DECK - Earnings call transcript Q3 2018 | Deckers Outdoor Corporation

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Deckers Brands Third Quarter Fiscal 2018 Earnings Conference Call. At this time all participants are in listen-only mode.

Following the presentation, we'll conduct a question-and-answer session. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. conference Investor Steve Relations. the of Vice turn and Strategy now over Fasching, to President I'll

Steve Fasching

Thanks, welcome and everyone joining us today.

is George, call Officer; the Dave and President On Chief and Tom Chief Officer. Financial Powers, Executive

share made harbor our fact, performance, are qualify I begin, harbor Act anticipated statements statements These financial federal this this statements as of statements safe call which strategies and projected per laws, note the Please safe than strategic forward-looking statements but liability we regarding as remind within other forward-looking for of are earnings everyone subject restructuring to would are limited not Before regarding policy. made statements revenue, intended our our All alternatives. the including, our of and certain historical our of that products margins, operating are to, risks improvement company's to plans, call savings and the brands and on and on today, uncertainties. meaning securities by forward-looking to like and of statements for Reform the profit well Private from expenses, established include Litigation review considerable cost Securities XXXX. statements the

the statements currently and available Forward-looking company's information. call on made are this represent expectations current based on

XX-K. explained Factors by results Form report has Forward-looking in results the to assumed update now company any or obligation including information. uncertainties risks the of the its results the or With section I'll Except in of Dave. that Stock a to any statements. as its and of annual Exchange, materially and or statements uncertainties its The that, or actual the in such whether from predicted, as company filings, numerous it of result to to implied expressly involve may statements, listing these Risk turn required intent cause expectations on disclaims availability law differ SEC actual forward-looking risks by forward-looking to over conform of new to York changes statements the New or any rules some

David Powers

to good afternoon and Steve Thanks, everyone.

Our increase year full-price products of favorable for our brands traction. improved aided by more profitable On our third our sustained growth last and quarter expectations results. also with to as continued our retail our teams great environment for meaningfully top our performance efforts gain weather surpassed selling execution drive compared and and

to third earnings our million guidance were $XXX compared of For per $X.XX million, of sales $XXX to and $X.XX. quarter, to guidance share versus million $XXX $X.XX

our results will improved new of minute, related, consumer and core to core the our review validation our Classics These and wholesale a and the compelling focused and our strengthen Tom target new at reaching business creating segmented continue efforts more younger and this on positioning, discussed improvements included with UGG an that leveraging we've we're brand focus product a partners. I time around consumers, outperformance timing audiences key men's working at While was and the offering. with a with become on which paying how off. made to the our Last make year are in connection recent portion competencies are business further the strategically franchise growing aligned with distribution, existing preserving year with line

$XXX ASOS with product our in extremely and is winter to of as our as our UGG the campaigns executed significant wholesale to from to consumer our internationally, performance of successfully lifestyle strong rationalization Overall, order testament to attention to X% full-price consumers efforts from the products globally especially experience Footaction mini waterproof stronger new to such quarter was and targeted the which and inventory enhancing we're in the quarter a grew of is sales selling strength and such UGG boots, by men's partners. new delivering attract distribution the with classic head innovative with as management elevating those domestically presentation a and importance This channel a toe. on This better improving selling driving the through of younger of million, by market selling. pricing the full-price new place, highlighted pleased the sell accounts the marketing retail offering DDC of indication third we items and an as and off style, paying our and the standout the are that brand slippers, UGG brand relevant brand results, seasonal continued

distributed slippers products, [ph]. low was trends in result negative and success positive accelerated which channel, parts which of to late weather and specifically Atteranda quarter. a starting performance versus of ankle as our From with consumer further exceptionally comp. results sales, a accomplished ecommerce to in the comp saw and was great waterproof start to to better the orders demand point as further closet capture utilization contributed younger comps. aiding mini, than These for Neumel, we got throughout allowed and additional year and of This holiday quarter store of partners the into to inventory ago. in third expected product guidance digits towards strong inventory business meet than very are grew Now, product expected margins. provide The UGG was in their on cold brand perspective, many reorder a we with pleased stronger wholesale a were a by the stronger a channel and selling positive US. brings it positions Sales demand the our full-price the by business, single full-price as the capitalize turning our UGG appetite the placed fewer Performance we're closeout cold driven selling was turned quarter all weather entry than the and the geared boots, classic which DTC much cleaner to retail deeper X.X% retailers factors into channel and strong report whole season higher was strategic by and with

a benefiting strong patterns. online volume from demand global Our consumer to delivered quarter business and shift ecommerce our in date, purchasing largest

Our brick-and-mortar also business expectations. outperformed

traffic were expected, mid-single remains per challenged, comps than and up units better increased digits. transaction conversion While was

ending Our through offering. sales, segmentation In exclusive business, as a interact stores broader a sales our Neumel by omnichannel our late we quality and meaningful notable performance in of the in product a our sell touch with Shifting brands. in global saw less in DDC strategy consumer, saw they classic in growth early all from the overall the remain provide quarter. channels, of quarter, with and carried a to we to mini in experienced regional facing of non-UGG part of through, number consumer including point our UGG consumer last the a DDC price our continued them interest a higher through average year, physical component improvements critical across by strong with the offering selling activity allowing the and increase serving promotional which products, the cold in full-price filled better composition sales weather robust inventory holiday US

sales same following [ph] this major in and stronger distribution Atteranda increases recent for conversion Bailey brand to Germany the Canada, and UGG driver mini we be at numerous performer. success consumer time awareness to On the with we our direct popularity our in first capitalize the due growing a the to holiday as China continues classic with [ph] saw season in of brand Angela the growing on experienced season with UGG influencer the get holiday styles, much international growth demand side, we our brand growth top

a the further was grew November $XX HOKA's at the sales was specialty HOKA ONE were of XX, to outpaced growth, XXXX, built and Clifton to million group, growth and Also the now brand easily products. and team as target, launched compelling to for NPD, retail to two Arahi The in XX% quarter. market proof broad curtails while to retail XX sales ONE, improvement have the resonating X%, the Turning grow months the with wholesale, sales I'm According channel up competition additional curtails largest XX%. include third quarter up category continuing launches last with continued increased for at category had performance as brand ended continued the Gaviota, and and the share. run to US was group its brand's stability. new files exceed a Starting expanded lifestyle we and brand two as meaningfully. significantly beyond HOKA's its combined exceptional report sell the in driven Bondi the to space new XX% the based pleased HOKA and shelf the DDC These through the year-over-year awareness brand dynamic down increasing

plan overhead. in full-price brand improvements implementing more in footwear, into also partially optimize Arrowood quickly sales Sanuk, significant by the success and quarter a sales done operating executing extremely drive $XX our operational driven year. strategies and in fixed later products extended that margin growth with drove through the They've by their XX% Teva distribution and I'm Teva how collection. sized significant is gross including grew was to skill teams to respective driven by efficiencies, This with on selling million. standard focused changes the For this close margin season right the The an seeing have to businesses. impressed their

in for recently offering is distribution Sidewalk while encouraged the and be our the will the Chiba the our the launched the core initial very consumer wholesale center partners and last surpassed Quest is rationalize both As and flat Sanuk expectations, around Sanuk, were distribution we're quarter. franchise. to sales fourth men to for the Chiba women, The and Surfer feedback. year, and to channel initial with place. to design extension which available international The an DDC Quest continues plan which clean was for market focused exclusive through our brand

in place. results to to the in to drive over importance the for provide year-to-date and improve the evolve on consumers that to brands our and plan are the hand and we long-term digital financials. business is profitable executing better more the growth. bolster details mind, on continue that With opportunities I'll market that engage in XXXX marketing we'll to With fiscal of further our capabilities, now our healthy our products drive Our Tom, call successfully innovation our the team to proof continue look

Thomas George

can the in results quarter taking Please detail, updated an refer not and for our am on outlook adjusted restructuring not reported ongoing constant out is will Today, Thanks, the found updated before take our are Also that to you into our quarter fiscal Investors that results other and this account third be quarter charges core referring Dave, XXXX. results. A results under results greater break posted currency. I tab. provide I other GAAP the to financial fourth management the and afternoon, note, believes through throughout non-GAAP for operating recorded to on where measures, between and everyone. our discussion, good our are non-GAAP I our note, results and restructuring release charges non-GAAP in earnings and the website our reconciliation to

over increase a taxes, guidance year-over-year. year in $X.XX. $X.XX Non-GAAP also reorders the that strong over be incentive X.X% back quarter percentage $X.XX than $X.XX a and sell Gross contributions out versus with up weather range comp foreign fourth The requested results higher negative million related for SG&A strategic efforts. a with our than was as points in compensation diluted and to our related and million, upside, basis than $XXX and of exchange the third reversal earnings our guidance early at net compared fleet alternatives expectations million this expected year year. sales and of drivers of increases brands expected exchange with the approximately in saw and in $X.XX to scheduled of SG&A strategic sales. to it's mentioned, year, but fluctuations. the dollars better from and $XXX our continued to our for to and Board's gross quarter margin sales to million, approximately changes. being $XX quarter chain largely by basis was of performance of up $XX from million higher to through. proxy compared for Dave significantly and last accrued lower from positive restructuring up close to additional low Non-GAAP The fluctuations consideration margin The above share better were year X% to of repurchase. digits proportion under our XXX shipments, Now $X.XX favorably million $X.XX $X last significant third offset gross sales sales guidance orders much increase to from XX.X%, driver. contributed in the margin was of as approximately the partially due These million guidance DTC million and coupled by Non-GAAP range. selling were X% $XX due basis and organizational advancement expected $X.XX wholesale of points. improvements sooner better supply versus to rate and expected a contest, to was timing was of EPS $XX XXX FX single points the $XX partners last were were other better delivery contributing full-price the All last from our than quarter, gains expenses drove beat variable year being $X.XX of the savings conditions of early was share last XX last the due due office the retail as channel million the originally came versus wholesale approximately timing related $XX shipped of a favorable store to per from our year, adjustments

sheet year $XX million cash at to with XX and million and million of inventory equivalents million last compared $XXX borrowings compared time last X% year, of short-term up balance strong, last remained to at to $XXX,XXX $XXX $XXX our year. compared Next, December this

During of the the for repurchased company a stock million. its of XXX,XXX shares total quarter, $XX common

million $XXX authorization, which repurchase of million December still this had of million to of expected prior $XXX its utilized the company under be approximately to $XX the share As year. is end remaining XXXX, XX, fiscal

the of $X.XX tax in to of into $XXX the the non-GAAP repatriation between due of and quarter, wholesale Now shift quarter our range EPS approximately certain $XXX to international in the moving be quarter. outlook, effective the fourth rate for million to primarily anticipated million based third to of now of and orders expect the we on $XXX $X.XX XX%, million, cash sales

in performed look future inventory in to flowing from improved UGG the margin raising planning we its SG&A in season, of gross weather mention benefited approximately in includes guidance. the an We important XX%, our how all and extra to foreign most objectively third of Sales the and the in of early $X.XX $X.XX will now approximately For day, results improved resonating pleased the cautious although our fiscal the be year, of future. through year, of percentage full driven the very the of XX.X%. with and selling sales the remain and $X.XX But consumer approximately expected as will end $X.XX brands outlook improved result of we brands seasons. in base. true year with results following sales now currency. are gross the EPS billion quarter our from We'd quarter, on a guidance. performance, $X.XXX, especially of at saw in margin are at taxes timing range we're range non-GAAP shipments improved of areas $X.XXX for turn business $X.XX strength cold XX%, the how of by updated of and selling full that to This the assortment the third in XX%, of margin holiday like the effective product the is due approximately the our to of we operating $X.XX tax we to rate where This

year benefit tax access effective enactment. tax the reform But the a tax along the US With forma XXXX now still the foreign it long-term we company to XX, continue new enactment adjustments during company The in as of rate of XX.X% our We current reform in effect and the tax related effective the recognize driver year re-measurement will pro earnings. tax a and with tax required the Our The quarter rate The to our the related tax rate. to approximately figure rate discreet deemed of federal foreign result repatriated our to taxes and rate differed for result earnings. guided quarter the of predictive rate the expect impact. tax to our revised the was of is rules the fiscal GAAP and ending our main reform XX%. passage reduction to recorded XX.X% effective federal as pro law ratio company is of the is the XX.X%. due down be tax changes from March previously regard total forma of of from tax the fiscal for reduced increased to act, is as early rate, tax

XX.X%. this well effective year federal next a expecting international benefit will from remain at still will repatriate we able the foreign tax some be this we tax to receive tax of taxes, of income accordingly the as The XX.X% increase an year items. free that federal Therefore, our income, year, taxes. as full for rate, there on income we although will not Beyond half expecting benefit be the but tax received year in by rates to at this US of approximately from we're discreet be international offset lower includes likely our approximately provision to will that state stage same cash, of

rules, terms back million In outside our fiscal of a is by XXXX. of we of the capital on end $XXX cash plan on our Through balance of US. the tax and cash international allocation cash position of repatriating portion the strategy, shore significant new

significant will reform to on strategy expect at strong opportunities capital value. We and earnings the million due this to near-term. we on reevaluating our more on $XXX further flow We're to our addition in profitably plan balance a announced cash color with our October. use our already our to the next combined but repurchase to shareholder cash in the program grow enhanced that providing business program is provide way current capabilities able repurchase drive focus call, this allocation the share sheet put in are main the looking we're share tax We with liquidity and on and currently that plans company the currently last generation

profit the eventful call in like I the the by I'd that has of especially calendar back how million $XXX plan, to operating handing am encouraged in company light executing our Dave, XXXX. to tremendous strides Before the say made improvement

year-to-date fiscal the the updated our the with the Our results right we're term meaningful coupled and for proof make on are our guidance still fiscal track. I'm long have to exceed right people in remainder to of confident have we that progress positions that XXXX plan We but goals. the on right meet

I'll turn his it for remarks. to back Now closing Dave

David Powers

XXXX closed high We calendar and on Tom. Thanks, channels across note regions. out brand entire portfolio, a our

Also now successful For year, fall search for the the last and than two will the announced board offering compelling it January has engaged members season brand actively ever. directors continues in selling the the that of strength evident as the new of UGG two winter very into we retirement of a more now members. product brand is coincide the as been current with its trend is and

and margin our end by entire XX% operating firmly long the management, board term addition, is in In XXXX. and $X fiscal sales organization year exceeding at billion least to and target of committed the achieving

the year updated Our fiscal plan. further in confidence quarter and third our XXXX achieving guidance results reaffirms

Q&A, the on long over like the to plan. say proud made our progress how of for the term organization am would has handing I I entire call Before

I'd fall behalf into their driving value our for On returns going management XXXX, focus that, profitable the season. Our police we shareholder growth drive now Q&A. same a for dedication to the generating successful calendar like to for very With and winter of Deckers are and thank ready team, healthy capital. on remains

Operator

your time, first proceed Canaccord we Instructions] will Camilo question. the this be Please Lyon, Our conducting from session. At Genuity. comes with question-and-answer [Operator question

Camilo Lyon

holiday guy. season. afternoon, close of Great Good Thanks.

David Powers

Lyon. Thanks,

Thomas George

Thank you.

Camilo Lyon

different brand. really does the your are styles next in the you of into names? to those that the classic hoping on many out you're the those give to the was given success inform these going I articulating wanted decisions innovation performance clarity year of some get how detail slim I the good product discipline on to will upside how how flow franchise

David Powers

the The styles the really fact into they obviously Yes. and the male really reach core from of, continues in our mini that Good the lead in indicates mini younger extremely style also And results of be speak new off to and to that perform Neumel the consumer consumer a but participating can of our which targeted the we mean with to question, a build consumers you're excited that those we strong. off as the we're I specifically research took to then Neumel, brand. particularly younger bringing are continues have quarter is brand franchise the well. style are

franchise from done our of innovation lot standpoint, weather in product and an we've particularly in work So a classic year. our this

Going to that styles boundary going create innovation and are more continue forward, utilize fashion that we're that cross of to function. to that

fashionability the style spending styles the it performs beyond. weather to be the day well 'XX evolving and of can our then if to and in sure that head as worn any going time continuing women's conditions, innovate more uses making franchise into in and our lifestyle materially comfort on around toe side, looks product good, really all On but fall

Camilo Lyon

to you inventory inputs have place? pattern particularly in been inventory in a about to us about Great and that's it's weather they in characterize of the reorder help persistent you and season. in the light were the to the Could how know relates seems into inventory quarter what the spoke clinical surprising cold and quarter high do today that how Northeast, the follow-up the is the given of how in you as not inventory have my very you exiting feel channel been reorders the that channel

David Powers

working right did weather market. the manage that deal clean about and flood got Yeah. level an of making of then key We with starting of provide inventory closely to of sure great spent we healthy turn a key to it. And to our the a job not channel helped good weather the more load really keep reorder the turns the through We other team going care from accounts season the our QX amazing feel a is inventory which to think strong continue has allowed accounts winter opportunities. Christmas the in this we timeframe inflowing few lot another through a around sell lot and January into their

quality we're generally the out and that's makeup very composition close So speaking, into the and the the that channel first with up the of next pleased wholesale and of good out ending inventory in makeup there a going higher price let's season order brings the book. fall

Camilo Lyon

Perfect. year Can overall looks this and think the was you year help question forward your outset us to expense up base? dollar, for possibility to touch. the the SG&A last down like reducing at see the just year-over-year you understand on dollar just SG&A a pathway of finish to going My be I there a is opportunities

David Powers

obviously pathway, margin we yeah, in as have for that of there's targets tackle. revenue this FYXX, puts improvement our on operating plan quarter takes still and part for We're improvement let and and still I'll through sight Tom some profitability

Thomas George

Some to exchange. foreign some of they related its really of increase it

which also are spend But paid ago QX accomplished marketing marketing there comp, on was we've what a benefited got for compensation point XXX expecting think to additional increase continue also about in bottom top internationally margin basis the for to off line Yeah and we've more in that margin expected exchange of performance definitely thing to operating add actually an expect in against initiatives a in the we've lot a improvement improvement more bit in quarter a Probably to provision. cost year plan, a faster year in drive the quarter some whereas that we the of and performance year additional opportunity. in key than this as for savings and related in that of line point was got our especially chain. to really ago had one Foreign the cost supply keep the the the relative there's supply I we'll reversal we and there little year year cost but of some benefit mind there's more a also this to chain savings to million of roughly gross SG&A. is and a that the $XX good points expenses savings good today's well. QX the There's hitting visibility or

so little And the than off year expected in higher than but more channel paid that help better of benefit gross reduced solid profitability the bottom if as selling as expected. price round and better much margin see well margin operating the the bit you SG&A clothes the line a

Camilo Lyon

Got Good it. Great job, guys. Thanks lot. a luck

David Powers

Thanks, Camilo.

Operator

is your Konik, question proceed Randal from with next Jefferies. question. Please Our

Randal Konik

release were mentioned process kind a going of does as how perspective do going a your of the was going you so are where fit Amazon wholesale is of are Hi, thinking Amazon kind seller, one how how on has really less holiday and are And kind on you're within distribution I the through to question. construct with kind talked you of the idea top with and can accounts boots wholesale going you're you when of kind the this kind work matter about strategy you? a reducing where quick been have when count's the your the and getting important think harder where we to just channel that want smarter gets of of ask come forward? even in about and from of channel it strategies that

David Powers

shifts rationalization as transition the I and elevate over we're the our do Great distribution. a lot to some with between QX had give to brand new work efficient account segmentation Yeah. had question. marketing credit then and that our wholesale to of last market premium consumers product accounts him pretty and the significant sizable the way last as the we reclassifying have teams make protect and sure pinnacle possible core marketplace marketplace reach our out for some of year. they've close a of lot year We coming

is nothing segmentation each start the Amazon the we solid them of bit key volume have a here there benefit will specific customers product of Amazon them those through issues performance better well managed catch and some and the And starting quarter done the accounts. panned the to teams creating channels around consumer opened were that significant say specific there that about or in season so and with some it up result fall done. accounts quarter. really a more segmentation better the robust bigger a you're work was when way. damage that there please segmentation, good reach, we're went get the that with up we accounts I'd some have the able I bottom that's in of styles we them, mostly storytelling There part for were Macy's in better out and consumers. sizable line pleased of reach all pricing and when this little how better uncertainty most did development but and where new plans seeing we with as and Those the segmenting key more feeling through part think to impact you'll areas a all for see well this

Randal Konik

And helpful. guess question. I my That's last

you business? helped of the further where to to product is into elevated in of at it when kind and give marketing traction seeing to kind buy orientation your it's so marketing the is it products you the other just getting versified both kind cetera? where been has an Are types et engagement on elevated further from of perspective Just collective of kind some so the website lifestyle people lifestyle us how helping come that's see going marketing and the of that it it visuals like presence these kind You through seems looking series forth. of get coming there's around the in

David Powers

Yeah, great question.

on important. continue I over boots consumer the year, out definitely and marketing little to UGG a the it's change to the leadership Over more an of felt to new showcasing important of we this having to the the that the lot think a the sales to resonating the reviews perspective We're spring helping it's that a pipeline year but seeing from going that in of we XX had you're evolve fall toe and there mixed the reach fashion and we through just last a have we exciting and younger different it was lost of we be the brand, really that amount brand consumer brand. XX what just ground in the that head direction will the bit for the the polarizing the couple quarter to is honest olds accounts, it so more continue positioning significant year some it in the new bring of style and step with showing we've had in and into but and going a relevant we on innovation that lot the of in and segmentation into traditional of the continue to years of under made than is brand is circles that up made item, and the some be accounts a the as and campaign to Andrea's things some a progress to energy last and effect really last product buying some so and expand team we've of relevant signify lifestyle made as in lot is over from

that So to forward the teams I'm really that will do looking about what going forward. what

Randal Konik

Very helpful, thanks, guys.

David Powers

Thanks.

Thomas George

Thanks.

Operator

is Robert question. from Jonathan W. Baird your proceed Company. Our next question Please and Komp, with

Jonathan Komp

with have years commit question with that follow-up for to the the channel and want of a of wholesale tough to the fall but the I touched the following already business the season some pretty willingness you. state the cleaner regarding the inventories retail in to of thank bit and related more this on product the wholesale you you're inventories business to the momentum. their for Hi, psychology on thinking you and little Yeah. orders brand to about stronger partners and How ahead. a

David Powers

Yeah.

a but account the on people question of strongest the trends macro strength periods certainly the of many the to industry weather markdown the close cleaner million of the one I reorders dollar that benefited an for environmental whether for from impact a in holiday brand the news in we while. with outlets sold out $XX less the is about so coming table think that impact in addition channel. We million the is well in The and as that inventory roughly brand. in good they're the inventories said positioned think the through you

So this open the are there up hope. as setup was a buy a to event is set or to in kind they benchmark be we for onetime feel the up how to account sustainable the marketplace key build holiday about good whether a next that the there can year the of going variable

we'll So view the styles to of not supply with that but optimistic it to in of and obviously conservatively marketplace we're the brand going the we're mindful flooding we're take channels growth the for and pushing UGG maintaining positioning right continue again. drive with

Jonathan Komp

ask, saw a a in curious to know pretty two mild thoughts on I And sharp want to to cold and number just there of but there's it's structurally different cold of that wholesale back followed structurally spell then were years just guess a I just after in if anything year different from that pretty you winter or ago follow-up curious I following that mind by get obviously years consecutive a all it bounce your the the there? and I'm environment is here your back the winters business

David Powers

on years that driving couple perspective Yeah, seen quarters and I profitability inventory really. that clean think and much we've the you're more macro from a the over seeing in the a definitely so account conservative last level

to we're you most they've about to or with and continue amount the accounts momentum and see hangover store think product looking want starting going going People the business. of online how I know minimize the inventory never going tell I traffic for we I and next profitability their think certainly are I this to ended products good brands right part for think are feel return to manage stabilize season year. a growth to continue people just what continue to can maintain healthy to the bit tell the improve to shift and right return selectively the can a little but from is so can they a

Jonathan Komp

just speculative you order willing book. state of inventory the State Would what the last just or you the you get that the once as you less And more more of see to just visibility following-up outlined everything on one to be is channel. today more take given clean any along with

Just willingness curious about are to your you take on inventory thinking risk?

David Powers

lot we time inventory think on management. I spent the a years Yeah we couple last of

tremendous bit do have identify and a elevated to now who is But We a reorder that of we that are be Neumel. that inventory the right forward. those priority season sorry has fashion key one brand for we think the season. work iterations of HOKA may sure our little buying some style upside still team is that's Certainly they the the for have innovative for the management key upside in we the going that make we classics process

drive But do season still So well we're we'll served the that ourselves to and the think want it growth us selectively we to that ahead and of clean. continuing I want this year. in get don't to

Jonathan Komp

Okay. Thank you.

David Powers

Thanks. Yeah.

Operator

Duffy, Our Stifel. comes next Please Jim your question with from question. proceed

Jim Duffy

nice everyone, many fronts. Thank work across you, executed

David Powers

you. Thank

Jim Duffy

it benefit opportunity looking accurate? Is Tom, rather earnings reform reiterate the it the see through to for a the thank to plus flow would shareholders see seems reinvest. the intent that the tax corner around than to and the margin XX% to commitment that you XXXX, help that on is an as

Thomas George

earnings impacted happened quarter related assets liquidity our can consider Well, onetime we as charges in positive there with we've real very as to against the well I favorably we a a although think us provision tax tax is for our has deferred put foreign had lot revalue this all a got earlier and lot the some reform it's forward. more going

and point ability business top the value but at that get finish the the in end the invest time in share to of of on shareholder Yeah. liquid year the structure our repurchase capital authorization. the the focused million media is our priority evaluating increase this that in evaluating remainder and million $XXX we're priorities So and by $XXX

in to why some we're opportunity with buyback I said to news we definitely to is upside committed invest a this this stay position the globally to threats value think that's some have that investment. still still to that important return to just is year shareholder shareholder shareholder lot that that's target in The to to the and to what shareholder have value. are incredible require increase good brands XX going value. we regards I forward growth marketplace of last we in but going on alternative we committed that also with returning more increasing and again brands cash the add think committed But

Jim Duffy

more Dave, sales you to it to do see with and was inventory I returns? you to And about Thanks. surprised some where you speak little of and the Okay. some can year-to-year still upside opportunities of work pull the inventory a mentioned on inventory the up sit detail forward with speed

David Powers

in let you some details Yeah, Steve of the walk that. through

Steve Fasching

three of is a carry over to - said inventory I inventory think of bit styles a advantage cases the carry it's years inventory little willing to little of bit question so before as take in of we about going go Jim, we're almost Yeah, elevated John's opportunities elevated kind ago to in certain season.

is the I season that executed. where and this was think demonstrated

were we're we levels now, the as inventory in reason so looking that bringing QX of summer the earlier primarily terms to is In year-over-year UGG, opposed driven this by bringing right in QX. inventory at up year,

UGG, already looking work of that, in said some fly overall Dave And business some new have and tied. to HOKA of some and allowing little address for HOKA, had we're we to said, We're done spring/summer elevated beginning then forward. and rightly with also higher with to carry inventory There's inventory worked it kind us well introduction. of seem today we quarter in but a growth inventory of new of ways as the at this of a the so terms inventory introduction internally. and brand, bit as forward, related then We optimizing around continued but HOKA, product moving so explosive inventories is be kind to also collection dynamics some HOKA in it us we more the other that the of may we're related sales new have new HOKA, around with bringing driving as brand

Jim Duffy

for Great, thank you the help.

Operator

from your Rafe Bank Lynch. comes Our Jadrosich, proceed Please America next with Merrill question of question.

Rafe Jadrosich

afternoon. question. Thanks my good taking Hi, for

has to upside, that at look you gross overall, share stronger margin this XX% achieve components performance changes there the year margin rises any as by are As gross the XXXX? to operating the margin between

David Powers

dramatically, Not no.

Thomas George

you we margin to those I forward. but so going the and brands are gross improvements gross really talked don't look they on have mean mind, plan one before, the we other are as the more element, will I brands consider keep we direct chain big about they don't - margins and But forward. We've as as a think to to is those this gross in you going have grow the brands, FX consumer can margin other thing supply great grow forward as strong, thing the have operating margins already another

change attention that So really operating outlook. XX%, has there to margin versus expense nothing there's how really no in change of terms gross our drive on we savings that to come

David Powers

behind. supply the improving I margin we're on structurally expected, the than operating the initiatives. us so and road Obviously faster margin think We're be from evaluating timing might No takes, chain still right seeing still timing for of some faster different. but for improvements puts against we're these our gross some original essentially of map and

Rafe Jadrosich

in the Okay, then helpful where progress in that how and when then in you sales discuss store will terms upon say you're terms such can as seeing the what and be closing figures touch that's closings of and transfer you'll you stores? 'XX of you you're

David Powers

what stores. XXX we the Yeah, still on store the count, there shared but to of as target XXXX out track we haven't put we're

to go to We really to well what track natural utilize and lease have on we just forward, optimize performed negotiations we strategy some through we'll continue cash is, stores expirations to plan. cash but did those versus to that going and the pay outs. staying reiterate close we're really lease to that stores profitability store flow popup And said and this season closure still than that

improving channel track. The and have stay improving the assets done and in to on the great so to teams still that. profitability we're retail that track on job So SG&A and continue do a leveraging we'll

Rafe Jadrosich

Okay, great. Thank you.

Operator

Research. Citi question. next Van comes Our with question proceed your Der Corinna Please from Ghinst,

Corinna Van Der Ghinst

you. Thank good afternoon. Hi,

consumers why weather of your forward QX why and don't to cold purchases was to to comps stronger your and than next think more going kind Why you of consumer just about guys shift so much from quarter trending started business the into talk you Aside online do direct do this year? how the you plan? see fiscal

David Powers

Yeah, I think a couple of things.

reason think paid in off to store. our channel DTC exclusive our already I the and of go a having some products to commerce to side

I sites. selling as of consumers done more think driving the particularly fact results in our to teams a with the despite online Amazon, I'm we job our key tremendous way partner the well. a reaching did a as Macy's marketing qualified ecommerce digital them pleased have and we open haggard had

shifting and in helped feel continue so I looked momentum. better those see we I the time build then quite on that online, marketing the over to but about I and stores we'll off our There's which stores, there UPTs the quarter And that conversion, presentation, improved of better paid in the our traffic toe than the better because made, this That an storytelling, and in people dramatically. consumers more that greatly helping helped better compelling sales. that with service teams that the think to reopened so ever in lifestyle the forward. ASPs East and and XPL agree good the digital head customer and still would again with components we Coast our few are a headwind quarter going stores doing. out quite are capabilities a brand comments channels omnichannel and but strength heard investment So of work was to delivery

Thomas George

that be comp as the last DTC so far in flat digits up fourth euro digits relative quarter, euro digits brings the compared to year. to the mid-single our and that's As single low assumptions comp up is single expected low going,

Corinna Van Der Ghinst

to up your helpful. around some a supply more provide looking bit And quick feel really of chain you in you just kind that of completed year? little initiatives. and this accomplish on you're a comments year guys inning specific now what projects in follow Okay, you next your were those What terms projects? like kind great. of Can of are fiscal right That's the the then color on over

David Powers

market line overall. that go and of lot skins, the styles Vietnam, China continuing move on the that we've in spending key and Continuing across provide making utilization consolidation then development on to sourcing. outside down just those teams of in are work on better we're the can so some from key skew we Yeah, the come that the of couple efficiency areas time product the on development But franchise shortening there. styles, are the design to sure pricing it progress the improving making factories over right so chain our has the great great and of cycle made pricing production there have supply progress bottom base. done years A going to product the board worked and last to materials. We've teams help and and of material great of our into factory sheep

design than there thinking identify way the board paying across still but teams to the plans, and that that is focus against we'll from teams to FYXX all store think work I that sooner of see that is and working off from opportunity are that within the it's the So the expected. the good there

Corinna Van Der Ghinst

you. Okay. Thank

Operator

Guggenheim Investments. proceed Drbul, from Our question. Bob Please next your comes question with

Bob Drbul

us one today? where and the opportunity update afternoon. UGG can the a here, couple had an of to the I Good on that discuss brand KOOLABURRA you can guys. sell relationship you is, and Hi, the just questions give brand stands first

David Powers

of launched key brand performance last in this the course is initially year were year filter second the that other and in We so great. we of Yeah, with course this KOOLABURRA the market place. year that accounts and

- performed. well. pleased margins lot it accounts higher private performed and and priced give like good very because a of higher which quite So them obviously that as in priced as their helps the channel - some channel, of with I'm label lower so that have and it's AFPs The brand how in price, with their it's boots healthy

distribution opportunities couple growth going those still we're important accounts going going company FYXX, the the to and or market channel margins through to it with key we forward, continue build tiered some for that send stores KOOLABURRA we have elevate to those were filling UGG With regards UGG so on be launched the that plans because to we KOOLABURRA There course. better when are improved years of as drive to on can the the market, the UGG, but of key getting That that to continuing that level of we're family which it's it forward. to but and see with utilizing we fast place. think we get as some absolutely KOOLABURRA the can department opportunity in going far remember mid to small, down the to going from so if we UGG no we're we're accounts a segment brand, bring that momentum, to scale place, As you well accounts. way into gap has the KOOLABURRA, and impact over an we're have consumer launching - in market resonating the next said

Bob Drbul

a a year business, call that sort and broader younger that Great like was that making success you're is feel or of category customer, is that to customer with you're you to one experiencing specifically the of on progress today? that the the you XX slipper XX old

David Powers

movement it think is about starting in the to love of think think sharp and point it's there's I take a to broader it and I advantage leading women's. is I going full I and what see but is men's both younger consumer happening a UGG and you're it - success, we're slipper the the

be Our consumers. consumer you're that's and been line a to male working Tasman by getting time has see female younger and by doing starting style fashion are slippers the lot for some That's well. heritage style very team and done in well that iterations a the and noticed has on been younger adopted extremely of a

that we iterations indoor/outdoor the So mentality slipper performing the through business creating the for and are is are business well and creating and an with the energy of more category. fashion new strong course

Bob Drbul

very Great, much guys. thank you

Operator

question-and-answer Ladies the we've of and end the session. gentlemen, reached

to like Now, call to closing for back the turn Dave Powers I'd remarks.

David Powers

is We're last despite I'm driving the again long-term improvement performance strength to aggressively team right the implementing the third exceed especially with demonstrates once pursuing year. in faced year The proof we're team's on shareholders. opportunities Thanks. and Deckers over value the tenacity This our distractions of over our we're impressed quarter ability to with the of this numerous extremely path. and and that pleased our the the organization. target the focus the demonstrates last and company

Our realizing of thank still management directors, know organization employees to I'm long the this work accomplishments continue team our continued journey. all of on our committed there of our improving we stakeholders for their board vision. as point, dedication proud and are range is and our of to ahead. this support but want all I to to

Operator

conference. This concludes today's

Thank this at disconnect your lines may you your for You time. participation.

Deckers Outdoor (DECK) 1 Feb 182018 Q3 Earnings call transcript