Deckers Outdoor's two flagship brands, Uggs and Hoka, appear to be losing sales momentum, which will ultimately pressure the company's profit margins. Given this trend, Bernstein has assigned Deckers an "underperform" rating with a $100 price target.

Bernstein analyst Aneesha Sherman noted that Hoka has reached saturation in the U.S. running shoe market and is emerging from a multi-year popularity cycle. "We expect growth rates to slow significantly to high single-digit percentages in the coming years, primarily driven by international markets," Sherman stated.

Additionally, Deckers' profit margins are at industry highs and may face pressure from slowing growth and changing product mix. While both brands currently maintain strong profitability with gross margins near 60%, margins are expected to gradually decline as growth slows, revenue mix shifts toward wholesale and lower-priced new categories, and management invests heavily in marketing. Sherman forecasts a 190 basis point decline in gross margins from fiscal 2026 to 2030.

Looking at the challenges facing each brand, Hoka's superior cushioning technology has been replicated by competitors, while retailers are showing fatigue with the trend. Nike's strong comeback in the running shoe segment poses a threat with its more diverse product lineup, while On continues to gain market share.

As for Uggs, the brand achieved significant growth in the global casual footwear market, but this category is gradually shrinking as consumers shift toward athletic shoes. Sherman expects this trend to continue, with the casual footwear market remaining flat through 2029. He anticipates Uggs growth of approximately 4%, compared to double-digit growth rates in recent years.

Deckers closed Thursday's trading session down 2.74% at $115.43. The stock has declined 43% year-to-date.