Hoka Brand Lifts Deckers as Nike Battles Inventory Glut

As of August 4th, 2025, Deckers Outdoor's recent rally after its quarterly earnings release has been short-lived, with the stock still only about 5% above its 52-week lows. This comes amid broader weakness in the consumer discretionary sector.

However, a potential pairs trade opportunity may be emerging, with a long position in Deckers and a short position in its larger competitor, Nike. The core of this strategy rests on the expectation that Deckers, driven by its booming HOKA brand and robust financial health, will outperform Nike, which continues to grapple with inventory issues, market share erosion, and macroeconomic headwinds.

Deckers' appeal stems from its strong brand momentum and sound financial footing. The Hoka brand has achieved remarkable growth, and the company's expansion in the Asia-Pacific region helps mitigate U.S.-centric risks. Despite a nearly 50% year-to-date stock decline, Deckers' underlying fundamentals remain solid, with a strong balance sheet and attractive valuation metrics compared to Nike and the broader market.

In contrast, Nike continues to face significant structural challenges and a decelerating trajectory. The company reported a 12% revenue decline in Q4 2025, reaching $11.1 billion, due to persistent inventory gluts and weakening demand in key markets. Earnings per share growth has plummeted, with further erosion projected due to elevated costs and discounting pressures. Nike's stock has entered a deep bear market, down nearly 60% from its 2021 highs, reflecting lost market share to agile competitors.