Deckers Brands (DECK) 2027財年第二季財報電話會議：利潤率強勁，展望審慎

重點總覽

• Deckers Brands 公布 2027 財年第二季營收為 14.8 億美元，年增 3.5%。HOKA 品牌營收成長 7%，UGG 品牌營收則成長 4%。
• 稀釋後每股盈餘 (EPS) 成長 27% 至 2.31 美元，其中包括來自 IEEPA 關稅退款淨額的 0.28 美元收益。若排除該收益，EPS 為 2.03 美元，年增 11.5%。
• 毛利率擴增 430 個基點至 60.5%。關稅退款貢獻約 310 個基點，而正價銷售與良好的產品組合則推動了 120 個基點的基礎改善。
• 隨著競爭對手加大促銷力度（特別是在運動鞋領域），美國直營 (DTC) 業務表現有所減弱。Deckers 表示，相較於近期的邊際營收成長，公司更優先考慮正價銷售與品牌健康度。
• 管理層目前預計 2027 財年全年的營收將達到 57 億美元至 57.25 億美元，其中 HOKA 的成長率為高個位數，UGG 的成長率為低個位數。
• 全年稀釋後 EPS 指引為 7.80 美元至 7.95 美元，包含截至目前收到的關稅退款及相關利息，並假設 2027 財年將實施 10 億美元的股票回購。

核心財務數據

業務與營運表現

HOKA

HOKA 營收成長 7%。批發營收成長 9% 至 4.44 億美元，而 DTC 營收成長 4% 至 2.34 億美元。

在強勁的正價銷售支持下，國內與國際市場的批發售罄率依然強勁。國際 DTC 表現亦保持穩健，但美國電子商務因運動鞋普遍進行促銷而承受壓力。

Bondi 系列領軍核心產品，Clifton Pro 亦對成長做出貢獻。管理層承認 Transport、Kawana 及 Solimar 的更新並未獲得強烈迴響，這為自 2027 年春季開始的產品執行提供了契機。

即將推出的新產品包括 1 月發布的 Bondi 10、Mach Pro、Mach 8 以及其他專業運動與休閒生活系列產品。管理層表示，這些新品發布加上國際市場需求的持續增長，將支持 HOKA 營收成長在第四財季加速。

UGG

UGG 營收成長 4% 至 7.86 億美元。批發業務成長 7% 至 6.41 億美元，而 DTC 業務則下降 8% 至 1.46 億美元。

管理層指出，消費者越來越傾向於在有即時需求時才購買，並將消費集中於促銷活動期間。儘管如此，Lowmel、Goldenstar Evelina、Zora、Quill 以及羊毛主導的服飾系列仍獲得熱烈迴響。Sunburst、Classic Tall 與 Classic Mini Dipper Legwarmer 的早期需求亦超出管理層預期。

Deckers 計劃透過協調一致的行銷活動、優化的數位體驗以及選擇性的促銷活動來迎戰假期購物季，旨在保護 UGG 的高端定位。

區域市場趨勢

國際市場依然是成長的主要動力來源，其中亞太地區 (APAC) 錄得最高百分比增長，對營收增量貢獻顯著。

在歐洲、中東及非洲地區 (EMEA)，受第三方物流供應商營運中斷影響，約 2,200 萬美元的出貨遭到延誤。Deckers 已採取補救措施，但管理層警示，並非所有延誤的營收都能在下半年彌補，部分訂單可能會進一步推遲或被取消。

在美國市場，更為激烈的促銷活動與消費者更趨精挑細選的支出，主要對 DTC 表現造成沉重壓力。批發表現則優於公司預期，部分抵銷了國內電商的疲軟。

管理層財務指引

毛利率展望包含在第二與第三季收到的約 8,800 萬美元 IEEPA 關稅退款淨額。這代表約已申報金額的 90%；指引未包含尚未收到的退款。

針對 2027 財年第三季，管理層預計總營收成長率為低個位數。其中 UGG 預計將以低個位數增長，而 HOKA 預計將以低至中個位數增長。稀釋後 EPS 預計落在 3.52 美元至 3.60 美元之間，包含約 0.24 美元的關稅退款收益。

風險與關注焦點

• 在 Deckers 維持正價紀律的同時，美國運動鞋市場的促銷活動可能會持續對 DTC 流量與轉換率施加壓力。
• 消費者正日益尋求折扣、圍繞促銷活動購物，並延後購買時間至接近實際需求時。
• EMEA 地區的物流中斷，為延誤的批發與經銷商出貨帶來了時程拉長及訂單取消的風險。
• 較高的運費與促銷活動的適度增加，預計將部分抵銷第三財季關稅退款所帶來的收益。
• 2026 日曆年推出的部分 HOKA 核心系列更新市場迴響較為平淡，這使得 2027 年春夏與秋冬產品的執行變得更加重要。
• UGG 的假期購物季展望並未假設能達到前一年強勁旺季時的補貨訂單水準。

分析師問答亮點

• 品牌長期成長：管理層表示，短期指引修正反映的是當前市場狀況，而非 HOKA 或 UGG 品牌健康度惡化。管理層提醒不要將一兩個季度的表現推演為品牌的長期前景。
• 毛利率強勁表現：若排除關稅退款，第二財季毛利率改善了 120 個基點，由正價銷售與有利的產品組合大致平分貢獻。
• 第三財季利潤率架構：管理層指出，毛利率應略高於 60%，相較於去年同期的 59.8%。預計超過 200 個基點的關稅退款收益將被運費與促銷活動帶來的約 150 個基點負面影響部分抵銷。
• HOKA 通路佈局：Deckers 認為在美國體育用品與運動專賣通路仍有選擇性擴張的空間。管理層表示，更廣泛的產品分眾化應能讓批發客戶之間實現更有意義的差異化。
• Bondi 系列過渡：Bondi 9 正價銷售持續強勁。管理層預計在 1 月發布 Bondi 10 之前，市場庫存將相對乾淨，降價促銷的時間點將視庫存水準而定。
• UGG 假期需求：消費者對新品與精選經典款式的早期反應令人鼓舞，但管理層仍保持謹慎，因為該季度的銷售大部分集中在 11 月和 12 月。

法說會完整逐字稿

完整財報電話會議逐字稿

管理層陳述

Operator

Good afternoon, and thank you for standing by. Welcome to the Deckers Brands' Second Quarter Fiscal 2027 Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded.

I'll now turn the call over to Erinn Kholer, Vice President, Investor Relations and Corporate Planning.

Erinn Kohler

Hello, and thank you, everyone, for joining us today. On the call are Stefano Caroti, President and Chief Executive Officer; and Steve Fasching, Chief Financial Officer.

Before we begin, I would like to remind everyone of the company's safe harbor policy. Please note that certain statements made on this call are forward-looking statements within the meaning of the federal securities laws, which are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements made on this call today, other than statements of historical fact, are forward-looking statements and include statements regarding our ability to drive profitable growth, brand health and long-term value, the macroeconomic and consumer environment and related impacts on our business and operating results; including the expected persistence of current consumer and promotional trends, our current and long-term strategic objectives, the expected performance of our brands and demand for our products; the anticipated impacts of our brand, product, marketing, marketplace, distribution and investment strategies, including the expansion of our wholesale presence and our brand's lifestyle apparel and year-round product offerings, our product development plans and the timing and anticipated performance of product launches, changes in consumer behavior, our ability to acquire new consumers and gain market share, our ability to achieve our financial outlook, including anticipated revenues, gross margin, SG&A expenses, operating margin, effective tax rate, promotional activity, anticipated rate of full price selling and earnings per share, our cost management and resource allocation actions, the anticipated effects of corrective actions related to our European third-party logistics provider, the timing of wholesale and distributor shipments our ability to maintain a premium statements regarding tariff refunds and our ability to generate free cash flow and execute our capital allocation strategy, including potential share repurchases.

Forward-looking statements made on this call represent management's current expectations and are based on information available at the time such statements are made. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors such as changes in consumer demand, foreign currency exchange rate fluctuations and changes to trade qualities, including the amount and timing of any future tariff refunds that may cause our actual results to differ materially from any results predicted, assumed or implied by the forward-looking statements. The company has explained some of these risks and uncertainties in its SEC filings, including in the Risk Factors section of its annual report on Form 10-K and quarterly reports on Form 10-Q. Except as required by law or the listing rules of the New York Stock Exchange, the company expressly disclaims any intent or obligation to update any forward-looking statements.

On this call, management may refer to financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including constant currency, free cash flow and certain results and outlook measures presented excluding the net benefit of IEEPA tariff refunds and related interest, such as diluted earnings per share, gross margin and operating margin. For example, the company reports comparable direct-to-consumer sales on a constant currency basis for operations that were open throughout the current and prior reporting periods. The company believes these non-GAAP financial measures are useful supplemental indicators of its operating performance because they exclude items that are unrelated to and may not be indicative of its core operating results. The company defines free cash flow as net cash provided by operating activities for a particular period less capital expenditures made during that same period, and believes free cash flow is a useful supplemental measure of liquidity as it reflects the cash generated from operations after investments required to support the strategic growth of the business. Please review our earnings release published today for additional information regarding our non-GAAP financial measures.

With that, I'll now turn it over to Stefano.

Stefano Caroti

Thank you, Erinn. Good afternoon, everyone, and thank you for joining today's call. In the second quarter, Deckers delivered another solid result. We expanded our global presence, performed well in multi-brand environments and delivered a high mix of full price sales. For the quarter, total company revenue grew 3.5% versus last year, with HOKA and UGG increasing 7% and 4%, respectively. Diluted earnings per share was $2.31, including a $0.28 benefit from the impact of IEEPA net tariff refunds received in the quarter. Excluding this benefit, diluted EPS would have been $2.03 well above the high end of our guidance range and up 11.5% versus last year. Despite some top line pressure, we maintained healthy gross margins, delivered global growth and continue to invest in the long-term strength of our brands. Our commitment to full price selling and disciplined expense management demonstrates the resilience of our operating model and the value of our strategic approach to growth. As consumers face increasing economic pressure, our updated fiscal year outlook reflects a more measured approach to growth over the next two quarters. Consistent with our strategic framework, we're making deliberate choices about how we compete, win and grow our brands. We will continue to prioritize margin preservation and long-term value over chasing potential incremental near-term revenue that could dilute our brands. We will use our flexible expense levers to stay agile and protect the integrity of our premium global brands.

Against the backdrop, I will now share what we are seeing across the business in the operating environment, along with the actions we are taking to build on what's working and address the areas where we see opportunity for improvement. International continues to be an area of strength for our brands. Within International, APAC delivered our highest percentage growth and was a meaningful contributor to incremental year-over-year dollar growth in the second quarter. International markets serve as a proving ground for our brands in emerging categories. With UGG and HOKA sale in earlier stages of development in many of these markets, these consumers often view our brands through a broader lifestyle lens, helping to influence trends that late gain traction in other regions.

In EMEA, demand signals remain strong. However, service disruptions at our third-party logistics provider during a peak shipping period affected the timing of certain shipments. While this impacted revenue in the quarter, we've taken corrective action with our partner to restore normal operations, improve visibility and reduce the risk of future disruptions.

In the U.S., we saw promotional activity increase throughout the quarter, particularly in athletic footwear, which weighed on our U.S. e-commerce performance as we maintain full price discipline. We also observed two shifts in consumer behavior. Consumers increasingly seeking discounts concentrating traffic around promotional events and consumers becoming more purposeful in their spending and prioritizing products with immediate relevance and utility. Given the trends across our brands and the growing pressure on consumers, we've identified areas where improving execution can have a meaningful impact. Our objective is to deliver healthy market share gains even in a more challenging environment. These actions are grounded in our four guiding principles of consumer first, brand-led, innovation forward and globally driven. Along with our playbook, these key pillars are designed to support sustainable brand growth and create long-term value for shareholders.

As we look ahead, we're focused on: First, delivering product excellence. We have a robust innovation pipeline designed to deliver tangible consumer benefits, reinforce the positioning and credibility of our brands and create meaningful new revenue streams. We will maximize its impact through sharper franchise segmentation, clear differentiation, elevated design and purposeful innovation that is commercially relevant and directly connected to consumer demand. Second, elevating marketing capabilities. We're strengthening our global marketing capabilities, so our products connect with consumers more meaningfully. Through sharper brand storytelling, more impactful consumer messaging, and more compelling experiences will build deeper engagement across our growing global audience. This integrated approach will also enable us to deploy resources more effectively and generate greater consistency, leverage and returns from our marketing investments. Third, strengthening marketplace execution. Consumer behavior is changing rapidly, and we're evolving how we show up. We're focusing our resources in the channels, platforms and points of sale where consumers are most engaged and purchase intent is highest. By amplifying our digital presence, deepening engagement, enhancing loyalty programs and elevating execution at point of sale, we can meet consumers more effectively and convert interest into demand. And finally, continuing to apply disciplined cost control and resource allocation. We're making clear choices moving faster and prioritizing initiatives that we believe will deliver the greatest results. This approach will help us manage cost pressures, spend efficiently and concentrate resources on the actions that will most effectively support the long-term health of our brands.

Steve will provide more detail on our second quarter financial performance and updated fiscal '27 outlook later in the call. Before that, however, I will review HOKA and UGG's second quarter performance and discuss how we expect current trends to develop through the balance of the year. Starting with HOKA, global revenue in the second quarter increased 7% versus last year to HOKA growth versus last year was driven by both wholesale and DTC. HOKA wholesale increased 9% to $444 million, while DTC grew by 4% to $234 million. HOKA continued to perform well across our global wholesale accounts with strong sell-through in domestic and international regions. Consumers are increasingly turning to wholesale partners, both in stores and online to explore and compare brands in multi-brand destinations. And HOKA continues to deliver a high degree of full price selling. This performance reinforces the brand's premium positioning and the strength of key franchises. While HOKA maintained strong performance in a competitive wholesale landscape, DTC results were uneven across markets. While the international DTC growth remained robust, U.S. performance was pressured amid a highly promotional U.S. environment, particularly in the athletic footwear category.

Across the business, our core franchises performed well, led by Bondi. With the introduction of Clifton Pro, a well-received extension of the Clifton franchise also contributed to that success. However, feedback from consumers and wholesale partners indicated that some other franchise updates in calendar year '26 did not resonate as well. This feedback highlights where we have an opportunity to improve for future seasons, starting with spring 2027. We remain focused on continuing to deliver high-quality growth with our wholesale partners, while also improving DTC execution.

Across the global marketplace, we'll continue to focus on distinctive performance product franchises that reinforce our innovation credibility, convert awareness into a broader base of lifetime consumers and expand the HOKA brand's authentic relevance in lifestyle. As we advance these initiatives, we're confident we will improve our ability to capture market share moving forward. Specific to our product pipeline, our work to sharpen franchise segmentation is already in flight.

Let me provide further insight into the work we're doing. On the performance side, we have a clear approach across the glide and fly collections that I shared on last quarter's earnings call. We will extend our leadership in Max Cushioning through Glide and expand our speed platform with Fly. Within the Glide collection, Bondi 10 launches in January, introducing an upgraded dual density super critically foam midsole with streamlined design built for performance runners looking for premium cushioning and comfort. I'm confident Bondi 10 will be a standout performer. In our Fly collection, we launched Mach Pro in April, which brings a bold and aesthetic and ATPU midsole to our fastest performance word franchise designed for daily training. Testing of Mach has been exceptional and bookings are very strong.

Then in early fall, we'll build on that momentum with another major update to the Mach franchise. We recently previewed Mach 8 with several major accounts and the reaction was excellent. In addition, we'll be expanding our price architecture in both directions, up and down, broadening access while elevating the pinnacle of the brand. In the first half of calendar 2017, we'll introduce two powerful expressions of this strategy. Fly pace in January, at $115, will welcome a new consumer into HOKA. And Bondi Ultra X in June at $325, will deliver our softest, most cushion ride for consumers seeking the very best. Bondi Ultra X represents a major leap forward in HOKA innovation, featuring a triple density ATPU midsole that takes maximum cushioning to a whole new level.

Turning to Lifestyle. We have a three-pronged approach. First, we're building on the success of archived models such as Mafate Speed 2 with modernized applications, taking insights from early success we are seeing in certain markets to influence opportunities across the globe. Second, we'll expand Bondi and Clifton through fresh colors and new materials that unlock more wearing occasions to drive greater franchise segmentation and differentiation across the marketplace. And third, we'll see new models like CLO 70, a lower profile silhouette inspired by running shoes from the 1970s and designed to bring new lifestyle consumers into the brand.

As we build the lifestyle opportunity for HOKA, we're applying the same authentic approach that established the brand's performance credibility. We're still grounded in our performance heritage while building lifestyle relevance through differentiated product and consistent storytelling, refined season over season based on consumer and partner insights. Positive feedback from key accounts reinforces our belief that we're building momentum with our target consumer and have ample opportunity to take share in this category. We have a powerful product pipeline across performance and lifestyle, grounded in meaningful innovation, clear segmentation and disciplined distribution. That combination will help us switch more consumers, strengthen the brand every level and drive the next phase of HOKA growth. Delivering differentiated products is only part of the equation. We must also connect innovation with consumers in more compelling and impactful ways. Working with external experts, we reviewed the deployment of our marketing investments and are making changes to improve its effectiveness and efficiency. We're clarifying HOKA brand messaging, sharpening product storytelling and broadening our content to resonate with a larger audience.

Specific to our third quarter, we're focused on executing a strong holiday season for HOKA, maintaining the strength of full-price demand while preparing the marketplace for key launches in our fiscal fourth quarter. We remain focused on protecting what makes the HOKA brand distinctive while raising the level of execution needed to capture the significant global opportunity ahead.

Moving on to UGG. Global revenue in the second quarter increased by 4% versus last year to $786 million. Growth was driven by wholesale, which increased 7% to $641 million. This was partially offset by an 8% decline in DTC, which delivered $146 million in the quarter. With the second quarter being a largely selling quarter for the brand, wholesale performance was healthy across the U.S. in international regions, which sets the stage for the upcoming holiday season. In addition, we continue to see very positive indicators of brand health and interest, giving us confidence that UGG is well positioned for peak season. At the same time, pressures on consumers are prompting some to delay purchase and feel closer to need. We believe that this shift toward a more deliberate buy now, wear now purchasing behavior makes it even more important to give consumers compelling reasons to choose UGG across a broader range of styles and occasions.

Across the globe, consumers are responding to elevated product that is distinctly gravitating towards fresh expressions of iconic franchises as well as new styles that bring recognizable ag brand codes into new and unexpected categories. In Q2, we drove success with Lowmel, continue to build UGG brand's relevance in sneakers, Goldenstar Evelina, extending our presence in clogs and Zora and Quill demonstrating the brand's ability to quickly adapt to fashion trends. We're also seeing growing demand for UGG head to toe, with fleece-led apparel driving engagement and reinforcing the brand's potential to cement itself as a premium global lifestyle brand. The goal now is to bring these innovation stories to a broader audience. Our most loyal consumers look to UGG for what is next, and we're focused on extending that excitement across a broader consumer base and all genders. Classics and Tasman are already well-established franchises, while we're building Lowmel, Golden, Zora and Quill into more meaningful contributors. This deliberate season-by-season approach is designed to create hero franchises with lasting relevance.

As awareness grows, these franchises can expand how consumers engage with AG across categories and wearing occasions. During the quarter, our teams created urgency through scarcity, timely restock messaging and culturally relevant product stories. Sunburst, Classic Tall and Classic Mini Dipper Legwarmer demonstrated the effectiveness of the strategy with early season demand exceeding our expectations. These successes show that consumers continue to respond to compelling styles and fresh expressions of the brand, even in a more selective spending environment.

As we move deeper into UGG season, our focus is on applying those learnings more broadly and raising our level of execution across the business. That means being more purposeful in how we tell our product stories creating greater energy and urgency around key franchises and newness and driving elevated consumer engagement through sharper alignment across product, marketing and marketplace execution. Building on the encouraging response to key styles, our teams are hyper focused around the key action plan to deliver the brand's largest quarter in its nearly 50-year history. We will support peak shopping periods with coordinated marketing and enhanced digital experience and compelling product storytelling incurred in our gift the feeling holiday campaign.

Throughout the third quarter, we remain disciplined in how we drive digital conversion and execute peak shopping periods while managing promotions selectively to protect the long-term health of the brand. I'm excited to see the brand activations come to life this holiday season.

With that, I'll now hand over the call to Steve, who will provide more detail on our second quarter financial results and updated fiscal year '27 outlook.

Steve Fasching

Thanks, Stefano, and good afternoon, everyone. As Stefano outlined, second quarter performance reflected a combination of continued international momentum and solid performance in multi-brand environments. Combined with softer U.S. DTC trend dated with our EMEA third-party logistics transition. As the quarter progressed, the U.S. marketplace became increasingly promotional However, we remain disciplined in how we manage the market marketplace, protecting full price selling and prioritizing the long-term health of our brands. That discipline is reflected in our financial results. While revenue came in slightly below our expectations, our continued focus on full price selling and expense management contributed to exceptional gross margin and earnings per share performance. Importantly, these results demonstrate the flexibility and the resilience of the Deckers operating model even in a more pressured environment.

As we execute against the actions Stefano outlined, our financial strength gives us the capacity to continue investing behind our brands while remaining disciplined in how we allocate resources. We believe that balance protecting profitability today, while investing behind our most compelling long-term opportunities remains fundamental to how we aim to create sustainable value over time.

Now let's get into the details of second quarter results. Second quarter fiscal 2027 revenue came in at $1.48 billion, representing an increase of 3.5% versus the prior year. Performance in the quarter was driven by HOKA and UGG, which increased 7% and 4% versus last year, respectively. And our Other Brands segment was down 54% versus last year, primarily due to lapping the final quarter of impacts related to the wind down of stand-alone operations for the Koolaburra brand. As Stefano mentioned, we saw some top line pressure against our original expectation for the quarter as a result of shipping delays related to our European 3PL transition as well as some e-commerce softness. The amount of the 3PL shipment delays impacting the quarter was approximately $22 million. The softness in our domestic DTC business was largely offset by better-than-expected wholesale selling across the globe.

Gross margins for the second quarter was 60.5%, up 430 basis points from last year's 56.2%. Second quarter gross margin included an approximate 310 basis point benefit from IEEPA tariff refunds net of cost sharing arrangements with our independent manufacturers. The underlying 120 basis point improvement was driven by favorable full price selling and favorable product mix.

SG&A dollar spend for the second quarter was $506 million, up 6% versus last year's $477 million. The total SG&A expense was below our prior expectations in actions to better align spend with lower revenue growth, while marketing and technology remain the primary drivers of year-over-year investment. This led to an operating margin of 26.3%. Excluding the net IEEPA refund benefit, our operating margin was 23.2%, 40 basis points above last year's 22.8%. Our tax rate was 22.4%, which compares to 21.7% in the prior year quarter.

During the second quarter, we repurchased approximately $299 million worth of shares at an average price of $93.65. Over the first 6 months of fiscal year 2027, we have repurchased $637 million, representing approximately 5% of our outstanding common stock, pacing well ahead of what we signaled at the beginning of the year. This continues to demonstrate our commitment to returning capital to shareholders through disciplined share repurchases while utilizing our strong free cash flow. As of September 30, 2026, the company had approximately $4.4 billion remaining under its stock repurchase authorization. These results culminated in diluted earnings per share of $2.31 for the quarter, which is $0.49 above last year's $1.82 diluted earnings per share, representing EPS growth of 27%. Excluding the net impact of the IEEPA tariff refunds and related interest, diluted earnings per share was $2.03, representing growth of 11.5% versus last year.

Turning to our balance sheet. At September 30, 2026, we ended September with $1.2 billion of cash and equivalents. We continue to tightly manage inventory, which was up 3% versus the same point in time last year to $861 million. And during the period, we had no outstanding filings.

Now moving into our updated outlook for fiscal year 2027. As Stefano outlined, our updated outlook reflects a measured approach to revenue growth in the current landscape, maintaining our focus on protecting brand health and profitability. Importantly, we are maintaining our operating margin outlook and in large part, maintaining our prior EPS expectations before the benefit of net IEEPA tariff refunds. Then with the net impact of refunds received to date, we are increasing our full year EPS outlook.

With that in mind, let me walk you through our expectations for fiscal year 2027. Total company revenue is now expected to be in the range of $5.7 billion to $5.725 billion with HOKA now increasing by a high single-digit percentage versus last year and UGG now increasing by a low single-digit percentage. We are increasing our gross margin expectation to now be approximately 58.5% of reflecting slightly better performance as well as the approximate $88 million IEEPA tariff refund benefit in cost of sales, which is net of cost sharing arrangements with our independent manufacturers for amounts received to date in both the second and third quarter, representing approximately 90% of the amounts we have submitted. We have not factored any remaining unreceived amounts in our forward-looking guidance.

SG&A is now expected to be approximately 35.5% of revenue as we manage costs with discipline and reduced dollar spend in response to lower revenue growth expectations, resulting in a slightly higher percentage of revenue. With these all culminating in a raised operating margin expectation of approximately 23% inclusive of the net IEEPA tariff refunds received to date. Our effective tax rate is still projected to be approximately 23%, and we now expect diluted earnings per share in the range of $7.80 to $7.95. This earnings per share guidance now includes IEEPA's net tariff refunds and associated interest received to date and assumes share repurchases with a value of $1 billion in fiscal year 2027.

Excluding the benefit of IEEPA net tariff refunds received that are now reflected in our outlook, gross margin would be increasing to 57%, and our full year operating margin would still be slightly better than 21.5%, highlighting our discipline and [indiscernible] selling.

To provide a little insight on the third quarter as we are comparing to a very strong quarter last year, we are expecting third quarter total company revenue growth to be in the low single digits with UGG expected to grow low single digits and HOKA anticipated to deliver low- to mid-single digits in the third quarter. Our expectations have factored continued strength internationally, along with anticipated ongoing pressures in the U.S. market, primarily impacting DTC. Third quarter diluted EPS is expected to be in the range of $3.52 to $3.60, which includes an IEEPA net tariff refund benefit of approximately $0.24.

With this third quarter context in mind and our updated full year outlook, we recognize this implies acceleration of revenue growth in the fourth quarter for HOKA. This expectation reflects our confidence in continued international demand signals and includes the benefit of planned global product launches Stefano discussed earlier. As always, these forward-looking statements are subject to the risks Erinn outlined at the beginning of the call.

In closing, our second quarter results represent the flexibility and the resilience of the Decker's operating model. Our high levels of profitability and the need to make targeted investments that we believe can support future market share gains and drive sustainable long-term growth. Thanks, everyone.

I'll now turn the call back to Stefano for his final remarks.

Stefano Caroti

Thank you, Steve. As we look ahead, we remain confident in the power of HOKA and UGG and the significant long-term opportunities in front of both brands. We recognize that the consumer landscape continues to evolve, and we are operating with the agility and discipline required to respond. We will remain laser-focused on protecting our premium brand positioning, driving growth with a high degree of full-price business, managing inventory with discipline, building clear channel and franchise segmentation while preserving industry-leading levels of profitability. Fundamentally, our long-term goals remain intact, and we believe in the significant runway ahead for both HOKA and UGG.

Our brands are strong. Our balance sheet provides flexibility and our operating model allows us to move decisively without sacrificing the long-term health of our brands. We believe that this combination positions Deckers well to navigate the near term and capture the substantial opportunities ahead.

Before turning to Q&A, I'd like to mention a board update we announced today. We are pleased to welcome Rati Sahi Levesque to the Deckers Board effective December 1. Rati brings more than 15 years of leadership experience in the retail industry with deep expertise in digital innovation, brand positioning, elevating brands online and consumer engagement. I'm super excited to have Rati joined the Board and bring her expertise, especially her deep knowledge within the digital commerce channel. We look forward to working with Rati to advance our disciplined growth strategy. I also want to thank Lauri Shanahan, who will retire from the Board when Rati joins. Lauri has been a tremendous asset to me and to Deckers through a period of exceptional growth. Her knowledge, passion and insights have been incredibly valuable, and we're grateful for Lauri's immense contribution, dedication and service to Deckers. We wish her all the best.

Thank you for joining us today. We'll now open the call for questions.

Operator

[Operator Instructions] Our first question is coming from Jay Sole with UBS.

分析師問答

Jay Sole

I'm going to start with one question, and then I do have a follow-up. Stefano, clearly, you're protecting the health of the brand, you're playing the long game, lowering the guidance for both brands right now to high single digit and low single digit. How do we think about the long-term guidance that we talked about in May with HOKA being a potential growing low double digits through fiscal '30 and UGG being mid-single digits. Can you get back to that all going forward next year? If so, how? Just if you can tell us a feel about that, that would be great to start.

Stefano Caroti

Yes, of course. Hi, Jay. We're only 6 months into the guidance we shared. The near-term challenges do not change my belief in our brands and their potential for growth. As you know, growth is [indiscernible] line. And in this environment, we don't want to trade brand equity for short-term revenue. We need to manage the next couple of quarters with discipline. At the same time, we need to keep investing in the opportunities that will drive long-term growth. And the discipline starts really with the quality of our growth. Not all growth is healthy, not all growth is profitable, not all growth is bad enhancing. And I assure you, we'll compete aggressively, but we're not participating in a race to bottom. Experience has stopped really all of us that the right approach in this environment is to continue to build your brand to keep inventory tied and to really focus on full price selling. So our brands continue to be healthy, engagement is strong. Our strategy, we believe, is sound. And our premium model continues to support attractive management. So our vision remains largely intact at this point in time.

Steve Fasching

Yes, Jay, it's Steve. Just to kind of add on that. I think the most important thing is these brands are healthy, and we're controlling them in the marketplace. And so the takedown that you're seeing reflected in this year is more an indication of what we're seeing in the current environment. It is not indicative of what we see for these brands kind of going forward. So the brands are in healthy shape. This is our ability to control the market and to control pricing and margins and profitability. And we just think, given some of the pressures that we're seeing in the market, some of the level of promotion that's going on in the market, especially with our competitors. This is the right step for us and for our brand health. And in the long term, these brands will continue to do well. I would just be careful about kind of extrapolating what we're doing in a quarter or two into any indication of what this represents for the brand over the long term. We believe and have high confidence in what these brands can do over the long term.

Jay Sole

Got it. I mean that makes total sense. If I can follow up on that. Steve, obviously, I think gross margin this quarter is better than -- the Street had modeled even though wholesale grew a lot faster than DTC. Can you just talk about what drove the gross margin upside? And then maybe stepping over. Obviously, there's a lot of promotions out there from your competitors in the analytic footwear space across the wholesale channel. When do you think the marketplace gets clean? When do you think that sort of like just maybe irrational pricing that's out there sort of gets back to a more rational level where maybe full price selling doesn't get hit so much.

Stefano Caroti

Yes, you go first.

Steve Fasching

Yes, I'll start first. So Jay, kind of in terms of that 120 basis point improvement that we talked about outside fund. So that really was kind of split evenly between full price selling and product mix. And so I think it was -- as we look at it, what drove that, it was higher-margin products selling through better as well as us maintaining our full price selling environment. So where we saw others being more promotional or heavily promotional we stayed out of that. We were not getting as aggressive in our promotion levels. We do know that weighed on our DTC performance in the U.S. as a result. But again, to Stefano's point, we don't want to chase revenue that is not productive to the brand or profitability. And so in pulling back on that, we actually performed better from a margin perspective.

Stefano Caroti

Is your question about the marketplace and how soon it will be clean, Jay? I don't have a crystal ball, but what I see is that the second summer '27 and the fall will look better. What I can assure you is that the transition of our models, there was a bit still of an overhang of Clifton 10. We introduced Clifton 11, but we'll be very, very clean of Bondi 9 when we introduce Bondi 10 in January. So I'm confident that we will be quite clean in the marketplace, and that will allow us to continue to drive price business.

Steve Fasching

Yes. And I think just one more thing to add on that, Jay. Look, we're also watching to see what competitors are doing. We don't want to enter that race to the bottom. There's a lot of promotional product out there. There's a lot of product in the inventory that's weighing especially in the athletic footwear space, our belief is we steer pulp over the long term, you're seeing in the current quarter how it's driving better margins. So this will serve us better in the long run. And that's really a big driver of, again, the reduction.

Operator

Our next question is coming from Adrienne Yih with Barclays.

Adrienne Yih-Tennant

Stefano, I guess my question will still be on the promotional environment. I mean we know that there is kind of an excess of inventory in kind of that lifestyle category, but it now also sounds like it's kind of also in the performance category. Is it broadly the athletic footwear in general, is promotional and therefore, you can end up competing against lifestyle products that are also promotional in the marketplace? And then secondarily, UGG is it's really in my mind and the call out has been -- it really is UGG brand's moment, or a little bit more on the brown to a little bit of a nonathletic look to it. So I guess the question there is, are you holding back some sell-in because it is promotional out there? Do you see the order book sort of building into spring/summer? As I've said before, I think that you have some of the most newness that you've had in a couple of years, and it really looks fantastic. Just a little bit more color commentary on the sales mix there.

Stefano Caroti

Yes. Adrienne, hi. Let me start with UGG, buy now, wear now is real, and consumers are purchasing closer to need. To your point, what is very encouraging is that our 360 strategy is paying off, and it's really working across categories and also seasons and wearing occasions. Our growth is increasingly driven by sneakers, shoes, flats, logs apparel and consumers are indeed responding to newness. Keep in mind that we've also been allocating our key styles to ensure scarcity of full price selling. So some of the new products that the team has delivered, Quill, Zora, Evelina, Clog have been really stand out. And the way that we've has been really resonating. So we are looking forward to have -- things are slower than we would like at this present time, but we're confident the consumer will show up because the brand is super healthy and consumer engagement is strong.

Steve Fasching

On the first question, Adrienne, maybe I'll take a first shot and then Stefano can jump in. In terms of kind of the difference between performance and lifestyle, clearly, I think one dynamic that we're seeing in the current environment is -- some people are wearing performance as lifestyle. So anytime you have heavy promotion in performance, it is carried over to an individual who may be wearing performance for lifestyle. So that is creating kind of this promotional cloud, I think, over the environment. That's what we're trying to stay out of. Clearly, there are going to be elements that will always be promotional, your closeout product and so forth. What we don't want to get into is a heavy promotional environment where you're seeing a lot of promotion across multiple franchises, and that includes both brands. And so this is just our step to say some of our competitors want to be very promotional. We don't need to enter that competitive promotional environment. Our brands are healthy. We can maintain better health just by staying clean with a bigger focus on that fuller price sale.

Operator

Our next question is coming from Laurent Vasilescu with BNP Paribas.

Laurent Vasilescu

I wanted to ask Steve, Stefano, I think at the beginning of the year, you guys called out that HOKA continues to see what outpace HOKA wholesale. Just curious -- and I think on UGG, it was supposed to be an equal balance growth between both channels. So with the revised guidance, any chance you can give us some updated thoughts on how we should think about those channels across both brands for the year? And then I've got a follow-up question on the gross margin.

Stefano Caroti

Sure. Just related on HOKA. I think from an international perspective, we still believe that to be true. What you stated where we're seeing the pressure more is in the U.S. market. So that dynamic has changed a little bit with the pressure that we're seeing in the U.S. and where we're trying to remain as clean as possible within our e-commerce platform, especially. That's where we're seeing some of the pressure where consumers may be finding product through wholesalers through wholesale online at heavier promotions. We don't want to enter into that promotional environment within our e-commerce. Again, we'll have some level of promotion, but we don't want to get overly promotional, that's putting a little bit of pressure on that DTC growth. So that dynamic within the U.S. where we'll now expect to see wholesale growth in the U.S. outpaced DTC growth.

Laurent Vasilescu

Okay. Very helpful. And then I wanted to ask a housekeeping question. The $22 million shift, is that in Europe, is that a shift [indiscernible] or is that kind of just [indiscernible] and then on the gross margin question, specifically, ex-IEEPA tariffs, they were up, I think you were calling them to be down for 2Q. For 3Q, it's a little bit hard for us to model so far because there's an IEEPA benefit in 3Q and EPS. But should -- how does -- ex-IEEPA, should we think about your 3Q gross margin up or down?

Steve Fasching

Yes, sure. So first, starting on the European shifts of that $22 million. It's not a full shift into Q3. Some of it will get potentially pushed out longer and some of it may get canceled, right? So again, we'll have to see how the environment plays out. Right now, the way we've modeled it is not all of it carries through into the back half of the year. A portion of it will move in and some of it is risk of cancellation. In terms of the gross margin, I think your question was, how does it compare to the prior -- so the kind of the program, we didn't give a prior guide kind of on the quarter. Really the assumption if you kind of look at is there is the IEEPA benefit, which we haven't necessarily called out which you can calculate. That's going to drive an overall net improvement in the gross margin. There will be some slight offset to that, that we're anticipating, which is higher freight rates as well as a slight increase in the promotion environment. So again, we won't get highly promotional, but we are anticipating the promotional level to increase slightly. So net overall positive, driven by the IEEPA tariff refund that we've received to date, partially offset by some pressure on rising freight rates and a slightly increased promotion assumption.

Operator

Our next question is coming from Sam Poser with Williams Trading.

Samuel Poser

I'm just going to follow-up on Laurent's question. I believe he asked if compared to last year, how to think about the gross margin, last 3Q, how to think about the gross margin in 3Q '27 without the IEEPA refund? So that's what he wants -- I think that was the question. So I want an answer to it.

Stefano Caroti

Yes. No, I think that's the way we're thinking about it is in [indiscernible]. We will get a net improved improvement driven by the IEEFA refund and then a partial offset from higher freight rates this year versus last year and a slight increase in promotion activity this year versus last year.

Samuel Poser

Okay. I'll -- all right. The thing is, is that we're going to have to take out these benefits in Q2 and Q3 of next year. So if you gave us -- like we know that you were at 57.1%, I believe, in to without IEEPA. Can't you just give us where you're guiding without it? And because we're going to have to take it out next year anyway, and it's going to going to be -- all the numbers are going to be wrong unless you give it to us.

Steve Fasching

Sure, sure. So if I give it to you in terms of last year, last year Q3, we were at 59.8% on the gross margin. And what we're implying is just north of 60% in the current quarter. The way you can break that out is a little more than 200 basis point IEEPA tariff refund impact, offset by 150 related to mostly freight with a little bit of promo. So up, call it, 210 million, off by 150, that net is the increase you're seeing year-over-year.

Samuel Poser

And then with the Bondi transition to the -- from the 9 to the 10, when are you going to break price on the 9 to ensure that you're clean when the 10 comes out in January?

Stefano Caroti

Well first of all, it's already pretty clean because the bond in continues to perform very, very well across the marketplace at full price. I believe the markdown cadence starts around cyber. But let me get back to you on that, Sam.

Steve Fasching

Yes. Part of that, Sam, will depend on inventory levels and kind of when we want to go. But to Stephan's point, the sell-through of Bond 9 right now continues to be very strong at full price.

Operator

Our next question is coming from [ Jon Komp ] with Baird.

Jonathan Komp

I want to follow up just on HOKA and the U.S. wholesale marketplace. When you look at indicators of sell-through and wholesale, are you seeing any similar dynamics where you maybe are losing out on some sales to brands that are being more promotional. And as you think about total growth for the wholesale category for HOKA, how far runway or visibility do you have on the distribution front, some of the new doors that could sustain total growth, even though it's a more difficult to sell through the marketplace.

Stefano Caroti

Yes. Let me start with the second part, Jon. As you know, we're still in much less distribution than many of our peers in sporting goods [indiscernible] specialty, [indiscernible] specialty in on specialty, we're pretty covered. So ample opportunities for us in terms of expansion. And now that we have aligned a collection and offer that allows us to segment the market more purposely. We'll be able to differentiated accounts more meaningfully. So starting with spring, you should see a continued thoughtful expansion of our wholesale distribution in the U.S., which will continue in the fall and not just in the U.S. and Europe as well. because the line now allows us to do so. Regarding the first part of your question, we continue to gain share about $120, and we continue to be the leading performance running brand in the U.S. at a premium price point. So where we potentially lose share to others are the more compressed price points below $120, where the competition is greater.

Jonathan Komp

Okay. And can you comment at all -- when you look at a few of the new model changeovers that didn't go as planned? Are you making significant changes as you look ahead, or is it more tied to the product features on Bondi 10 and others? Just any more color there...

Stefano Caroti

No, no, no. Good question. So as I referred in the remarks. Some products didn't go as planned for to Transport, Kawana and Solimar. Others performance [indiscernible] Speedgoat 7, Arahi 9, Sinsonte continue to do well, are doing very well across the marketplace. I am very encouraged by what the Robin and team have crafted and created for Spring/Summer '27 and fall '27. The lineup of new products, and I'm talking about not just Bondi and Clifton, which are -- have been received very, very well. But the supporting cast, Mach Pro well received a book super well. Mach 8 early in the fall, best Mach today, also been very, very well received by the market. So the supporting lineup of products and some of the upgrades that are coming across performance and lifestyle will be very strong. [ CLO 70 ] will help us attract a new consumer and these extensions of Bondi and Clifton with material applications and colors to appeal the lifestyle consumer also very well received. So I am very confident that the lineup we have, the collection we have for spring and fall will allow us to get the U.S. market back to growth.

Steve Fasching

Yes. I think on that, Jon, too, with some of the updates that you'll see in '27 are more significant than the updates you saw in '26. And that's kind of really what Stefano is highlighting, is that the updates you saw and what you will see next calendar year.

Operator

Our next question is coming coming from Peter McGoldrick with Stifel.

Peter McGoldrick

I wanted to ask on the UGG brand as we enter holiday. With UGG wholesale performing better than DTC, can you help us think about the assumptions around retail sell-through and replenishment embedded in the low single-digit growth outlook for the December quarter? And then how do those assumptions compare to the current trends you're experiencing in the marketplace right now?

Steve Fasching

Yes, I'll start. Maybe just a little bit about kind of how we're thinking about the setup. So coming out of Q2, we definitely saw some of the impact on the consumer. I think, as we mentioned a little bit in the prepared remarks, we are seeing consumers kind of buying closer to wearing occasions. We're also seeing sales events driving kind of higher level of sales as opposed to kind of routine level of sales. So that is how we're looking at it. As we mentioned and Stefano talked about the excitement around some of the new product. We think that's going to garner consumer attention, especially as we're getting closer to season. As you know, we just opened up our UGG season. And so we've seen some strong early reaction to the opening of UGG season that is encouraging. But again, it's still very early days in that. A lot of of sales will come in November kind of through December. So so very early on in that. In terms of the assumptions then, we are necessarily making the same assumptions around reorders that we had last year was a very strong season. The set up, the weather contributed very well, that drove a very, very strong additional order business for us in December and January. So we're not anticipating that same level of reorder but we'll see what happens. We think our brands are well positioned in the market. If the consumers show up, we believe we've got the product out there that will resonate, and we'll see what happens.

Stefano Caroti

Yes. The way consumers are spending to newness is fantastic. And some of the heritage styles that we're bringing back like Sunburst Tall, this got heritage, Classic Mini Dipper Legwarmer are all performing well. So that gives us confidence that the consumer will shop.

Peter McGoldrick

Okay. And then on the HOKA opportunity and zooming out a bit, I wanted to ask how the current environment is influencing your multiyear opportunity to penetrate more meaningfully in athletic specialty, sporting goods and run specialty environment?

Stefano Caroti

Our strategy doesn't change. As we shared is, we're going to slowly expand where it makes sense. And now that the offer gives us more differentiation opportunities that's what we'll be doing. So our strategy and outlook doesn't change for HOKA.

Operator

Thank you. This concludes today's Deckers Brand second quarter fiscal 2027 earnings conference call. Please disconnect your line at this time, and have a wonderful day.