Shares of shoe company Deckers Outdoor (DECK -18.51%) got hammered on Friday after the company reported financial results for its fiscal third quarter of 2025. As of 1:30 p.m. ET, Deckers stock was down 17%.

A beat-and-raise quarter wasn't enough

I believe the story here is that expectations for Deckers were just too high. There's nothing problematic in the numbers. The company's Q3 net sales jumped 17% year over year to over $1.8 billion, ahead of analysts' expectations. And its Q3 earnings per share (EPS) of $3 were up 19% and also ahead of estimates.

Deckers also has provided full-year guidance for its fiscal 2025. And with its Q3 report, management held some parts of the guidance the same but raised most aspects of the guidance. For example, it was expecting full-year net sales growth of 12% but now it expects 15% growth. Likewise, guidance for its gross margin increased from 55.5% at best to 57% at worst.

These are meaningful increases to guidance for Deckers. But analysts were hoping that management would raise guidance even more. Deckers stock consequently dropped today.

Resetting expectations is healthy

In fairness, Deckers stock was trading at an all-time high going into its Q3 report, and shares were up over 70% in just the past year. Moreover, Deckers stock was trading at more than 7 times its trailing sales, which was the most expensive it had ever been and quite expensive for a shoe stock generally.

In other words, it seems that analysts and investors had elevated expectations for Deckers and had pushed shares up on those expectations. If so, it does make sense for Deckers stock to cool off a little bit today even though the numbers were still quite good and encouraging for long-term shareholders.