President Donald Trump’s tariff policy decisions this year have put Hoka’s parent company, Deckers Outdoor, under significant pressure to raise sneaker prices.
So far, this year’s new tariffs have increased effective import taxes to 17.4% from 2.4% in January. That’s the highest tariff rate since 1935, according to Yale Budget Lab. and a big problem for the footwear industry, which relies heavily on manufacturers in Asia.
Deckers Outdoor at a glance:
- Annual revenue in fiscal 2026 (est): $5 billion
- Brands owned: Ugg, Hoka, and Teva
- Number of employees: 5,500
Deckers shoes, including Hoka, are primarily made in China and Vietnam, where rivals like Nike and Adidas also make them.
After a tariff tit-for-tat this summer, tariffs on Chinese imports into the U.S. have settled at 30%. Vietnam cut a trade deal in August, resulting in tariffs of 20%.
Those tariffs will hit Deckers hard, to the tune of nearly $200 million this year alone.
“Assuming Vietnam increases from 10% to 20%, we would expect to face a total of $185 million of unmitigated impact to our cost of goods sold in fiscal year 2026,” said Deckers’ Chief Financial Officer Stephen Fasching on the company’s earnings call in July.
Fasching warned customers that the company’s plan is to offset those costs by raising prices on its shoes, including Hoka, something it already began doing in July.
Unfortunately, more price increases are coming.
Image source: CFOTO/Getty Images
Hoka customers feel price pinch
It may not feel like it, but footwear is somewhat of a discretionary purchase. When times are tough, consumers extend the life of their sneakers and shoes or trade down, buying less pricey options.
The economy has been humming along smoothly for many over the past few years, with low unemployment and wage increases that have generally outpaced inflation since inflation peaked above 8% in June 2022.
That’s been good news for Hoka, since it’s a premium brand that typically carries a higher price tag than many other choices. It recently launched Mafate X and Rocket X 3, which cost over $200.
However, inflation has started climbing again, and tariffs aren’t helping matters. In August, the Consumer Price Index showed inflation of 2.9% year-over-year, up from 2.3% in April before most tariffs went into effect.
Most companies were surprised by the size of the tariffs, and as a result, have been feverishly pulling levers to offset costs by negotiating with vendors and, unfortunately, increasing prices, including Deckers Outdoor (DECK) .
“We implemented selective initial price increases, which went into effect on July 1,” said Fasching. “One of our mitigating levers is price adjustments.”
Fasching warned that more price hikes are coming:
We plan to phase in product price increases over the course of fiscal year 2026.
Deckers isn’t alone; sneaker prices at rivals are also higher
The footwear industry imports 99% of the products sold in the U.S. annually, according to the Footwear Distributors & Retailers of America (FDRA).
It’s hard to blame Deckers for boosting prices, given that they’re far from the only company doing it. The industry is big, and many companies are vying for a share, particularly in sneakers.
The largest footwear companies:
- Nike
- Adidas AG
- Skechers USA
- Deckers Outdoor
- Puma
Source: Spherical Insights
In its earnings call in May, Nike said tariffs would reduce gross margins by 1% this quarter and increase costs by $1 billion. As a result, Nike’s CFO Matthew Friend said:
We have implemented a surgical price increase in the United States with phased implementation beginning in fall ’25.
The uncertainty caused by tariffs caused Skechers to remove its forward guidance in March ahead of its acquisition by 3G Capital.
The industry’s hit from tariffs is significant, and that’s causing major inflation across all makers. According to the FDRA President Matt Priest:
The latest inflation numbers show what families already know — shoes are getting more expensive. Footwear prices jumped 1.4% year-over-year, the most significant increase in 17 months, with women’s shoes spiking 2.8%, the highest in two and a half years.
U.S. footwear industry at a glance:
- Market size: $113.7 billion in 2024
- Footwear sold: 2.5 billion pairs of shoes
- Tariffs paid previously: Approx. $3 billion industrywide annually
- Tariffs estimated in the future: Approx. $5 billion annually
Source: FDRA
Deckers’ financials face headwind
During the July earnings call, Deckers’ management forecast fiscal second-quarter revenue of $1.38 billion to $1.42 billion, saying Hoka sales would rise by “approximately 10%.”
The bad news: It estimated gross margin would dip to 53.5% to 54% “primarily due to increased tariffs for goods shipped into the U.S.,” and it said it plans to partially offset that headwind with “selective and staggered price increases in the U.S.,” according to Fasching.
More retail:
- Major office supply retailer sold after it closed 1,000 stores
- AutoZone makes harsh change customers will notice
- Iconic retail chain closed 80% of its stores
“So looking at not all products, but certain products within the fall across all of our brands. You’ve seen some of those around $5 increases on some of that product. Then we’ve also looked at spring of next year. So looking at some price increases…on some existing as well as some new models that will come in.”
The reality is that prices on some products have already risen, some new models will be pricier, and prices on existing models are slated to increase more through early next year.
Deckers Outdoor’s fiscal sales by year:
- 2026 (est): $5.46 billion.
- 2025: $4.99 billion.
- 2024: $4.29 billion.
- 2023: $3.6 billion.
- 2022: $3.2 billion.
Source: Deckers Outdoor 10-K filings with the SEC. The 2026 estimate is the Wall Street consensus.
Wall Street weighs in on Deckers Outdoor
Deckers’ stock price has fallen sharply this year, dropping 48% year-to-date, far worse than the S&P 500’s roughly 13% gain.
Bank of America analysts don’t expect things to get much better for the company. In a note to clients on Sept. 25, they wrote:
Near term EPS momentum is offset by potential for peak EBIT margins this year and elevated competition… there are several gross margin headwinds including tariffs net of pricing, material costs, and channel mix… we think intense competition in the running space will pose a challenge for HOKA to notably reaccelerate its US business. Our specialty run channel checks on HOKA have been mixed recently, with some retailers suggesting other brands are taking share, particularly Nike.
Bank of America rates Deckers Outdoor neutral and has a price target of $111, which is only slightly above the current $106 stock price.
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