Deckers brands (NYSE: DECK) Q3 2026 Earnings Call dated Jan. 29, 2026
Corporate Participants:
Erinn Kohler — Vice President, Investor Relations & Corporate Planning
Stefano Caroti — Chief Executive Officer, President & Director
Steven J. Fasching — Chief Financial Officer
Analysts:
Jay Sole — Analyst
Peter McGoldrick — Analyst
Laurent Vasilescu — Analyst
Paul Lejuez — Analyst
Samuel Poser — Analyst
Rakesh Patel — Analyst
Dana Telsey — Analyst
Presentation:
operator
Good afternoon and thank you for standing by. Welcome to The Deckers Bands Third Quarter Fiscal 2026 Earnings Conference Call at this time all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at the time for you to queue up for questions. If anyone has any difficulties hearing the conference call, please press 0 for the operator assistance at any time. I would now like to remind everyone that this conference call is being recorded. I’ll now turn the call over to Erin Kohler, Vice President of Investor Relations and Corporate Tax. Please go ahead
Erinn Kohler — Vice President, Investor Relations & Corporate Planning
Hello and thank you everyone for joining us today. On the call is Stefano Korodi, President and Chief Executive Officer and Steve Fashing, 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 respond to the dynamic macroeconomic environment and the impacts on our business and operating results, including as a result of changes to global trade policy, tariffs, pricing actions and mitigation strategies and fluctuations in foreign currency exchange rates our current and long term strategic objectives, including continued international expansion the performance of our brands and demand for our products anticipated impacts from our brand product marketing, marketplace and distribution strategies product development plans and the timing of product launches changes in consumer behavior including in response to price increases our ability to acquire new consumers and gain share in the dynamic consumer environment our ability to achieve our financial outlook and including anticipated revenues, product mix, margin expenses, inventory levels, promotional activity, anticipated rate of full price, selling and earnings per share and our capital allocation strategy, including the potential repurchase of shares.
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 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 10K and quarterly reports on Form 10Q. 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. For example, the Company reports comparable direct to consumer sales on a constant currency basis for operations that were open through the current and prior reporting periods. The Company believes that these non GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to and may not be indicative of its core operating results. 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 — Chief Executive Officer, President & Director
Thanks Erin Good afternoon everyone and thank you for joining today’s call. Decker has delivered an outstanding third quarter performance underscored by a strong composition of results that demonstrate robust global demand for our brands, fueling an increased outlook for fiscal year 2026. For the third quarter we delivered $1.96 billion of revenue, representing a 7% increase versus the prior year. Global HOKA and AG performance was exceptional with revenue increasing by 18% and 5% versus last year respectively, and each brand delivering balanced growth across DTC and wholesale. From a regional perspective, HOKA and ugg collectively drove third quarter revenue increases of 15% in international markets, reflecting continued momentum from the first half and 5% in the United States, demonstrating positive inflection relative to the first half.
Based on our effective marketplace management initiatives. This result exceeded our expectations for both brands. Importantly, it was achieved while maintaining high levels of full price selling and demonstrated resilient price elasticity. As a result, Deckers preserved strong gross margins which Contributed to an 11% increase in our third quarter diluted earnings per share a record $3. As I reflect on our progress this year and our focus to build brands for long term sustainable growth, I’m extremely pleased with our performance over the first nine months of this fiscal year which contributed to total company revenue increasing 10%, HORCA revenue growing 16%, AG revenue growing 8% and diluted earnings per share increasing 13%.
Decker’s year to date fiscal results and raised outlook demonstrate our commitment to generate shareholder value through sustained growth in revenue and earnings per share, bolstered by our share repurchase program and fortified balance sheet. Now in the final quarter of this fiscal year and looking to the next, I’m confident that we’ll continue to execute on our strategic plan and deliver compelling results through the sustained success strong momentum of our global brands. Steve will provide specific details on our updated guidance and third quarter performance later in the call. But first I’LL share some brand specific highlights from the third quarter.
Starting with UGG Global AG revenue in the third quarter increased 5% versus last year to a record $1.3 billion. AG continues to be top of mind for consumers, growing its leadership position as a premium lifestyle brand through a combination of purposeful consumer informed product creation that celebrates recognizable brand codes, broadening the dimensions of category acceptance and an elevated global marketplace aligned to our target consumer segments where the brand is able to build connections and community through a tailored yet consistent brand identity. As discussed on our last call, in response to the ongoing rise in consumer demand for the YAG brand, we strategically allocated additional products to the wholesale channel prior to peak season.
The results indicate that this approach has proven effective. Our strategic execution enabled improved in stock positions for wholesale partners, boosting fall sales and as planned, we effectively address late season demand through our direct to consumer channels. In terms of the YAG brand’s third quarter performance across channels, DTC revenue increased 5% versus last year and wholesale revenue grew 4% compared to last year. From a direct to consumer perspective, our marketplace teams around the globe work closely across different departments to fill consumer demand both in retail locations and online. Through these efforts, we drove meaningful growth in agriward membership, email subscribers and retained consumers, providing ample opportunity to further strengthen consumer connections and and drive repeat purchases in the future.
During the quarter, we also used our DTC channel to test products with speed to market, strategically pulling forward targeted new silhouettes to generate early reads. At a time where UGG historically has the greatest attention from consumers, our new Quill franchise was a standout success. Through this initiative, by sharing performance insights with our wholesale partners for products like the Quill, we are able to accelerate the global expansion and adoption of new offerings. AG has firmly positioned itself as the top premium lifestyle brand in the global market. Our ongoing goal is to further enhance UGG’s presence at every consumer touchpoint through consistent product presentation that highlights our distinctive brand identity.
While we focus on improving the consumer experience in our direct to consumer channels, we’re also collaborating very closely with our retail partners to elevate the brand through intentional product offerings that support year round wearability. In our Men’s initiative. By planning strategically for shared growth, we sustain strong partnerships and nurture future opportunities, all while ensuring marketplace scarcity for UGG remains healthy. We’re especially proud of how our retail partners supported the UGG brand during the holiday season, strengthening consumer connections and raising awareness and adoption across categories. Overall, this was an exceptionally well executed third quarter and holiday season for the UGG brand.
Our marketing teams did a brilliant job leveraging product collaborations, brand activations and ambassadors to drive UGG brand heat, including a field house experience in New York City celebrating the UGG Sakai product collaboration, pop ups in Chicago and Berlin that featured the palace product collaboration and new male brand ambassadors across sport and pop culture in China, contributing to our strongest men’s regional performance Globally, the men’s category performed very well as you continue to see healthy adoption of popular all gender products like the Tasman, Ultramini and Lomel as well as men’s specific styles like the Weather hybrid collection that spans across multiple silhouettes.
Overall product performance was positively influenced by robust consumer response to newness, which underscores the growing demand for UGG and its diversified product range across various categories. Iconic UGG franchises continue to benefit from the addition of complementary styles such as the new Tazelle and Classic Micro helping fuel growth for the brand, with the latter even placing among the 10 best selling styles this quarter. We also made notable progress with products aimed at supporting the Ugg Brands 365 initiative. The Lomo franchise continued to expand Ugg’s presence in the lifestyle sneaker segment, more than doubling its revenue this quarter and ranking among the brand’s top five bestsellers.
As we approach the fourth quarter, our priority is to finish another successful year by boosting interest in new product launches that align with our brand strategies including the Mini Mel, an all new low profile spring sneaker with the Lowmel collection the Otso, an all new clog with a sleeker aesthetic that features elevated materials and new fashion sandal silhouettes within the golden collection. Congratulations to Ann and the entire AG team on a fantastic fall season and holiday quarter. We are excited for what’s to come as we continue to expand consumer reach and and category acceptance of our compelling product assortment and grow this amazing brand around the world.
Speaking of amazing brands, let’s shift to HOKA Global HOKA revenue in the third quarter increased 18% versus last year to $629 million. This growth included strength in both DTC and wholesale with gains in the US as well as international markets. The strong performance was driven by broader consumer adoption of the Hoka brand’s innovative and versatile products, especially as we’ve refined our approach to managing the global marketplace. This helped achieve balanced growth across channels as DTC revenue increased 19% versus last year and wholesale revenue grew 18% compared to last year. As we continue to build this brand and introduce new products to the market, we are proactively maintaining a healthy pull model of demand across all channels.
This approach aligns with our long term objectives of of achieving growth in every channel and region. While some fluctuations in channel growth may occur as we make strategic adjustments to distribution, we remain committed to creating a more balanced business over time as demonstrated by hoka’s performance this quarter. We continue to incorporate insights from consumers and learnings from the marketplace to refine how we go to market. A notable initiative this quarter has been our HOKA Membership program which enhance consumer loyalty by delivering a distinct and differentiated customer experience. Our revamped membership program now includes exclusive and early product access, select opportunities for special discounts and rewards for higher purchase frequency.
Though we are still early in the development of the HOOKER Membership program, with additional consumer engagement drivers and differentiation in the pipeline for next year, we’re already seeing a benefit in revenue per consumer units per transaction and multi category purchasing from HOOKA members relative to the average consumer. These members key performance indicators are directly contributing to our positive results, helping drive an acceleration of the Hooka Brand’s DTC growth in the third quarter compared to the first half of the fiscal year in the US DTC returned to healthy growth in the quarter with a meaningful improvement of new consumer acquisition online compared to what HOKA experienced earlier this year.
In addition, as we look ahead to future product transitions, we see an opportunity to more effectively utilize our higher margin DTC channel to strategically manage end of season inventory in a controlled manner as we tightly manage wholesale marketplace inventories to ensure a clean environment for future launches. The HOKA brand’s improved DTC performance demonstrates the effectiveness of our loyalty marketing tactics which have enabled us to enhance the consumer’s journey, increase brand affinity, build lasting relationships and increase customer lifetime value for a growing base of consumers. At the same time, we remain focused on driving strong performance with HOKA in the wholesale channel.
We believe it’s very important for HOKA to compete in a multi brand environment, particularly in the performance category where innovation is critical to success. Our partners remain an important destination for consumers to experience the Hookah Brand’s unique blend of technology, geometry and premium materials directly on their feet. HOKA has continued to perform very well in the wholesale channel globally driving healthy levels of full price sell through and gaining additional market share in the U.S. according to Sakana, Hoka’s market share increased significantly in the road running category and above $140 for the three months ending in December.
This growth further establishes HOKA as the top brand in the segment and demonstrates the strength of our full price sell through in Europe. The pace of Sellout continues to drive record levels of reorders with our top strategic customers averaging 90% sell through, which is fueling future season demand. We attribute the Hoka brand’s market share expansion to three main compelling, innovative products that resonate with consumers, enhance global brand awareness and recognition, and increase brand access in more locations. These developments have opened the door for a wider range of consumers to connect with the brand, not just for performance related reasons.
With more people choosing to wear Hoka as part of their active lifestyle wardrobe, the brand is well positioned to take advantage of this growing trend. Hoka is proactively advancing its lifestyle strategy and identifying this segment as a significant opportunity in terms of product development and expansion through wholesale distribution, account segmentation and differentiation. As the lifestyle category evolves, Hoka is positioned to leverage the company’s global expertise in this area. As Hoka continues to tap into significant lifestyle opportunities, it’s important to acknowledge the valuable growth potential within our established categories. Our main global marketplace priorities for Hogan include enhancing the brand’s premium position through product innovation, engaging authentically with consumers through strategic product segmentation, and expanding the brand’s reach while maintaining performance integrity.
As we look at wholesale distribution in the US Market, Run specialty remains our priority segment to introduce and engage consumers with Hoka brand’s innovative performance products. Our aim here is to uphold Hoka’s performance credibility by by continuing to lead in the segment in sporting goods. Hoka is present in roughly half of the targeted stores we consider potential distribution points. We also see more opportunities to expand shelf space and market share in existing doors as we continue to diversify our product offering. The biggest opportunity for Hoka’s expansion in the US lies within the athletic specialty segment where we are currently represented in only about a quarter of the stores we believe will be relevant for the brand moving forward.
Internationally, we’re much earlier in the process of expanding Hoka’s distribution in Europe. We’re making steady progress in building awareness and marketplace presence. We still have room for DORA and market share expansion in the European run specialty segment where we continue to climb in brand ranking throughout various countries in the region Having captured around 80% of the opportunity we see for the segment. Furthermore, HOKA has reached approximately 40% of the European sporting goods destinations considered relevant for the brand. It is available in less than 20% of suitable athletic specialty stores in the region. This illustrates the significant opportunity that remains for attractive distribution expansion in Asia.
Our primary area of focus remains China where we operate mainly through a mix of company owned and partner run mono brand retail stores. Typically we keep a 2 to 1 ratio of wholesale partner locations to company owned retail stores. Currently, we occupy a little less than 1/3 of the potential we see over the next several years. All this to say we continue to see meaningful untapped global opportunities for Hooka. We’re building this brand for the long term and we’ll continue to take a methodical approach to global expansion, maintaining a pull model of demand while gradually improving the balance between DTC and wholesale channels.
Our ongoing progress in international markets, along with positive developments in our US Operations makes us very optimistic about hoka’s promising future from a product perspective. Top franchises continue to perform very well and we are now operating in a much cleaner global marketplace relative to a year ago. The Brand’s launch of Gaviota 6 is off to a great start, further bolstering our positioning in the Stability category and alongside the positive reception of the Arahi 8. Hoek has a number of exciting product updates to come in the fourth quarter across our key strategic priorities of winning in road, dominating trail and igniting lifestyle.
The rook category has two key product stories launching in Q4 our pinnacle racing shoe, the Cielo X1.3.0, which is the fastest and lightest racing shoe hook has ever created in our completely redesigned the Mach 7, crafted for responsive daily runs with tempo beyond the road segment. We eagerly anticipate the launch of Speedgoat 7 which is designed to build Hoka’s legacy in the Trail category by offering an exceptional underfoot experience across diverse terrains in lifestyle. We’re excited to announce the launch of our first fully integrated marketing campaign for this category featuring new ambassador partnerships, global brand experiences and products that connect with well known HOKA franchises.
Congratulations to the whole HOKA team on a well executed quarter. We look forward to closing out the year with these exciting product launches to come. I am really proud of the success our entire team has delivered this year and I’m even more excited for what lies ahead as I look at the opportunities for the next year and beyond. We intend to continue driving healthy, profitable growth for both AG and hoka. We expect HOKA to remain a fast growing brand with significant potential for international expansion and consistent progress in the US supported by effective marketplace management.
At the same time, we also expect the AG brand to continue driving growth across DTC and wholesale through its men’s and 365 product initiatives similarly led by international regions alongside continued growth in the U.S. given these growth opportunities, our disciplined management of the global marketplace to sustain strong full price sales in our strategic investments, leveraging portfolio synergies. I’m confident that Deckers will continue to be a leader in our space. Thanks everyone. Over to Steve for more details on our third quarter financial results and an update to our fiscal year 26 guidance.
Steven J. Fasching — Chief Financial Officer
Thanks Stefano and good afternoon everyone. Our third quarter performance exceeded expectations and demonstrated robust momentum of the UGG and HOKA brands for the third quarter. UGG drove solid growth to deliver its largest quarter in history with balanced increases across channels and regions. HOKA delivered another quarter of strong global growth with this quarter being balanced across DTC and wholesale. HOKA growth was led by international and included meaningful contributions from the US market highlighted by the positive inflection of the US DTC business. These results are a testament to the exceptional strength of our premium brands within the US and internationally as our disciplined approach to marketplace management combined with innovative product and an elevated consumer experience led to high levels of full price selling and exceptional performance during the holiday season.
Now let’s get into the details of the third quarter results. Third quarter fiscal 2026 revenue was $1.96 billion, representing a 7% increase as compared to the prior year. Revenue growth in the quarter was Primarily driven by Hoca which increased 18% versus last year to deliver $629 million, adding $98 million of incremental revenue over the prior year. As anticipated, HOKA performance benefited from another sequential improvement in the UFDTC business which delivered healthy growth in the quarter, contributing to a more balanced result Across DTC and wholesale. UGG increased 5% versus last year to deliver record quarterly revenue of $1.3 billion, adding $61 million of incremental revenue over the prior year.
UGG growth also benefited from improved global DTC performance which inflected to positive growth following a more pressured first half. Gross margin for the third quarter was 59.8% which was better than we had expected for the quarter primarily due to a lower than expected impact from increased tariffs reflecting the timing of inventory flows and the mix of inventory sold through during the quarter benefiting from lower tariff inventory in the pipeline, larger benefits from our pricing actions primarily attributable to the UGG brand and though above last year we had slightly lower promotions than planned for the quarter.
In achieving this result, both UGG and HOKA maintained a very healthy level of full price selling with each achieving an average selling price slightly above the prior year and HOKA delivering gross margin expansion expansion in the quarter contributing to our better than expected result. SGA dollar spend in the third quarter was $557 million up 4% versus last year’s $535 million as we continue investing in key areas of the business. As a percentage of revenue, SGA was 28.5% which is 80 basis points below last year’s rate of 29.3% with leverage primarily driven by favorable impacts from foreign currency exchange rate remeasurement.
Our tax rate for the quarter was 23.3% which compares to 21.8% for the prior year. These results culminated in a record diluted earnings per share of $3.33 for the quarter, which is $0.33 above last year’s $3 diluted earning per share representing EPS growth of 11%. Turning to our balance sheet at December 31, 2025, we ended December with $2.1 billion of cash and equivalents. Inventory was $633 million, up 10% versus the same point in time last year and includes tariffs paid on inventory received this year and during the period we had no outstanding borrowings. In the third quarter we repurchased approximately $349 million worth of shares at an average price of $92.36.
Through the first nine months of fiscal year 2026, we have repurchased approximately 8 million shares representing more than 5% of shares outstanding at the beginning of this fiscal year. As of December 31, 2025, the Company had approximately $1.8 billion remaining authorized for share repurchases and given our strong cash flow and cash balance and in consideration of the current market valuation, we remain committed to continue returning value to shareholders through our share repurchase program. In fiscal year 2026, we are on track to repurchase more than $1 billion in total by the end of the year, which is expected to contribute more than 20 cents of diluted earnings per share improvement.
Now moving into our updated guidance for fiscal year 2026 based on the strength of our brand’s performance in the third quarter, we are increasing our full year revenue expectations to a range of $5.4 billion to $5.425 billion for Hoca. Specifically we’ve raised our expectation now reflecting mid teens revenue growth versus last year and for UGG we now expect revenue to increase mid single digits versus last year which is at the high end of our prior guidance. Gross margin is now expected to be approximately 57% which is 100 basis points above our prior guidance, primarily due to lower than previously anticipated net impact from tariffs.
We still expect SGA to be approximately 34.5% of revenue as we continue to make investments that support the long term growth and opportunities ahead for Ugg and Hoca. Our operating margin is now expected to be approximately 22.5% which is 100 basis points above our prior guidance and remains best in class. We still expect an effective tax rate of approximately 23%. These updates and the continued benefits from both year to date and projected fourth quarter share repurchase result in a raise to our expected diluted earnings per share which is now in the range of $6.80 to $6.85 representing a 7 to 8% increase over last year’s record EPS Regarding Tariffs Based on the robust pricing power of our brands which has not materially impacted demand to date, combined with a lower than expected blended tariff rate in Q3, we now expect the unmitigated tariff impact on fiscal year 2026 to be approximately $110 million.
As a result of our better than expected price action benefits and the favorable timing of inventory sold, we now estimate a net tariff impact of approximately $25 million. Please note this does not represent a full year impact if tariffs remain in place moving forward. Our increased full year 2026 guidance includes the following assumptions. For the fourth quarter, Hoca is expected to deliver 13 to 14% growth representing the brand’s largest ever quarterly revenue and based on the momentum from international regions and continued US growth with both contributing to global market share gains. Oak revenue is assumed to be roughly flat to last year as some orders previously planned for Q4 shipped earlier in Q3 with the total of both quarters contributing to the brand’s increased outlook for the year.
Our implied gross margin assumes an approximate 200 basis point headwind, the entirety of which is expected to come from the net pressure from tariffs. Note that this is projected to be our largest quarterly net impact from tariffs in fiscal year 2026 on a rate basis as we anticipate the full 20% burden in Q4 and slightly more deleverage in our SGA spend in the quarter as we continue to make investments while taking advantage of our overall improvement improved Outlook we believe these targeted variable investments will help us continue to carry momentum into FY27. As Stefano touched on, we have a high degree of confidence in our brands to continue delivering exceptional results into next fiscal year.
Specifically, we believe Deckers has the ability to continue delivering meaningful revenue growth paired with a top tier operating margin beyond this year through operating a pull model of demand maintaining a well managed global marketplace that drives high levels of full price selling utilizing shared service synergies across brands as we invest to add capabilities and remaining disciplined in our approach to portfolio management, focusing on investments in areas that we see the highest long term returns. In closing, we are proud of the outstanding results achieved in the third quarter as our in demand brands drove record quarterly revenue and earnings per share.
UGG and Hoka are operating at a high level across the global marketplace and I, along with the rest of our leadership team remain confident in our ability to deliver on our increased guidance for fiscal year 2026 and continue driving healthy growth over the long term. With that, I’ll hand the call back to Stefano for his final remarks.
Stefano Caroti — Chief Executive Officer, President & Director
Thank you Steve. Deckers performed very well in the quarter, achieving record results that highlight the strength of our brands in the global marketplace. During the holiday season, Agenhoka drove consistent growth across channels, demonstrating success in both international markets and in the US through compelling and innovative products that are meeting the demands of our consumers, Deckers has once again demonstrated resilience, gaining share and improving growth momentum in the current environment. We have visibility to continue growth both domestically and internationally and this gives us the confidence to raise our full year outlook. We are very proud of our company’s ability to guide for another year of robust and profitable growth through our powerful differentiated brands that are operating in growing segments of the global marketplace.
Agen Hookah are both actively scaling their respective addressable audiences through category expansion, giving each brand ample opportunity to gain market share, grow in under penetrated markets and capture new consumers globally. They remain highly complementary allowing us to benefit from shared synergies and knowledge expertise across the organization as we maintain our best in class profitability profile.
Before we close, I want to once again express my sincere gratitude for the tremendous work of our dedicated global teams and all we’ve accomplished thus far in this fiscal year 2026. In December, the Wall Street Journal recognized Deckers as one of the best managed companies of 2025. In honor made possible by the collective efforts of our employees are the driving force behind what makes our company so special. Thank you all for joining today’s call and thank you to our shareholders for your continued support. With that, I’ll turn the call over to the operator for Q and A.
Questions and Answers:
operator
Ladies and gentlemen, we will now begin the question and answer session. As we move to Q and A, we ask that you please limit your input to one question and one follow up. To ask a question, please press the Star button followed by the number one on your telephone keypad. If you would like to withdraw your question, please press Star one again. One moment please. For your first Question. Your first question comes from the line of Chase so of UBS Financial. Please go ahead.
Jay Sole
Great. Thank you so much. Stefano. It sounds like Hoka really had a terrific quarter. It sounds like that you’ve seen an acceleration in the business from last quarter to this quarter. Can you maybe just dive into what has changed, what has driven the improvement? And you talked a lot about product. I think you mentioned the Gaviota, the Arai. You know, there’s a lot of newness out there. You mentioned the Cielo, the Mock, you know, Stinson, you know, some of these other things that have popped up. Is it product, is it marketing, is it just maintaining a very strong full price, sell through mentality? Maybe just explain to us what has gotten better and do you see it as sustainable going forward? Thank you.
Stefano Caroti
Yeah, first of all, I do see it sustainable going forward. I think we had a few learnings last year. We decided to space out key franchise launches, we tighten inventories of outgoing styles and we better leverage our DTC channel to move closeouts in a controlled manner. We see opportunity across every region, every channel in every category of our business this year. So I feel confident that this trajectory will continue.
Steven J. Fasching
Yeah, I think, Jay, just to add on to that too, I think what’s also encouraging in some of where we’re seeing acceleration is with some of the new product that we introduced last year performing very well with consumers. So recall that we had some of our big franchise updates last year early last year and we’ve continued to see consumers engage with those updates quite a bit.
Stefano Caroti
Yeah. And as you mentioned, Jay, Gaviota 5 is off to a great start on the back of a successful Iraqi 8 introduction. Now we’re a meaningful player in the stability category. Transport to again launched last week, but off to a Good start. CLXOne 3.0, our fastest and lightest shoe to date launched today and it’s already our best selling style online. So I feel very good about the product pipeline coming.
Jay Sole
Maybe I can just follow up on that. You know, you talked about lifestyle in your prepared remarks. I think you mentioned you’re going to do a new ad campaign. Can you talk a little bit more about, you know, where lifestyle is today, you know, what your projection is for how that business will develop and you know, with all the new stuff that you’re talking about. Mock, Speedgoat, Cielo, Gaviota, Orahi, Stinson Transport. I mean how much, you know, how much is the diversification of the product line really change the mix of the business from just Bondi And Clifton, can you give us a sense of that as well? Those. Those are really the two questions. Thank you.
Stefano Caroti
That is really one of our aims. We have boosted capabilities, as you know, across innovation, design, color and lifestyle. And this is helping us more effectively segment the marketplace and also differentiate dtc. Performance, however, remains at the core of what the brand is. And as you know, the lifestyle consumer has adopted many performance styles at the same time. We do view this category as a huge opportunity for the brand and I’m really encouraged by what is coming. Early reads on some of the products we launch in Q4 is very positive. Stinson 17, Bondi, Mary Jane, Speed Loafer are performing very well. And as I look ahead, the team has done a great job in clarifying the line architecture, simplifying designs, and also hit more commercial price points. So I do believe that we have a good Runway also in lifestyle going forward.
Jay Sole
Got it. Okay. Thank you so much.
Stefano Caroti
Thank you, Jerry.
operator
Your next question comes from the line of Peter McGoldrick of Stifel. Please go ahead.
Peter McGoldrick
Hey, thanks for taking my question. I was interested in the channel strategy for the Ugg brand. It’s encouraging to see both channels grow in tandem in the key sell through quarter. Given this shift in strategy to prioritize retail partner in stocks for fiscal 26, I’m curious how we should think of your plans to manage the Ugg brand in fiscal 27 on wholesale versus DTC basis.
Stefano Caroti
Potential for the Ugg brand across all channels, all regions and all categories. So you should continue to see a balanced growth in the AG portfolio. We’re very happy with what the brand has delivered in terms of newness. Our 365 offering has been very well received. We’re now playing legitimately in the sneaker category with the low mal. And our classic products continue to perform very well. So you should expect continued segmentation of the marketplace, continued differentiation and growth across all channels, markets and categories.
Steven J. Fasching
Yeah, and I think, Peter, also as you looked at this year in terms of channel strategy, I think the important thing to recall is a couple of things that impacted timing, especially around the wholesale channel distribution. So recall in Europe, we had a distribution center move, so we were shipping earlier product to avoid disruption on some of that business logistics change in Europe. And then I think with the strong demand that we saw coming out of last year, we saw strong wholesale orders and then reorders. And so much of those customers wanted product earlier this year.
That’s why you were seeing a shift of the wholesale growth more to the first half of the year and that was really more of an indication of the strength of the demand of the UGG brand coming up to, you know, our biggest season. And so what that allowed us to do was shift more focus to dtc. So very encouraging to see how that channel played out during the course of the year because again, we’re not managing just every quarter. We’re managing the business for the long run and for the season. So what’s very encouraging is how well the season did. And I think some of the dynamics that you saw play out between quarters was just a way of managing the increasing demand that we’re seeing for the brand.
Peter McGoldrick
I appreciate that. And Steve, follow up for you on DTC performance. Nice to see the consolidated inflection. I’m curious how you should consider this moving forward. It seems like you’ve got some nice structural contributors from HOKA membership and then we’re looking at easier comparisons. Can you help us think about assumptions for traffic conversion ticket and basket embedded in the outlook?
Steven J. Fasching
Yeah, so we continue to see improvements. So I think encouraged with what we saw, consistent with what we’ve been saying for the past few quarters in terms of, you know, an expectation that we would see momentum and improvements in the DTC performance, you’re seeing that continue in the current quarter that we just reported and we’re continuing to look for improvements going forward. So I think encouraged with everything that we’ve said. I think, you know, the other highlight was some of the things that we talked about in prepared remarks which improved DTC and I think importantly drove gross margin improvement on the HOKA brand. Right. So it shows that the work that we’re doing to improve the business, draw more full priced consumers in and bring them through the DTC channel is working and we’ll continue to build on that.
Peter McGoldrick
Thank you.
operator
Thank you. Your next question comes from the line of Laurent Basilescu of BNP Paribas. Please go ahead.
Laurent Vasilescu
Oh, good afternoon. Thank you very much for taking my question. I wanted to follow up on Peter, you know, the hoka guide of 13 to 14%. This is despite a very, very easy compare. Any consideration there on that fund is just conservatism. I think you mentioned in your prepared remarks, maybe with Stefano, going forward there’s fluctuations in channel growth that may occur, strategic decisions. Can you maybe unpack a little bit more for the audience? Thank you very much.
Steven J. Fasching
Yeah, sure. I’ll start on that. I think the point there, right, is how we’re managing both our brands for long term sustainable growth. Right. And so we’re not going to get hung up on kind of quarterly compares if we believe it’s kind of detrimental to the brand. So if we look at what happened this year, right, as I talked about with Peter’s question, in terms of how we were flowing inventory into the channel, we’re making sure that we have the appropriate amount of inventory with the demand that we’re seeing, but also setting up an opportunity to continue to grow our dtc.
Right. With a long term target of improving the proportion of our DTC business overall, which will take several years. It’s an important marketplace management setup of how you get there. And I think that’s what you’re seeing play out this year is a focus on balancing some of that wholesale demand out, fulfilling it a little bit earlier, placing then a little bit more emphasis on DTC growth as we get into the selling or bigger selling seasons. And that works. Right. And so as we look going forward, it’s about maintaining that. One of the positive things I think that we see is when we have these strong quarters, it’s a signal of the consumer demand that’s out there.
And the demand for our brands is very strong. What it also does is it encourages some wholesale accounts to order bigger and order earlier. And we’ll take advantage of that and that’s where that will play out. But again, we have a very keen focus on how we continue to develop our DTC business. You’ve seen some of the improvements that we’ve made and how that’s driving more consumer engagement and more full price consumer engagement for us.
Laurent Vasilescu
Very, very helpful. And then as a follow up second question here, I think on the last call it was noted that you have strong spring summer order for hoca. I think today, I think you talked about meaningful growth. Curious to know what your order books look like. If you can maybe unpack that a little bit more in terms of dimension, like in terms of how do we think about the growth rates that because you mentioned meaningful growth and did I hear this correctly, Steve, that you anticipate to grow next year for fiscal 27. Was that in the prepared remarks? Thank you very much.
Steven J. Fasching
Sure, I’ll take a shot at the first one, then Stephanie, you can jump in. Yes, we’re anticipating growth for Ugg in FY27. I think, you know, through the quarter that we just delivered is a demonstration of, of how well the UGG brand resonates with consumers across the globe, including the U.S. so even as we continue to get bigger, the demand continues to grow for this brand. And so yes, we see UGG continuing to grow in FY27.
Stefano Caroti
Yeah. And to the order book. We’re not going to provide today fiscal 27 guidance, but I’m pleased with how the order books are coming in for both brands, especially if you’re hooka given the fact that hooka books a bit early fall than UGG does. Typically wholesalers wait for the holiday season to end given how big that season is for AG to place orders in early spring and but we’re visibility through the first three quarters of next year and we’re very encouraged by how the order book is developing globally.
Laurent Vasilescu
Okay, very helpful. Thank you very much Ambassador Locker.
Stefano Caroti
Thank you. Thank you.
operator
Your next question comes from the line of Paul Leshaway of Citi. Please go ahead.
Paul Lejuez
Hey, thanks guys. Curious within the HOKA wholesale business if you can talk about sell through by channel specialty running sporting goods athletics specialty what you saw this quarter and I’m curious if you’ve seen any change quarter to date. Thanks.
Stefano Caroti
No major changes throughout the fall season sell through continue to outpace sell in which is a good indicator of brand health in the marketplace. All our major introductions for the season and the color updates on our two biggest franchise continue to perform well in the athletic specialty space. Our performance product has actually outperformed our lifestyle product. But in one of the two leading athletics specialty retailers for the month of December where the number two brand in the doors we’re in. So the brand is performing well really across channels.
Paul Lejuez
Can you talk about the sell through at the sporting goods channel as well?
Stefano Caroti
Yes, very, very similar. My comment was for the for all channels. So generally speaking, yes, we continue to perform well across all channels, across every market.
Paul Lejuez
And then just one follow up, I think last quarter you had some cautionary comments about the US consumer. Just curious about your outlook for the consumer just given that we’ve just got through the holiday season how that might influence or inform how you’re thinking about growth for each brand in the US next year. Thanks.
Stefano Caroti
Yeah, that’s fair. We’ve been cautious about the economy and the consumer but never about our brands. So the brands did show up and this increases our optimism going into next year.
Steven J. Fasching
Yeah, I think Paul just on that, you know, I think as Stefano said our comments, you know in prior quarters more has been just watching especially the US consumer as we’ve seen very strong growth internationally. We knew our brands are well positioned and I think we even said that on the call last quarter which was hey, if the consumer shows up we expect our brands to do well and that’s exactly what happened. So Even in the current environment, I think we see consumers choosing and buying the brand that they want. And again, with our performance, this is just an indication of the resonance that our brands has with consumers. And so that really gives us confidence going into next year.
Paul Lejuez
Thank you. Good luck.
Stefano Caroti
Thank you. Paul.
operator
Your next question comes from the line of Sam Poser of Williams Trading. Please go ahead.
Samuel Poser
Thank you very much. And Aaron, I’m sorry, we can’t go through our normal stuff. We already got all the info. Can you hear me?
Steven J. Fasching
Yes, we can hear you.
Samuel Poser
Okay. All right, a couple questions. Can you give us some idea of how the domestic DTC business was for HOKA and for ugg?
Stefano Caroti
Both AG and HOCA perform well indeed.
Steven J. Fasching
And I think continuing. Yeah, continuing to grow positively. Inflection. Right. Which is kind of what we said on the call. So again, as we said at the beginning of last year, we expected sequential improvement. We’ve delivered sequential improvement, and we’ve positively inflected in the U.S. so does that.
Samuel Poser
Mean, I mean, you’re up 19 with your DTC. Does that mean U.S. was up like 8 and you were. Or, or, I mean, can you give us some. A little bit. A little warmer? And then was the ugg. Was the ugg hole, the Ugg DTC business up in the U.S.
Steven J. Fasching
Yeah. So both. Both were friends were up.
Stefano Caroti
Yeah. Yeah.
Samuel Poser
Okay. And then. And then you, you know, you talked about lifestyle and then Stefano, but you mentioned, like with athletic specialty, how they were doing better with performance product. How do you define. How do you define lifestyle? I mean, because, you know, a lot of product over the years has. So the product has. Has run over the years, you know, has just always hit the, you know, it’s a gray area. What’s lifestyle and what’s performance sometimes based on how consumers respond. So how do you define. How do you define lifestyle?
Stefano Caroti
We define lifestyle as product created by our category. Right. But to your point, you know, we’re treating performance products also in a lifestyle manner that have been adopted by our athletic specialty distribution, and those have performed very well. So.
Steven J. Fasching
Yeah, and I think, Sam, just on that a little bit. Right. I think to your point, on kind of the gray area nature is, you know, we build performance product, but clearly we have people wearing it once they experience kind of the comfort of HOKA for lifestyle applications. So we have performance shoes that are being worn in lifestyle applications. When we talk about the further lifestyle ability, it’s more around than improvement on certain styles or designs where we can further amplify our ability to get into a lifestyle category. Clearly, people are wearing individuals, consumers are wearing products for lifestyle. That is giving us more permission to move more aggressively into a lifestyle defined category.
Samuel Poser
Thanks. And one last thing, back to the. To the breakout, the regional breakout. Based on the information you gave us about dtc, that implies that one of the two brands, Hoka or Ugg, was down, the wholesale business was down in the quarter. Could we assume that that was Hoka just because of the amount of Bondi’s that you shipped?
Steven J. Fasching
Yeah. So just to clarify on that. No, both and Hoka were up. If you’ll see on the press release, part of what’s driving the decline is the phase out of the Coolabura brand. And so that’s where you’re seeing decline. So if you refer back to the press release, you’ll see where we’ve broken out kind of three categories. The declines there are driven by the phase out of Kulabura, Ugg and Hoka were all positive.
Samuel Poser
In both geographies.
Stefano Caroti
Yes.
Samuel Poser
Okay, I’ll get you later. Thank you very much.
Steven J. Fasching
Okay. All right. Thanks, Sam.
Stefano Caroti
Thanks. Sam.
operator
Your next question comes from the line of Rick Patel of Raymond James. Please go ahead.
Rakesh Patel
Thank you. Good afternoon. I also have a question on Hoca US B2C. So you’ve touched on the numbers, but can you help us understand what drove the positive inflection in Q3 relative to to the first half? Because you previously alluded to consumers preferring to shop in person for new products and this wait on B2C in the first half. So just curious, what’s changing the go to market strategy to drive the positive outcome in Q3? As we evaluate the durability of this B2C growth.
Stefano Caroti
One of the main reasons, Rick, has been the HOCA membership program that has helped us improve revenue per customer, units per transaction, multi category purchases and relative to the average customer. That was one of the main reasons for our success and the fact that there was less noise in the marketplace of outgoing styles. If you recall last year with the Bondi A transition and there was a lot of product in the marketplace. This year the marketplace is a lot cleaner and we benefited from it.
Steven J. Fasching
Yeah. And I think Rick, to the point you made where we were saying people were finding the updates, right, People were more familiar with the updates. So as we moved into Q3 and this was part of our comment on the sequential improvements, as people became more familiar with the product having been in the market, they were responding right to the updates. That that’s to my earlier. One of the questions where I talked about what’s driven Confidence for us is the consumer engagement with our updates. And so yes, it’s Clifton Bondi’s Arahis. It’s other styles too, but that it speaks to consumers coming back to us directly through improvements through the membership program and engaging with us to buy that product. So there are a number of things there that are embedded. It’s product improvement exclusives, early drops and that has definitely helped our DTC business. Yeah. Great.
Rakesh Patel
And then can you also help us think about the opportunity for HOKA pricing? I think the increase you took last year was a bit lower than what competitors have done. So do you see room to take pricing higher and if so, is that a near term event?
Stefano Caroti
Selectively and strategically as we’ve done, we have some price increases hitting this spring and some more in the fall. Typically when we upgrade the product, we price it up. That has been our approach and has served us well so far.
Steven J. Fasching
Yeah. And I think the quarter demonstrates that we have more pricing power and that’s something that we can always look at.
Rakesh Patel
Thanks very much.
Steven J. Fasching
Great. Thanks. Rickshaw.
operator
Your last question comes from the line of Dana Telsey of Telsey Advisory Group. Please go ahead.
Dana Telsey
Hi. As you think about the DTC channel, any difference by brand of E commerce and stores and what are your plans for opening stores this year? And then just on the wholesale channel. Any more color on any specific retailers that that’s been working and did you have any exposure to Saks? Thank you.
Stefano Caroti
On the latter note, we have little or no exposure to Saks. Both channels, retail and E commerce perform well. And your third question was so related to DTC on wholesale, we’re very happy with really the performance of the brand. Really across all retailers. Journey’s had a good run of the brand. Foot Locker is performing well with the brand. DSG is performing well with the brand. Run Specialty continues to perform well with the brand. And you know, we are together with Brooks number one too in the run Specialty channel. So generally the brand has performed in a balanced way across the whole wholesale portfolio.
Dana Telsey
Thank you.
Stefano Caroti
In the U.S.
operator
Thank you. There are no further questions at this time. With that, ladies and gentlemen, concludes today’s call. We thank you for participating. You may now disconnect your lines.