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The S&P 500’s reached new record highs in 2025, climbing by 9% since the start of the year (even after suffering a sharp tumble in April). Yet, not all of its constituents have been so fortunate, with Deckers Outdoor (NYSE:DECK) being among the worst-performing large-cap US stocks since the start of the year.
The footwear and apparel designer saw its stock price crater in February, tumbling by over 20% in a single day. And since then, the shares have continued their downward trajectory, falling by almost 50% in the last seven months.
What happened? And could there be the possibility of a rebound that investors can capitalise on?
Investigating the problem
At first glance, it’s not immediately obvious why this S&P 500 business suddenly turned south in winter. Its quarterly results posted fairly strong earnings with both revenue and net income climbing by 17%. Yet what seems to have spooked investors is Deckers’ guidance. Or rather, the lack of it.
Management issued a warning that growing macroeconomic and trade uncertainty was making it difficult to project performance going into its 2026 fiscal year (ending in March). And the small insight that was provided for the following quarter pointed to a concerning slowdown for some of its flagship brands.
Skip ahead a few months, and the entire apparel sector got hit with a wave of selling activity as US tariffs threatened higher import costs as well as pressure on discretionary consumer spending. Subsequently, Nike and Adidas also saw their market-caps shrink as investor sentiment soured. And with these headaches still persisting today, the Deckers share price has struggled to recover.
A hidden opportunity?
The sharp drop in share price has dragged Deckers Outdoor’s forward price-to-earnings ratio down to 18. While that’s not cheap by UK standards, it’s pretty reasonable versus some of the valuations in the US market today. And with the impact of tariffs now baked into the stock, could now be a good time to buy?
Despite the external challenges, Deckers still has some desirable traits. It’s Hoka and UGG brands remain popular with customers that have continued to deliver double-digit growth in spite of headwinds. And with management expanding its direct-to-consumer sales channel, the company’s steadily unlocking higher-margin growth versus its traditional wholesaler approach to doing business.
The balance sheet also appears to be in tip-top shape with no debt in sight and $1.7bn of cash & equivalents. And management’s begun using this spare liquidity to buy back its own stock at the current discounted price.
That certainly signals confidence in the long run once the economic landscape eventually improves. And it’s why I think investors may want to give this S&P 500 stock a closer look.
