’ management stated that as the brand’s scale expands and the shipping schedule of international wholesale business changes, fluctuations in quarterly growth rates will become more common.

Market concerns have not disappeared because of this.

Deckers did not raise its full-year revenue guidance; earnings per share guidance increased by only $0.05, mainly due to a better-than-expected gross margin in the first fiscal quarter.

The company also raised its tariff cost assumption from 10% to 12.5%, expecting gross margin pressure in the second quarter.

With increasing competition in running shoes and a high brand base, how much incremental growth current product upgrades and channel expansion can bring still needs to be verified by subsequent sales data.