DECKERS OUTDOOR CORP

Previous wording

Consolidated financial performance highlights for the six months ended September 30, 2024, compared to the prior period, were as follows:

Current wording

Consolidated financial performance highlights for the nine months ended December 31, 2024, compared to the prior period, were as follows:

Previous wording

•Diluted earnings per share increased 51.9% to $2.34 per share.

Current wording

•Diluted earnings per share increased 32.3% to $5.33 per share.

Previous wording

Sanuk Brand Asset Sale. During the three months ended September 30, 2024, we entered into an agreement pursuant to which the buyer agreed to purchase the Sanuk brand and certain related assets which was completed on the Sanuk Brand Sale Date of August 15, 2024.

Current wording

Sanuk Brand Asset Sale. During the three months ended September 30, 2024 (prior quarter), we entered into an agreement pursuant to which the buyer agreed to purchase the Sanuk brand and certain related assets which was completed on the Sanuk Brand Sale Date of August 15, 2024.

Previous wording

Financial results for our reportable operating segments present the former Sanuk brand through the Sanuk Brand Sale Date for the current period. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report for further information.

Current wording

Financial results for our reportable operating segments present the former Sanuk brand through the Sanuk Brand Sale Date for the current period and full financial results for the three and nine months ended December 31, 2023. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report for further information.

Previous wording

As of September 30, 2024, we have a total of 178 global retail stores (including 139 UGG brand retail stores and 39 HOKA brand retail stores), which includes 92 concept stores and 86 outlet stores.

Current wording

As of December 31, 2024, we have a total of 179 global retail stores (including 139 UGG brand retail stores and 40 HOKA brand retail stores), which includes 93 concept stores and 86 outlet stores.

Previous wording

Total net sales increased primarily due to higher global net sales across all channels for the HOKA and UGG brands. On a constant currency basis, net sales increased by 20.4%, compared to the prior period. Further, we experienced an increase of 19.0% in the total volume of units sold to 21,300 from 17,900, compared to the prior period. Units sold represents all units related to the total net sales presented, inclusive of all categories such as footwear, apparel, accessories, home goods, and care kits. The prior period total volume of units sold for only footwear has been modified to conform to the current period presentation.

Current wording

Total net sales increased primarily due to higher global net sales across all channels for the UGG and HOKA brands. On a constant currency basis, net sales increased by 16.6%, compared to the prior period. Further, we experienced an increase of 14.2% in the total volume of units sold to 24,900 from 21,800, compared to the prior period. Units sold represents all units related to the total net sales presented, inclusive of all categories such as footwear, apparel, accessories, home goods, and care kits. The prior period total volume of units sold for only footwear has been modified to conform to the current period presentation.

Previous wording

•DTC net sales increased primarily due to higher global sales for the HOKA and UGG brands, driven primarily by consumer acquisition and retention online as we continued to experience increased demand for both brands, especially among international regions. Comparable DTC channel net sales for the 13 weeks ended September 29, 2024, increased by 17.0%, compared to the prior period.

Current wording

•DTC net sales increased primarily due to higher global sales for the UGG and HOKA brands, driven primarily by consumer acquisition and retention online as we continued to experience increased demand for both brands. Comparable DTC channel net sales for the 13 weeks ended December 29, 2024, increased by 18.3%, compared to the prior period.

Previous wording

•Wholesale net sales of the UGG brand increased primarily due to higher global net sales as a result of increased demand for year-round key product franchises, also benefiting from timing of sell-in for fall and winter franchises.

Current wording

•Wholesale net sales of the UGG brand increased primarily due to higher global net sales, particularly from international regions, as a result of increased demand for year-round key product franchises, strong partnerships with brand enhancing retailers, as well as benefits from increased inventory availability of key styles through peak season, compared to the prior period.

Previous wording

•Wholesale net sales of the HOKA brand increased primarily due to higher global net sales across the brand’s product assortment, driven by market share gains and benefits from select new points of distribution with key partners globally, as well as the timing of certain distributor shipments.

Current wording

•Wholesale net sales of the HOKA brand increased globally, primarily driven by outsized increases from international distributor markets as we prepare the marketplace for key franchise upgrades, continued market share gains, and benefits from select new points of distribution with key partners.

Previous wording

•International net sales, which are included in the reportable operating segment net sales presented above, increased by 33.0% and represented 34.9% and 31.5% of total net sales for the three months ended September 30, 2024, and 2023, respectively. These changes were primarily driven by higher global net sales across all channels for the HOKA and UGG brands.

Current wording

•International net sales, which are included in the reportable operating segment net sales presented above, increased by 28.5% and represented 36.0% and 32.8% of total net sales for the three months ended December 31, 2024, and 2023, respectively. These changes were primarily driven by higher global net sales across all channels for the UGG and HOKA brands.

Previous wording

Gross Profit. Gross margin increased to 55.9% from 53.4%, compared to the prior period, primarily due to favorable brand and product mix for the HOKA brand along with higher margin product driving a higher proportion of growth for both the HOKA and UGG brands, and reduced closeouts to the wholesale channel. These benefits were partially offset by unfavorable freight costs due to rising ocean freight costs, and slightly unfavorable channel mix shifts.

Current wording

Gross Profit. Gross margin increased to 60.3% from 58.7%, compared to the prior period, primarily due to favorable product mix with higher margin UGG brand products driving a higher proportion of growth, fewer closeouts to the wholesale channel, higher levels of full price selling for the UGG brand, and a small benefit from favorable foreign currency exchange rates. These benefits were partially offset by higher freight costs and increased promotions for the HOKA brand as we prepare the marketplace for key franchise updates.

Previous wording

•Increased variable advertising and promotion expenses of approximately $32,000, primarily due to higher promotional marketing expenses for the HOKA and UGG brands to drive global brand awareness and market share gains, highlight new product categories, and provide localized marketing.

Current wording

•Increased variable advertising and promotion expenses of approximately $33,200, primarily due to higher promotional marketing expenses for the HOKA and UGG brands to drive global brand awareness and market share gains, highlight new product categories, and provide localized marketing.

Previous wording

•Increased net foreign currency-related gains of approximately $19,500, primarily driven by favorable changes in Asian and European exchange rates against the US dollar.

Current wording

•Increased net foreign currency-related losses of approximately $28,100, primarily driven by unfavorable changes in European, Asian, and Canadian exchange rates against the US dollar, compared to a favorable impact in the prior year.

Previous wording

•Increased other variable net selling expenses of approximately $20,100, primarily due to higher rent and occupancy costs related to HOKA brand growth, higher warehouse expenses and credit card fees, as well as higher selling expenses, including sales commissions and related fees, and materials and supplies.

Current wording

•Increased other variable net selling expenses of approximately $16,200, primarily due to higher corporate warehouse expenses, as well as higher sales commissions and related fees for the UGG and HOKA brands, and rent and occupancy costs related to HOKA brand growth.

Previous wording

•Increased other operating expenses of approximately $25,600, primarily due to higher contract expenses, legal expenses, and infrastructure investments and related depreciation.

Current wording

•Increased other operating expenses of approximately $15,000, primarily due to higher contract expenses and other operating expenses, as well as higher impairments in IT.

Previous wording

•Increased payroll and related costs of approximately $45,200, primarily due to investments in talent for key functions for corporate and HOKA brand roles driving higher employee headcount and full-year costs for prior comparable period hiring.

Current wording

•Increased payroll and related costs of approximately $14,200, primarily due to investments in talent for key functions for corporate, HOKA brand, and UGG brand roles driving higher employee headcount and full-year costs for prior comparable period hiring, partially offset by lower performance-based compensation.

Previous wording

The increase in total income from operations, compared to the prior period, was primarily due to higher net sales at higher gross margins, combined with slightly lower SG&A expenses as a percentage of net sales.

Current wording

The increase in total income from operations, compared to the prior period, was primarily due to higher net sales at higher gross margins, partially offset by higher SG&A expenses as a percentage of net sales.

Previous wording

•The increase in income from operations of the DTC channel was due to higher global net sales for the HOKA and UGG brands at higher gross margins, partially offset by a slightly higher rate of SG&A expenses as a percentage of net sales.

Current wording

•The increase in income from operations of the DTC channel was due to higher global net sales for the UGG and HOKA brands, a higher UGG brand gross margin, partially offset by higher SG&A expenses as a percentage of net sales, mainly driven by the HOKA brand.

Previous wording

•The increase in income from operations of HOKA brand wholesale was due to higher global net sales at higher gross margins, combined with relatively flat SG&A expenses as a percentage of net sales.

Current wording

•The change in income from operations of HOKA brand wholesale was relatively flat to last year, despite higher global net sales, due to lower gross margins primarily related to preparing the marketplace for key franchise updates, and higher SG&A expenses as a percentage of net sales, primarily related to certain advertising and promotion expenses.

Previous wording

Total Other Income, Net. The increase in total other income, net, compared to the prior period, was due to higher interest income from higher invested cash balances.

Current wording

Total Other Income, Net. The increase in total other income, net, compared to the prior period, was primarily due to higher interest income from higher invested cash balances.

Previous wording

The net increase in our effective income tax rate, compared to the prior period, was primarily due to the effects of discrete items, including a change in valuation allowance on tax attributes and a change in return-to-provision differences, partially offset by net discrete tax benefits for stock-based compensation.

Current wording

The net decrease in our effective income tax rate, compared to the prior period, was primarily due to higher income tax expense from changes in jurisdictional mix of worldwide income before income taxes, partially offset by a lower benefit from net discrete items, including from return-to-provision adjustments and tax benefits for stock-based compensation.

Previous wording

Net Income. The increase in net income, compared to the prior period, was primarily due to higher net sales and operating margins, as well as higher interest income. Net income per share increased, compared to the prior period, due to higher net income and lower weighted-average common shares outstanding driven by stock repurchases.

Current wording

Net Income. The increase in net income, compared to the prior period, was due to higher net sales at higher gross margins, partially offset by higher SG&A expenses as a percentage of net sales. Net income per share increased, compared to the prior period, due to higher net income and lower weighted-average common shares outstanding driven by stock repurchases.

Previous wording

Total Other Comprehensive Income (Loss), Net of Tax. The increase in total other comprehensive income, net of tax, compared to the prior period, was primarily due to higher foreign currency translation gains relating to changes in the net asset position against Asian and European foreign currency exchange rates, partially offset by higher unrealized losses on cash flow hedges.

Current wording

Total Other Comprehensive (Loss) Income, Net of Tax. The increase in total other comprehensive loss, net of tax, compared to the prior period, was primarily due to higher foreign currency translation losses relating to changes in the net asset position against Asian and European foreign currency exchange rates, partially offset by higher unrealized gains on derivative contracts.

Previous wording

Six Months Ended September 30, 2024, Compared to Six Months Ended September 30, 2023. Results of operations were as follows:

Current wording

Nine Months Ended December 31, 2024, Compared to Nine Months Ended December 31, 2023. Results of operations were as follows:

Previous wording

Total net sales increased primarily due to higher global net sales across all channels for the HOKA and UGG brands. On a constant currency basis, net sales increased by 21.4%, compared to the prior period. Further, we experienced an increase of 16.8% in the total volume of units sold to 34,000 from 29,100, compared to the prior period. Units sold represents all units related to the total net sales presented, inclusive of all categories such as footwear, apparel, accessories, home goods, and care kits. The prior period total volume of units sold for only footwear has been modified to conform to the current period presentation.

Current wording

Total net sales increased primarily due to higher global net sales across all channels for the HOKA and UGG brands. On a constant currency basis, net sales increased by 19.2%, compared to the prior period. Further, we experienced an increase of 15.9% in the total volume of units sold to 58,900 from 50,800, compared to the prior period. Units sold represents all units related to the total net sales presented, inclusive of all categories such as footwear, apparel, accessories, home goods, and care kits. The prior period total volume of units sold for only footwear has been modified to conform to the current period presentation.

Previous wording

•DTC net sales increased primarily due to higher global sales for the HOKA and UGG brands, driven primarily by consumer acquisition and retention online as we continued to experience increased demand for both brands, as well as a slight benefit from higher levels of full-price selling. Comparable DTC channel net sales for the 26 weeks ended September 29, 2024, increased by 19.3%, compared to the prior period.

Current wording

•DTC net sales increased primarily due to higher global sales for the HOKA and UGG brands, driven primarily by consumer acquisition and retention online as we continued to experience increased demand for both brands. Comparable DTC channel net sales for the 39 weeks ended December 29, 2024, increased by 18.6%, compared to the prior period.

Previous wording

•Wholesale net sales of the UGG brand increased primarily due to higher global sales as a result of increased demand for year-round key product franchises, also benefiting from timing of sell-in for fall and winter franchises.

Current wording

•Wholesale net sales of the UGG brand increased primarily due to higher global sales, especially internationally, as a result of increased demand for year-round key product franchises, strong partnerships with brand enhancing retailers, as well as benefits from increased availability of products in the channel through the peak season, compared to the prior period.

Previous wording

•International net sales, which are included in the reportable operating segment net sales presented above, increased by 27.8% and represented 35.9% and 33.9% of total net sales for the six months ended September 30, 2024, and 2023, respectively. These changes were primarily driven by higher global net sales for both channels for the HOKA and UGG brands.

Current wording

•International net sales, which are included in the reportable operating segment net sales presented above, increased by 28.1% and represented 35.9% and 33.4% of total net sales for the nine months ended December 31, 2024, and 2023, respectively. These changes were primarily driven by higher global net sales for both channels for the HOKA and UGG brands.

Previous wording

Gross Profit. Gross margin increased to 56.3% from 52.6%, compared to the prior period, primarily due to favorable brand and product mix for the HOKA brand along with higher margin product driving a higher proportion of growth for both the HOKA and UGG brands and higher full-price selling, including reduced closeouts to the wholesale channel.

Current wording

Gross Profit. Gross margin increased to 58.2% from 55.5%, compared to the prior period, primarily due to favorable brand and product mix, with higher margin product driving a higher proportion of growth, and increased levels of full-price selling, including reduced closeouts to the wholesale channel; partially offset by unfavorable changes in freight costs.

Previous wording

•Increased variable advertising and promotion expenses of approximately $47,800, primarily due to higher promotional marketing expenses for the HOKA and UGG brands to drive global brand awareness and market share gains, highlight new product categories, and provide localized marketing.

Current wording

•Increased variable advertising and promotion expenses of approximately $81,000, primarily due to higher promotional marketing expenses for the HOKA and UGG brands to drive global brand awareness and market share gains, highlight new product categories, and provide localized marketing.

Previous wording

•Increased payroll and related costs of approximately $20,300, primarily due to investments in talent for key functions for corporate and HOKA brand roles driving higher employee headcount and full-year costs for prior comparable period hiring.

Current wording

•Increased payroll and related costs of approximately $59,400, primarily due to investments in talent for key functions for corporate, HOKA brand, and UGG brand roles driving higher employee headcount and full-year costs for prior comparable period hiring.

Previous wording

•Increased other operating expenses of approximately $33,200, primarily due to higher infrastructure investments and related depreciation, contract expenses, and travel expenses.

Current wording

•Increased other operating expenses of approximately $48,200, primarily due to higher contract expenses and other operating expenses, as well as higher depreciation, travel expenses, and IT expenses for software costs.

Previous wording

•Increased other variable net selling expenses of approximately $11,300, primarily due to higher warehouse expenses, sales commissions and related fees, and credit card fees, as well as higher rent and occupancy costs related to HOKA brand growth.

Current wording

•Increased other variable net selling expenses of approximately $36,300, primarily due to higher rent and occupancy costs related to HOKA brand growth, higher corporate warehouse expenses, as well as higher sales commissions and related fees for the UGG and HOKA brands, and credit card fees.

Previous wording

•Increased net foreign currency-related gains of approximately $15,100, primarily driven by favorable changes in Asian and European exchange rates against the US dollar.

Current wording

•Increased net foreign currency-related losses of approximately $13,000, primarily driven by unfavorable changes in European, Canadian, and Asian exchange rates against the US dollar, compared to a favorable impact in the prior year.

Previous wording

•The increase in income from operations of the DTC channel was due to higher global net sales for the HOKA and UGG brands at higher gross margins, partially offset by higher SG&A expenses as a percentage of net sales.

Current wording

•The increase in income from operations of the DTC channel was due to higher global net sales for the HOKA and UGG brands at higher gross margins, partially offset by higher SG&A expenses as a percentage of net sales, driven by the HOKA brand.

Previous wording

•The increase in income from operations of UGG brand wholesale was primarily due to higher global net sales at higher gross margins, partially offset by higher SG&A expenses as a percentage of net sales.

Current wording

•The increase in income from operations of UGG brand wholesale was due to higher global net sales at higher gross margins, partially offset by higher SG&A expenses as a percentage of net sales.

Previous wording

•Unallocated overhead costs were lower as a percentage of net sales, but increased primarily due to higher payroll costs for key corporate roles to support growth of our brands, and higher other operating expenses, partially offset by increased foreign currency-related gains.

Current wording

•The increase in unallocated overhead costs was higher as a percentage of net sales, primarily due to higher payroll costs for key corporate roles to support growth of our brands, higher depreciation and other operating expenses, higher net foreign currency-related losses, and higher corporate warehouse expenses.

Previous wording

Total Other Income, Net. The increase in total other income, net, compared to the prior period, was due to higher interest income from higher invested cash balances and average interest rates.

Current wording

Total Other Income, Net. The increase in total other income, net, compared to the prior period, was primarily due to higher interest income from higher invested cash balances.

Previous wording

The net increase in our effective income tax rate, compared to the prior period, was primarily due to the effects of discrete items, including a change in valuation allowance on tax attributes and a change in return-to-provision differences, partially offset by net discrete tax benefits for stock-based compensation.

Current wording

The net increase in our effective income tax rate, compared to the prior period, was primarily due to a lower benefit from net discrete items, including from return-to-provision adjustments, a valuation allowance on tax attributes, and tax benefits for stock-based compensation, partially offset by higher income tax expense from changes in jurisdictional mix of worldwide income before income taxes.

Previous wording

Net Income. The increase in net income, compared to the prior period, was due to higher net sales and operating margins, as well as higher interest income. Net income per share increased, compared to the prior period, due to higher net income and lower weighted-average common shares outstanding driven by stock repurchases.

Current wording

Net Income. The increase in net income, compared to the prior period, was due to higher net sales at higher gross margins, and higher operating margins. Net income per share increased, compared to the prior period, due to higher net income and lower weighted-average common shares outstanding driven by stock repurchases.