A slowdown in Hoka direct-to-consumer sales in the fourth quarter coupled with concerns of tariffs is causing shares for Deckers Brands to drop nearly 20 percent on Friday.

On the company’s fourth quarter earnings call on Thursday, Deckers chief financial officer Steven Fasching, noted that the Hoka’s brand DTC sales hit a “slight decline” in the U.S. due to some unique factors in the quarter.

“These included consumers opting to explore and purchase new product updates in store, higher levels of promotion on outgoing models and slower new consumer acquisition in the face of macroeconomic uncertainty,” Fasching said. “While in the near term, this has put pressure on the Hoka brand’s DTC growth, we are encouraged by the online retention metrics from repeat consumers in both the U.S. and internationally and expect this trend to improve following the first fiscal quarter.”

The CFO did point out that the Hoka brand drove a 3 percent increase versus last year from a DTC standpoint, which reflected continued strong growth from international regions.

Further, the executive said that global wholesale was the “primary driver” of growth in the fourth quarter for Hoka, as the brand benefited from expanded distribution sell-in of the Bondi 9 that launched in mid-January and experienced strong sell-through in the channel throughout the quarter as many consumers sought out new products in store.

Pressed further by some analysts on Thursday’s call, Fasching added that the company expected “some pressure” on the DTC business in the quarter.

“I’m not entirely surprised by that performance, generally where the quarter came in is where we expected Hoka to come in,” the CFO noted. “But once we get beyond Q1, with the success that we’re seeing with the new introductions in Hoka, we’re encouraged that you’re going to start to see those numbers improve.”

Stefano Caroti, president and chief executive officer of Deckers Brands, further pointed out on the call that Q4 was the “biggest quarter ever” for Hoka, and it grew $425 million year-over-year.

“I personally never felt stronger about the power of this brand, the team that we’ve in place as the financial model, and we see no change to our long-term expectations,” the CEO said.

Williams Trading analyst Sam Poser agreed with Caroti’s assessment in a research note, writing that he isn’t concerned about Hoka’s DTC slowdown in Q4.

“We recognize that many investors are transfixed by Hoka’s U.S. DTC sales, which were down in Q4 2025, but all of our checks with Hoka’s retail partners are calling out very strong sell through rates,” Poser wrote note. “Also, as Hoka expands its product offerings it is expanding its wholesale distribution, using a strict product segmentation strategy. No willy-nilly allocation and distribution decisions are being made.”

As for tariffs, Deckers’ CFO noted that less than 5 percent of the company’s footwear production comes from China, some of which would not be routed for sale into the U.S. The remainder of its production comes from Southeast Asian countries, primarily Vietnam.

“Our teams are closely monitoring changes to tariff policies and continue to evaluate levers to mitigate the impact on our business, including, but not limited to, flexing the pricing power of our brands, which we are assessing for strategic, selective and staggered implementation in the U.S. market and negotiating cost sharing with our factory partners,” Fasching said.

The CFO also noted that even with these mitigation efforts, the company expects to absorb a portion of the tariff impact as it does not anticipate that these actions will fully offset incremental costs in fiscal year 2026.

“We also believe there is potential to see demand erosion associated with the combination of price increases and general softness in the consumer spending environment,” he added.

This all comes as Deckers Brands reported a net sales increase of 6.5 percent to $1.02 billion in Q4 2025 compared to $959.76 million the same time last year. Net income for Q4 was $151.41 million, or $1.00 per diluted share, up from $127.55 million, or 82 cents per diluted share, the prior year.

For the full fiscal year 2025, net sales increased 16.3 percent to $4.99 billion compared to $4.29 billion in fiscal 2024. Net income for the year was $966.09 million, or $6.33 per diluted share, up from $726.56 million, or $4.86 per diluted share, last year.

Looking ahead, Deckers Brands said it will not be providing full year guidance for fiscal 2026 “given the macroeconomic uncertainty related to evolving global trade policies.”

The company did, however, issue guidance for the first quarter of fiscal 2026 on Thursday. In Q1, Deckers expects net sales to be between $890 million and $910 million in the period, and earnings per diluted share between 62 cents and 67 cents. This is below analysts’ expectations, which are calling for net sales for Q1 between $880 million and $973 million, according to Yahoo Finance.