DECK - Earnings call transcript Q4 2018 | Deckers Outdoor Corporation

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Operator

Good afternoon and thank you for standing by. Welcome to the Decker Brands fourth quarter fiscal year and 2018 earnings conference call. At the time, all participants are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. Instructions]. [Operator to this like being call everyone recorded. remind would conference that is I the Steve over President, now call I'll turn to Planning Investor Corporate and Fasching, Relations. Strategy, Vice Senior sir. Please go ahead,

Steve Fasching

everyone, joining you, Thank us for today.

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

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

this on at based on the current call information made statements expectations Forward-looking available made. are time management's represent and are such statements

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

David Powers

represents finish Thanks, Steve, the excited a great a solid of to and everyone. quarter, fiscal XXXX. another with Today, I'm share to good afternoon, you which details strong year

pleased believe further very with transformation progress are We recent results performance efforts. these on demonstrate our our and

performance For call, channel will the our call the fiscal our a we hand initial review and discuss discuss then and is to well our first strategic of financial the brand priorities results. over for Tom I to by the as focused will switch our for part outlook on. XXXX as of gears organization Then,

drivers fiscal of These the have with input operating tasked the plan aggressive year fleet. would successfully evident improving at which included billion, costs, laid to our store and To transforming our by that with and progress I XX%, fundamental these corporate objectives we our indirect beginning XX%. in in, the marketplace optimizing the I diving to like made reaching And on the results, north to profit base XXXX. start targets, that is process returns our am out increasing Before how improvement ago, a saying it our spend year encouraged fiscal we consolidating and XXXX retail goals, rationalizing sales on capital factory our base, of and executed of account at management plans. organization wholesale optimizing least operating improving has achieve are invested efficiencies the initiatives that looking margin to with at the team $X

XX financial top stock, results, guidance million also initial value returning shareholders. of strong expense X.X% ahead leverage record XX.X% the basis of points, of year, company basis billion, of the gross resulting $X.X For well delivered and of in improvement non-GAAP of to these meaningful all repurchased year, versus On last company our the margin operating points, revenue operating margin a of XXX of a XX.X%. $XXX

of I benefit long-term While am of results, still to we than complete our said, given that more the work confident weather from efforts. But objectives. achieve improvement accelerated these ever well-positioned we ahead that transformation also years, to We compared are have elements conditions favorable two did us previous we our with plan. our

So, a overview at came $X.XX in was with and of Revenue to over the our last that, compared performance. let's quarter non-GAAP with start to EPS up million of year. X% in brief $XXX $X.XX

income For was mentioned, million non-GAAP XX% a $X.XX, record to to up $XXX while non-GAAP revenue the I was $X.X year, and EPS up a as full increased billion, X% XX% also record. operating

Looking at by performance group.

beat up global UGG DTC lifestyle X% sales a to positive retail channel, and favorable the had drove cold-weather line. quarter better-than-expected was largely the selling seasons sales late of price with full with Helping both million, fuel a spring to contributions more combined weather that with strong Within the product the in sales online. summer $XXX group, XXXX due strong of of fashion the in from selling

X%, and sales UGG billion wholesale the increased mark, e-commerce for year, international with global gains. accounting of the majority the $X.X the cracking For

the consumers During the wear the strong the success slippers year-round. UGG their men's choosing mini, of trend to renewed continued classic and a Neumel in saw brand year, growth with benefited from

Over the spring made team years, past deseasonalizing several summer the business the a has offering. and with the focus on progress UGG on product

consumers. saw These targeted result consumers up trends UGG younger women's highest From strong. broader sell-in our line engaging are partners XX and year, season marketing. YouGov, according at our sandals with strategy, driven rise, date. assortment sell-in current impressions is our sell-through the with both to season, products the season heat and in the with Also, We perspective spring spring-summer demonstrate reaction double-digits initial focused company been the US US to XXXX compelling that high newer while and are resonate started tracking of positive, last been summer of with a is as brand They we're brand XX-year-olds is also in product success our UGG offering. sneakers on to consistent through success to XXXX. and up digital is having a since accounts, adopting date by to single the digits the the evidenced, it's and top As delivering has the wholesale

to continues Koolaburra million in accounts. as of $XX, full-price by driven track at more plan strong Next, doubled the major year to sell-through revenues than ahead

Styles to lifestyle to two we Switching demand and you brand lifestyle tie in fashion introduces strategy results style Our the edition, product the The are increasing These technical which Outdoor Outdoor Bondi, with the blends authentic that footwear footwear bestsellers. Editor's by as for to this, brand's market developing up exceptional The and Voices the due of partnership brand's Speed women initial that World drive ability XX%. growth On sales been like the line our innovative as footwear that Garments. reflects together have quarter continue resonates everyday Engineered design into group, continued determine and athletic recently to XX% Garments collection in Runner's embody a dedication collection This The fitness which lifestyle. active see collaborations popularity Voices see of reach healthy the their to Award who million, men was versatile with And first and profitable performance-based and can with of HOKA explosive the will marketplace running to with Trail for top positive to recently gears performance our style share brand now ethos, first, our the XXXX with very success well. demonstrates results, HOKA's family special the won from the Clifton channel. to and an to the growth. continue performance to launched incorporate the Clifton a take X and seasons innovation special Runner fourth and be with community. Choice and brands. introduced of the top-selling a Go growing lifestyle. partnership Hupana Engineered is within and $XXX

The also has product HOKA launched overall of these growth a years, stability seen an dynamic brand become expansion. few the quickly last offering. element the styles and through the category have from important category Over

brought spring, the and core fitness which brand towards launched a everyday runner fly and the the geared both collection, consumers into HOKA For is the has new enthusiast.

brand wholesale US. in the continue to at Fleet while Domestically, strategically and our leading US, business in brick-and-mortar, growth HOKA's meaningful their HOKA's as in needs. we the digital nearly own a XX% and business Sports partners wholesale migrate was expand our brand replenishment up JackRabbit will presence a time with Sports. with seamless consumers This accounts, by five two in offering growth online for on to experience same the working drive the became year e-commerce combined Within specialty Feet the was top

largest On with sales the share international front, year, the over up coming XX% for were the from Europe. HOKA

opportunities organic and the with to and we largest in see seeing continue opportunity beginning the Looking forward, adoption as brand early We're growth, Europe the ramp road down near-term of to represents awareness. significant APAC APAC up. region the build brand for

our I and the brands Both both provides Sanuk, group. lifestyle for And above play portfolio. to combined integral by to and last fashion Turning targets am contribution their counter-seasonal significantly year of XXXX an were in HOKA, and gross fiscal group expectations. as Teva up margin business role year profitability the with brands' performance encouraged over overachievement lifestyle

were e-commerce teens high sales in million, XX% growth on to up For US year by driven the Teva, the business. $XXX

improved staple original the the in X, to is Teva margins. which shoe was the and Hurricane Hurricane. is and the an introduced XLT higher slightly design and product driving price functionality the side, brand recently a update lineup the On This points

of core and relationship on brand's we leveraging the the franchise, heritage originals new with With younger the focus the consumer. fostering are

The resetting driven the by by decline were sales internationally of million. growth Sanuk, planned the is its the down in brand wholesale, to X% to year US was for as mid-single result distribution. the process just Turning $XX digit under offset in

reduced improvements. of the clean to significantly drive marketplace also in closeouts We and up margin amount an the effort

to the response. fourth update met in sidewalk important also introduced On with market surfer positive front, and Sanuk was quarter, our it product [indiscernible] an the franchise

saw in higher fuel low-single Now, undertaken domestically. to of DTC the growth sales of soft a and full moving the UGG company of retail we've results continued ongoing traffic X% channel, summer, wholesale internationally certain positive combined and year. Shifting total comps and for results direct the offsetting and growth price marketplace retailers. channel sales increased by The And The brick-and-mortar to year's and we XX% with headwinds spring consumer the the proportion clamp performance, bearing initiatives rationalization are is quarter, to HOKA quarter both digits the to fruit. online. mid-teen X% account and across for foot increased driven men's, at our UGG and Koolaburra,

X%. and For comp e-commerce X% increased sales on year, in platform. of total year strength increased on the XX% DTC our the continued the the quarter

with sales in of pays on the incremental as dividends to Our year a international the the investment. return during shift online business strong digital continued achieved spend over sales form in $XXX million marketing of

As faced. challenges to I team year, say the that the that exceptional proud the am on exceeded the delivered targets organization our reflect initial I many back results despite

As of profitability gross efforts, drove a a improvement healthy margin and capital. transformation and our in SG&A invested return on increase we leverage, significant part delivering

fiscal XXXX. from first overall quarter provide and on full that, to excellent details the long-term While on outlook our during we XXXX fiscal quarter to our initial hand over XXXX year, did financial as well results on I'll weather results fourth Tom showed With benefit the the fiscal objectives. progress year call and as our the

Thomas George

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

was improved XXX retail, as from million, last XX%, guidance $XXX which range over sales gain with year million. and for Dave of gross year. points margin was and Now our supply by in online mentioned, fourth $XXX from The being expense million our was Non-GAAP channel continued mix. Gross in worth last up by approximately global XXX million, points, with on both UGG basis up and up last an results compared $X.XX points sales to above better-than-expected an progress the basis balance our guidance to by Non-GAAP driven by midpoint The came year-over-year of positive $X.XX to FX, The and XXX last SG&A promotional profitability higher range significant X% quarter. XXX $XX our over to due wholesale the year. chain contributed contributions business, and $X.XX $X.XX compensation the better-than-expected largely realization marketing performance DTC and the from due at basis points increase fewer was and $XXX was improvements margin US favorable wholesale. sales driven from European increase of was impacted incentive year. environment in UGG closeout and basis expenses. HOKA to quarter, Revenue and EPS our related

The And $XX in $XXX in to a benefit basis SG&A margin HOKA year-over-year improvements, Non-GAAP due basis million the contributed XXXX. up billion, Revenue and included points up fiscal chain FX million over sum our last XXX closeout million up was gross in respectively. figures bulk The of from Gross fewer up higher environment, up FX. a expense was the million, increase, over UGG full-price XX.X%, points $XX of selling. primarily was $XXX basis balance and last $X.X from less from from gain sales is year. promotional Now year. these margin resulting points from was proportion $XX million X% year. last and and supply from brands the XX to a XXX

operating income XX.X% As $XX basis million compensation points Non-GAAP $XXX percentage incentive SG&A a XX.X% increased revenue, improved to from XX% over XX despite last year. of while to points at came guidance basis to our range year, compared in of operating million up from XX.X%. XXX and $XXX $X.XX $X.XX to increased to million to EPS year. margin Non-GAAP last last $X.XX $X.XX

as adjustments retail million proxy strategic non-GAAP board's related well closures were changes. to year, other transfers, alternatives, was as and store organizational the $XX the consideration the and For contest, of

balance $XXX sheet, we cash ended in to $XXX to million with million XXXX year. Turning our last fiscal compared

of Our domestic Inventories that to year. repurchased. on on our were repatriating as lines. noting our It cash to flat year-end also result a the balance under return forma million. net is includes debt over of growth over We our international to worth pro no shares compared balance million cash short-term a shift is from capital credit invested XX%. for a outstanding essentially $XXX our $XXX sales And had at basis, of X% improved calculated

repurchases, transformation option capital $XXX represent a last remains company's will X.XX ahead shareholder increase an of showed this total board allocation the quarter, the global a Combined orders orders our million. that would to previously-stated intention X% During fiscal of repurchased total as our comparable at increase basis. XX, $XXX strategy amount bulk and an repurchased million, million. of bulk our our included by share was as of was we $XXX year, the drive million million shares Therefore, we as we authorized inclusive outstanding Of had value last of $XXX year-over-year million approximately common backlog March XXXX. year, stock to in on our earlier continue $XXX XX. with the for March and view authorized attractive of on backlog an If continue of execute our evaluate repurchase Switching to gears, XXXX plans.

revenue a and backlog through about orders a closeouts. distributors of for all as company we from such of As March our for The may fourth figure our or and reminder, total include April future sales, year. December any wholesalers in orders third only delivery or not at-once our book includes the XX does represents quarter only at DTC orders the

and the that XXXX, strategic moving future. outlook made compete to decisions year for to today's our the on build in better positions the organization Finally, company marketplace some have fiscal we for

will topline create headwinds growth. overall the we in year, expect still these to achieve current some While revenue

XXXX, billion, be For slightly margins into range of fiscal of gross we better XX% fiscal of to fiscal we efforts $X.XX accelerated XXXX, which to roughly we $X.XXX in growth And than transformation X%. represents the gross expect our expect revenue as in margin billion to year-over-year to improve XXXX. have many

than be improve slightly it revenue We also percentage expect and better of continue SG&A to XX.X%. to a as

to $X.XX $XX tax with and projecting to operating be approximately expect the XX.X%. of diluted be rate per We margin share and between and $X.XX $XX XX%, range XX.X% We're effective between expenditures million. capital an of to earnings in million

continued expect be to is Teva and an in distributor EMEA season. as American North in more brand of drive ASPs proportion retail marketplace. a in-season of charges high due normalized Sanuk, by from down brand UGG the follows. Our are classics the implemented fiscal base anticipated store the down occur million. to XXXX Fiscal and distribution higher be control a we and additional other additional And comp effort XXXX, the The well offset the assumption as international to being is with fall sales fueled cancellations guidance year segmentation and as by excludes expected may largely the traffic as both continued of wholesale allocation in a And will closures. slightly these last expected US cleanup store charges better an as growing is be growth that to impact to franchise restructuring challenging rationalization include flat, of expectations model. not that XXXX range, single to mid-XX% the decisions any flat to to $XX HOKA closures and full of additionally, the environment we and outweigh a international weather account of revenue repurchases. impact single further DTC continues digits convert of the reorders. for digits, low as does price share expansion. is by approximately

year. versus million $X.XX EPS per $X.XX to of XXXX. is last of non-GAAP and in loss million earnings this experienced quarter rate quarter into to now result for buyback lower an tax lower provide first activity approximately quarter we in our approximately to first outstanding XXXX, count a buyback lower of of and a last The on count is will as to to diluted year. lower of of of The last fiscal a year, increased orders year's is due pull the a of back $XX reminder, quarter call wholesale to and share to approximately were more that benefit to combined due fiscal this effective basis. a compared and strategic hand orders rate per drivers per shares the expect decreased share of the this tax the and year $X.XX include variance effect lower the Dave forward priorities in approximately rate program be due expected share our And quarter, $XXX first an first year little bit to a $XXX This reform quarter share the loss the share. revenue fiscal pulled drove $X.XX share between $X.XX share we That recent per tax forward loss on Now, tax year-over-year loss XXXX, our result. year the the of share I upcoming million. to our for first context a

David Powers

with believe fiscal for I'd the made just future I details, XXXX. position decisions mentioned, for go we strategic success. will better the like our As But before that Tom coming to company start initiatives some for I have year into

groundwork our go-to-market intently growth speed continuing evolving our on are drivers, digital continuing capabilities including brands and further elevating plan, marketing to for process. the We e-commerce driving and to operational lay our efficiencies, executing on our our evolve and focused and

our plan, our We're We XXXX the growth. once of long-range profitable continuation complete, process as can business also in a we the plan; and of for see fiscal transformation updating positioning are on on from But we exceeding can our targets an fiscal our XXXX. well update last you as our provide see way year to set for initial our outlook. results, we

brick-and-mortar to and decisions that opportunities and as the our strong long-term implementation same brand's the in optimization of XXXX, strategic forward and At plan driving sites. HOKA, distribution, interests fiscal full developing headwinds to continued further but coming the we momentum. our the growth market to have of US Next, XXXX pressure year, These share, these e-commerce product footprint. and taking a of are product of strategy community. continue revenue some momentum wholesale authentic us with we But a shelf running by enter Taking through the premium allocation off will the current in segmentation is to overcome the in brand classics store in ahead actions best and success. accounts, the continuing near-term time, advantage own gaining to we making include invest we generate this internationally to traffic several space that our of win topline retail innovative online building drive and rationalization are in of

and building UGG be upon strength and the brand will expanding will of to awareness new growth offering men's women's on strategically continued a we product see accounts consumer. and line, our compelling that as building summer Additionally, expose new on from and younger spring we bringing

the process continuation return Sanuk, growth. XXXX. effort be to for Finally, Teva an with in XXXX are topline of more goal a fiscal brands in rightsizing a the to both return process growth their will distribution significant international of to in of that Fiscal and

a margins accelerate both so way will to in we we healthy As profitability to we the position do last maintain year. sales, brands achieved

end important the margins to driving us it's to over will commitment reminder to levels. in quartile our think top with operating XX%, which put I of industry of

more of do improvements and to work on upcoming to this continue have ahead the are year. We will fiscal front, make but plan over

leading operating the lay achievements the work with has and, foundation and the the Our will for in margin maintain organization the XXXX drive same to company levels. at fiscal future time, been in growth tasked XXXX

flow call to and growth. about ever, the over company More shareholders, positioned future turn for that, this cash the us Operator? value excited same With returns in seen, am that potential I'll while the significant the and I the to organization at how the preparing drives Q&A. is our than marketplace. within time you've operator and As for exists

Operator

Instructions]. [Operator

Komp question first W. Please your is with Jonathan question. from with Baird. proceed Robert Our

Jonathan Komp

of the looking the you And with kind XXXX bigger Dave, changes you. thank million the UGG about growth. for Hi, a side topline for of some picture question. making. a I the notice drag $XX X% you're with outlook year about Yeah. that that's provided, on you're

a in basis. So, on pretty you'd X% words, underlying other be close to

wondering underlying more kind along think lines if the So, is of that you growth the that's capability. portfolio, how the capable, revenue of think I'm ongoing about the you or underlying

David Powers

Yeah. Jonathan, that's right way about the think to it.

and we as to the long strong think brands, year right we distribution and for the saw we the the make elevating on where based of winter help a right they the marketplace, really the there consumer regards came shop of segmenting term brand across is success and want positive I accounts, that off to in and continuing and but by distribute we weather stores all we sure a in there, we we on channels, some opportunity to cold in particularly through rationalize got this brand we're brand think the the our path with the the the set and channel. UGG transformation that for

that right franchise, inventory control and this So, healthy the distribution, a a to marketplace. in on clean better make is feel that sure we we that handle and maintain reset that time get classics the the and we

new the already channels in brand and retail perspective, strategy right us rationalization healthy the spoken which So, for that, really with we've the profitable with about, very the is consumers set integrity going health to the a my of of growth to up and forward. from fleet, combined maintain

be of about the So, opportunity that. smart on XXXX XXXX of tracking we're taken still towards it of us in we've inventory. can to billion we XX% think doesn't this targets. way our and get distribution targets the We But and $X exceed the this the delivering year realistic and

Jonathan Komp

And show potential just kind target there looking different be just to it. you wide initial whether maybe is a of go XXXX, the you of the factors the backwards? over-delivery some the at to upside? And as look kind Could through follow-up margin on the then, quite by similar on forward exceeded forward, just margin. back Got or some looking targets that upside led you a margin dynamics the the XXXX side, versus what maybe looking might of

David Powers

Yeah.

think driven the part after that. we I of the Steve I A getting opportunities is in faster think, of But large that than fewer teams and that. cleaning up and obviously, part focus sure by of was expected a we the can I of tag-team margin, beat, full the and closeouts big the have sales, making higher in cost and improvements channel price obviously, goods of in to organization. across the see drive XXXX improvement XXXX or XXXX that expect greater don't in continuing efficiencies We to expected. than – we saw FY we Certainly, level acceleration FY to because there's we and still want anything XXXX do the to stay through Steve, play add work for to XXXX. do forward will that you across organization. track that? But on FY

Steve Fasching

just supply XXXX chain bit, heard, driven Yeah. Jon, we the to XXXX improvement, on by in that we talked that you about a initiatives the just about call year. little go back to talked last largely

some XXXX. Dave about forward into bit – of as mentioned, accelerating little And a

what last but we in on kind coming XXXX had a than So, little bit call. of our guided to initially better expected,

conditions, favorable weather close-out promotion with a We environment. had, and also better

winter year. closeout a of better with So, XX anticipated in also weather. Those of us were A more really the XXXX, assumed in going that basis some normalized little of initiatives – guide little a little help little more to chain as supply improvement, bit for we'll out. the we season. indicated, on And kind the environment, in there, FX There of terms the going bit component at you forward, the points look little was then, of there's we've that's as big on a bit the our the – lose a a about drivers. as promotion environment,

of a So, ground Overall, little there. pick we we'll bit bit. should lose a little up

Jonathan Komp

you. Okay, that's helpful. Thank

Operator

is next Pease Our Camilo proceed Canaccord with question. Lyon question with Genuity. your from

Camilo Lyon

guys. afternoon, Good Thanks.

level? XXXX Dave, context like a the and more And then, to talking you if questions. should [cost segmentation [ph] about healthier. some couple where consumer just in how guidance. little talked cancellations of] what could and you're is back you've further case a and the respect of maybe than and of articulate expectation around segmentation to on that the channel at that Just to those provide going channels focus It the guess you can the the being look with appears reorders that clearly I kind scenario classics should the being if bit it about clean implicitly that greater channels seems about the that make a distribution strategy with actually ability marries your one another. very what of

we to headwind and understand So, I'm the trying should $XX of to as on see to that expect brand. to such UGG the just put pieces a why altogether big million

David Powers

Yeah.

regard I you and the what consumer. way more it, for the From tailored for frame means specifically to channels that with what that mean going my the consumer. perspective and a for store individual assortment, does that into like consumer the So, the is segmentation, that

we've new year, same right lot and we felt, So, couple and over of premium our classics And a it segment and beyond the this of have the stores classics and time we the kind distribution. to with use department pinnacle core was between years across emerging that done do covered the franchise, franchise. of line work to last sure making the tiers core

is America think we through the account based of So, we allocated and have that assortment North channel. gone in off right every what

the is also product an that successful more with to going a we a assortment they'll style does that of consumer. part going is all each business the in this the out I forward every of us between the accounts product said rely less And thing I that core the in, their consumer beyond cetera. to balanced for are do, for business. price, a when and sure diversification the classics think ability premium this on product allow assortment styles What We show now have that get line tailored to of excite to broader more to and the to obviously, our assortment to the some make it about for the base, point the season are of broader comes et the we're differentiation right really a for go long-term using ourselves gives time. forward to and franchise So, think this other and earlier, consumer and within continued talking we've more is as classic of core opportunity brand, also driver assortment a have as positioning also been forward a and specific preference and

Steve Fasching

And allocating tie versus our that then, just how into assumption we and reorders, more what men's wholesale an Camilo, as kind classic net are of into we so as around actually mentioned, spring/summer. selling Dave we're is cancellations product,

conservative to that a the just there of would some UGG flattish other kind that it a with on little down bit business, of assume was So, relatively product. cancellations be we thought to

how of that kind into that's fits So, that strategy.

Camilo Lyon

weather the I versus Do my correct, can't greater you embedded have remember you're time reorders I cancellations that industry… normalized anticipating pattern. a last when actually in memory

Steve Fasching

that I have other think weather you Well, is factor the to Yeah. consider too.

So, we're factoring season. normalized a more winter

So, that's a to be going of part it too.

just what selling to think strong we're it's out positive and coming change year in, net right – big small It's a take with it's number. in a of we wholesale, of conservative where a we had very cancellation not So, number. a the and assuming kind reorders,

Camilo Lyon

right. All

like your seems sure [indiscernible]. that all presuming tied [indiscernible] So, partners, channel making wholesale that especially inventory the just they're the you're with really it on

Steve Fasching

Right.

David Powers

sellthrough, help a able finishing right season emerging similar new think product then situation marketplace going want in summer there's this for present going which categories. to and in to classics healthy allows also clean the for inventory really throughout year them and spring clean, the gives sellthrough as high the us inventory a more what to on we the clean investment with through, but the finishing because season, an strong, position we them result high because saw to approach have Starting to and season a opportunity opportunity their – us into We that's be forward. more

Camilo Lyon

Understood. I is on just Last question provide Koolaburra, update. if have could you just an

– it's defined I you and well just this maybe the classics received, segmentation? thoughts said, you channel think to classics in some how more on particularly the been brand, light like family want around of expand

David Powers

the a It's is by UGG think and I elevation season. days. of our ways, of second in the very the encouraged success I'm this brand. segmentation the of But lot It's early part of strategy Koolaburra.

and on consumer, key well strong. to full we're price continue they both our the that price margins the some been us of accounts It's with year resonating going the a expand style is the they Second customers distribution. telling And What a with has appreciate and value appreciate sellthrough of points to are and very perspective. brand. our

about. see formula focus sellthrough we value You we're tight healthy this, product key of we're family seeing year. get reach can on that with frankly, distribution, far further optimism excited with, core quite what a and learning And foray the we're very a so accounts forward, lot lot success our effort the high doubling future. through And about, we're just in the And cold-weather think into of little call, meaningful great we the spring is where way the summer. But in looking with into can it's of channel. kind that the first a go business this on for category that a a extensions, part, lot I kind of product beyond

Camilo Lyon

the job the luck That's And quarter. great. on good Great for year.

David Powers

you. Thank

Operator

Our next Stifel. with is proceed your Pease Jim Duffy question. with question with

Jim Duffy

bit you. congratulations behind start, about talk in you're US? And of to that markets. work to in a international everyone. of hard distribution fiscal last the little team. Hello, guide. seemingly great the international XXXX same work international brand the so I'd a what Clearly, there trajectory And year. the like To Really do referencing markets you're lot in in to more some assuming Thank Is UGG markets in the that. progress

David Powers

question. Yeah, good

continue really XX So, we're as markets out our we last encouraged focusing the over program months, the and and Europe that Germany XX, China been there. which to are by partner on we've roll

on focus nice assortment, continue maturity those particularly will they the the new growth relatively as elevated because distribution, key drivers. a in we it's balanced an markets Germany. more in new brand to are What's those that about So, of is the

markets. international in the there like wholesale between sellthrough, focused but both We healthy great to perhaps consumers, of of Germany markets. us we're a opportunity, the drive and to bit inventories, – ASOS, which up consolidated them, and of it healthier opening doing obviously, And so, brand in the in there. I has for way, China investments a healthy it it going America. stores, clean of going in those and Tons vehicle continue North we're particularly, continue that two A on from, growing reach some we'll balanced of to to to know, of a closing said, presentation new quality an accounts healthy with doing we're that. also way. to the what as A new up kind to the in of have rationalization much you similar bit a continue on online distribution great as market consumers in some new of in across little again bring rightsizing the in that. and Little new proved product retail to don't focus accounts which having over but markets, reach the of been issues younger success accounts and But through extent none we've UK, we'll with position Japan, is way, do

Steve Fasching

Yeah, Jim.

mentioned, color a we've Dave in domestic versus so Just that little about, on that's America/US the wholesale, decisions to talking strategic been the largely just North more give market. you a dynamic bit the

kind year-over-year we're where a So, seeing of that's decline.

distributor the we've So, year. up that's year-on-year guided guidance by given year, the domestic down bit on as being little The is that a driven we component. that really in business UGG the for international wholesale

grower expect Europe we UGG the be to a in So, business.

Jim Duffy

you can little reach then, new styles, consumers? accounts And the driving uptake help color talk of younger a that on of Dave, a us of will the some accounts you broader range you more think give Great. of

David Powers

Yeah.

of is as As SIX:XX, some accounts we Urban mentioned with we're store core through in ago consumer accounts and started did Zalando, over that point. as you distribution with repositioning new the don't Group, those department a I price Foot good But initial much Europe, and I ASOS, years the particularly testing know, that examples marketplace. part a some of couple too new crosses Footaction of we Locker perspective are brand sensibility kind with really younger fashion transforming a our Outfitters, distribution, and feel

resonating. out team the the to want has but a I little successful way fashion lot I myself, there forward. think California far. a new said, So, so of opportunity very the think is with those don't the of is going have brand ahead the there And product edge, UGG positioning, of bit and script, more YouGov I been I leveraging consumer. online. heard lifestyle the heat as channels resonate. about repositioned And in we or It's that, that a is younger the to tracking. to in consumer them We're driving social e-commerce right And reaching the you to new as assortment brand and with starting is working the accounts brand we're closely to talked the our and their their give that for traffic channel channels those the

that's there working far, significant going so And and opportunity forward. we see

Jim Duffy

Very good, thank you.

David Powers

you. Thank

Operator

Please Svezia question. with Our is with next your with Wedbush. Chris proceed question

Christopher Svezia

think and growth still curious Good faster thanks you, in do in Just we UGG XXXX, just beyond rationalization when you I think year, see for Dave, about congratulations. really how everybody, curious, that you my efforts think about going brand? into to some you're continue this or just questions and taking out anticipate doing I'm this. can how be you do for guess, afternoon, and this the these the which the timing of first, UGG XXXX, XXXX, continuation of XXXX, is this to repositioning the you brand all of

David Powers

an evolving Yeah. It's marketplace.

see And that. patterns happen so, as the year. majority the think I evaluate and continue cleanup of consumer this things we'll shift, you'll But evolve to

Dillard's, it as What through are and better maintaining does with though opening time think allows and distribution but be the I can core of the it some channels these on consumer. over think premium which us long the to that also elevating And protecting like new brand that, we see diversify is I key think our goal heritage I meaningful. said to term and of very of we're I early up starting success kind accounts, Nordstroms positioning. distribution of focused partners

you'll UGG way. XXXX FY seeing And the America is distribution North lifestyle XXXX we youth heritage a growth I so, result particularly a to kind kind a core as of up in presentation in quality with brand, more as the of for it, of, up in healthier call will across a starting return think elevated in what a end business that well that. as And end for marketplace

Christopher Svezia

thank reference for to UGG think, believe of for it products spring said Okay, just I you and, sellthrough was made with double what you. the I And sell-in Could was? sneakers. sandals the you brand actual you some clarify regard digits.

David Powers

slippers, to so And in sellthrough, [ph] in open far investment had lead the customers, sellthroughs on received have they specifics those spring and freeing that but across and key going men's and forward. summer. and that's the helping into show reports bought and the But that some on and of sandals women's. the of get strong fashion buy seeing them inventory the we going with sell-in categories they deeper are to part the didn't meaning And with to and categories up do we a what to past. in we're We think sneakers further was both so what growth assortment than Yeah. well, broader

Thomas George

Yeah.

bit I season later think, referencing just was year. the kind might you this start of too, a Chris, on be little that

uptick saw it in northeast, cold turn, weather on But I that was also seeing as our big the pick a think product. spring they an a the we the when with started of to weather saw we product. we're others, when sellthrough up in product, turn, uptick nice on So, the spring saw

David Powers

the also reflected the for quarter. DTC in comps it's And

Christopher Svezia

Okay.

be comparisons, would can down to the the improvement of the given gross add somewhat Finally, that you assume guidance, dollars like margin margin, in SG&A back how cadence, we of potentially flat forward, that? takes? are we can would you just Seems gross some about front-half SG&A and on color think the terms provide that in puts or of just and of your based I any year, loaded, the about move any half color most the as about

Steve Fasching

this Chris, Tom. Yeah, is

I think you it. hit

the year, it. SG&A It's expansion, year. of flattish you back terms more the hit gross down. half front In of half the terms for guidance more margin And of in the it's of to

gross That's to environment. quarter in something as quarter out promotional think fourth a the the first on favorable where on I margin. point the expect don't we

margin. you So, fourth decline see could the quarter some in gross

Christopher Svezia

you it. color Thank the Appreciate all enough. for this fair and Okay, best.

Thomas George

you. Thank

David Powers

Thanks Chris.

Operator

Our with question. Kummetz proceed next your Research. with Pivotal question is Please with Mitch

Mitch Kummetz

taking maybe questions. XXXX. as gross well I want and for sales the Yeah, Yeah. Thanks just outlook down for my for I'm on margins the – XXXX drill sorry to

but you looks of little some the for it was it maybe than quantify that chain, the like – majority to possible you it on to fewer then So, that. was? Steve, up [gross bit supply XXXX, said benefit received I basis a was hundred margin your in a points, couple the better you of was that of kind closeouts and what due less relative your that to XXXX promotions, can closeouts, on is the promotions plan think

Steve Fasching

give Yes. year-on-year. on the can do you I'll What is I

from I XXXX initially XX.X. finished FY an came really basis point at XXX points happening was drove. mentioned, some as we XXXX And initiatives basis of year-on-year. that at that acceleration that that XXXX. chain later, of finished So, happening XXX we of things had improvement in XX.X. we planned supply Roughly We

XX higher about a from of why basis about the little than we were that's promotions a it's year. basis closeouts worth We got the guided The and had points. FX XX originally in So, to. what bit points lift

much So, that's pretty XXX. your

Mitch Kummetz

ahead. said I'm go And sorry. then, – for you you XXXX,

Steve Fasching

percent, margin then, points. or basis around to around will assumptions offset initiative, be starting it getting I by we of a supply winter. was points. XX gross coming Yeah. better, chain that FX, more think XX-ish that basis get something going roughly And normalized at will say, additional so for call another from XX kind XXXX, XX.X to

– lose points. channel And around XX basis mix. then, we'll fidgeting bit So, with we'll we're a probably little lose

business proportion, a we the increase as little lose our So, bit there. margin gross wholesale on in we'll

year. little points So, basis netting than XX a better on the

Mitch Kummetz

UGG in XXXX, helpful. so really UGG is sales for that the a planning And than But, color I the That Okay. side, on that came bit I in year. planned. know secondly, little better know you're down then,

just the sort because strong better the that growth and I'm that up the of some were of that you of to of had in than was half it and due cancellations weather there X% expected as was abnormal think to into I year. of give going plan of and well? reorders back sort particularly any much wondering XXXX is how back

David Powers

Yeah.

the out impact, always weather weather. way we've the of it's figure to is kind looked difficult much year and how at the exactly the So,

of we reorders think conditions. up quarter We I $XX that beat in million what We think in you we heard a weather. think million the $XX roughly about pick continuation about about our us additional DTC on attributed due pickup business. in was call XQ, largely of talk favorable about there with a there got to was wholesale $XX to last QX million weather DTC also in

but So, ballpark hard or of, it, million. gauge, the XX-ish in to call more

Mitch Kummetz

plan XXXX any of back some in or there Got …? give it. to And that is

David Powers

Yeah.

is normalized as a there winter, a plan. are we we've Yeah, assumptions. assumed guide, not those more So the in making

normalized, kind so some back. about question a Camilo's of in that to means, and will give forth, that So, cancellations winter, and we right, whatever we guide have assumed the of more

Mitch Kummetz

very helpful. Thank you. It's Alright. okay. Got,

David Powers

Mitch. Thanks,

Operator

would reached like we Ladies and and gentlemen, Powers to turn closing back to for Dave question-and-answer end the call I have session over the remarks. of our

David Powers

over also and well. work their on for organization team the last I'd plan, and I'm their our past our fiscal their proud our their optimize the for And for like tireless accomplishments the we In in the thanks the lastly, their execution to of year. thank year position directors and achieved thank entire growth. Deckers continued business marketplace in of to efforts environment. I'd to forward, support support drive focus ongoing brands shareholders for like closing, and as entire our to challenging to exceptionally the their organization a contributions the as board

Operator

gentlemen, and Ladies concludes teleconference. this today's

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

Deckers Outdoor (DECK) 24 May 182018 Q4 Earnings call transcript