DECK - Earnings call transcript Q3 2020 | Deckers Outdoor Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. And thank you for standing by. Welcome to the Deckers Brands’ Third Quarter Fiscal 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following the presentation, we will conduct the question-and-answer session. at [Operator for Instructions]. provided up to be questions for will that you time queue Instructions I this being conference like call would to is recorded. remind everyone that

over President, I Erinn Ma'am. Planning. the like would ahead, call now Please go Kohler, Relations Investor Vice and Corporate turn to

Erinn Kohler

thank and for today. joining Hello, us everyone you

Dave President Chief Officer. Executive the and Steve On Powers, call Officer is Financial and Fasching, Chief

this certain Safe would are on laws, and Securities to Private are we statements liability remind company’s securities qualify which Please to These within intended the subject I statements by Litigation meaning to Reform from call the risks are Harbor like the established Harbor begin, uncertainties. considerable Act for statements of note Safe the the that Before of everyone policy. federal made forward-looking of forward-looking XXXX.

projected today, including products All forward-looking are anticipated and historical made this and statements not well for earnings on as but brands. than regarding limited margin, financial statements of our regarding our statements facts, other our strategies per share, include revenue, our performance, expenses as statements and statements call to,

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

risks, uncertainties cause statements numerous and materially the statements. other predicted, by forward-looking known Forward-looking actual assumed factors that results involve may results any and unknown our from differ to or implied

company rules Risk any New of some Except or risks Stock section quarterly uncertainties intent update of listing filings, and the obligation XX-Q. on and explained in disclaims in the forward-looking Form York to Form by these as any has or of SEC company the statements. law Exchange, annual Factors report report XX-K the expressly The including required its on its

charges These results. to discussion to the non-recurring financial certain maybe taking non-GAAP are prior ongoing throughout measures results. year non-GAAP operating not financial our that into be to to account refer core measures that before believed for comparable results note references Please there

are adjusted measures not financial for currency. Our non-GAAP constant

reconciliation reported did quarter have and found our posted year tab. results under between earnings is Investors non-GAAP adjustments non-GAAP the release that be XXXX, any not prior we financial our for site GAAP the Web can third our in the While a of fiscal on for

turn With I Dave. to now will it over that,

Dave Powers

And Thanks, us for Erinn. largest in quarter These earnings announce per the Good history $X.XX. the year of afternoon, expectations to total quarter results you company represent I'm and our million, Brands. proud over to revenue results earnings X% joining everyone. of third increasing thank with today. Deckers and that $XXX exceeded last share revenue delivering

by record consumer in a partially as and brands. that shift in performance the both by in our actively initiatives business, demand, we domestic to Our third with very pleased results quarter fueled We're pursuing. was ONE our higher than success forward continue anticipated sales Koolaburra sales as strength key our evidence HOKA well the aided ONE of UGG are within

XX% in As reminder, year, first these which growth, million last HOKA for reaching $XX time. include the increase experienced quarterly a versus revenue dealing

the diversifying and year, men’s capturing business, by brands and significant core market mix growing increased Building XX% year, brand Koolaburra last reducing UGG last incremental classic versus on reliance the with UGG XX% which emerging share. product over again fostering

progress mix With investments. these our in and and of on quarter making focused demonstrated organization the the brand largest UGG of sales our Koolaburra, HOKA performance diversification the the explosive both is growth underscores

detail share fashion but lifestyle into on I'm with group. more let's brand excited to get Starting highlight. evolution, the the our

of and consist our group lifestyle fashion UGG the Koolaburra reminder, brand. a As

the was the traction increased kid, in business within Fluff last contributions year. same by strength extensions its and UGG continued increased This women's the the history. male X% U.S. franchise as recorded representing business, in for the is franchise, as business. domestic gains well HOKA by across including largest to significant global and For to by sales as meaningful new sales the footwear domestic in kids the quarter men's its X% versus strength the driven brand's brand over last million, grew year $XXX period Growth quarter highlighted in

in UGG through We across strategy business continue points to international breadth in sales, differentiated experience targeting has account partially of expectations. with younger offset to line offers distribution, is the segmentation by our last which consumers. inventory experienced of our driven select success year, more in allocation, clean strengths by within U.S., consumer which wholesale which the new domestic forward and fashion in the our marketplace decline that was open experiences brand our enabled versus The the lower own the and channel managed X%

European in the we addressing While currently macroeconomic weakness of the in specific the some challenges are brand is event, that some market related to of exist. process

consolidate in region, a rationalize As of the the future enhance who reignite with the reset midst and a multiyear touch experience to we were provide have UGG in across stated inventory, points. more brand heat, our EMEA account-based brand we partners differentiated intended marketplace marketplace consumer

shift UGG localized and begun digital marketing, PR towards In marketing to the has addition, team more tool.

heat improvements our as approach Asia we our We similar Pacific and a be be will also APAC made we recognize region build to region, marketing work in as there in taking well. brand to are

our continue the diversification of to brand product make product at we look a strides Taking in line. the UGG offering,

UGG the family. quarter, in consideration. by our featured campaign the male and new in was and Men's awareness consecutive marketing is aided third growth, year of double to that the the campaign both made prominently this holiday marketing For drive Marley men's investments digit featured

both new continues fall seasons and big driver increase Flex well results. success Neumel very their introductory sold efforts, the heritage marketing particular, help styles leading In consideration men men Neumel of our all Yugo. as brand the during men As XX% introduced the deliver derivative and franchise among a a result be in through to with in season. strong product Zip experienced The new to according over male and these fashion mid increase UGG men's teens of

leading collaborations [Bae]. with and quarter offering. successful of We lifestyle the their also product Preston Heron pinnacle collaborations brand executed respective Both filled out rapidly two during

messaging, on influencers near done UGG the seeding UGG consumer year increase the product team men's men's XX digital old The As great has new job increased to purchasing XX% a a global to efforts, products result males of ugg.com. a the on around in experienced men's compliment a XX marketing focus with franchise brand's building and offer.

strong with by and to tactics. Turning holiday clean it targeted entered women's a business, highlight allocation our marketing in U.S., UGG the the channel, we wholesale dedicated a digital season setup

with on third XX As with increase a result, the also a in momentum accelerated the consumer. Similar to near XX% purchases women's women's consumers well years old aged domestically experienced in XX based the female in younger performed U.S. quarter, business men's the to

the were and globally, work classic is styles classic gravitated to short, our well diversified Fluff done like region. as interest Yeah offering there And Slide. the brand's newer international consumers styles well still both product to as received greater Younger like like Yeah while Fluff generate the to mini heritage in be styles in

that saw expand partnerships Drafting women's the year. and family. Neumel. consumer our wholesale success global and offering positive impact touch men, off of positive undoubtedly women helping this emphasize a strong The and success to last by benefited brand's takedown the the including kids to men's, from Slide whole both grew business are the key from footwear the campaign and led XX% kids accounts with points business from our exposure of for family response Yeah The Fluff and marketing to styles that holiday campaign versus

of grew non-classic the as sales; brand's brand of percentage product a kids which women's declining diversified a non-footwear result underscore the mix; the and towards with business, as including and being percent at global and increasing includes experiencing sales made The increasing percentage brand balance gain. men's women's classic progress year-over-year brand brand as total of level, a the as sales, a the product, derivatives, core more with purposely of

remains a brand UGG composition team on peak Diversifying to third with the the rich Overall, we'll styles had product DNA. executed the our exciting mind, with I'd brand and continue on an amplifying new UGG and like focus top products the well to complimenting congratulate season, of brand's while quarter. heritage offering exceptional revenue

year expectations. above to sales third global in domestic by driven gains by the the a quarter Turning $XX few Koolaburra, guided was within prior to versus marketplace. wholesale growth XX% delivering share million our This market in increased million,

introduced strong sell done marketing Koolaburra a display and product toddler's with on great wholesale fall, job consumer. a through record impressive UGG differentiated demand an the with this Koolaburra men's and for Additionally, strong assortment have Congratulations lines and both and to the of target capturing fantastic partners. breaking time, Koolaburra Both our clearly team products, first revenue. holiday quarter entire the

brand consumer record replenishment. global and while acquired domestically brand nearly of $XX sales of lifestyle which new is Shifting HOKA growth, of group, experienced on year online In HOKA to HOKA third last a to acquired quarter, consumers XX% performance and also channels Sanuk. all HOKA by number versus across brand of the hokaoneonone.com. through increased consumers distribution. migration seeing HOKA, doubled The the million. a internationally discovery, both Teva comprised

the seamless awareness brand to possible HOKA has channel. network strides by highlighting which and by are experiences experience brand HOKA demand on our in driving of The through building direct made partners focused At great the consumer same brand entire ecosystem, a includes consumer wholesale creating strong efforts consumer marketing and time, the a made product.

of HOKA platform, the human campaign, which Trends. across which with featured garnered more HOKA. kicked quarter with impression The significant real the search third brand in to brand's has off experiences to XX% helping interest The drive the Google than tells stories increase according of campaign time-to reimagine video, time launch social

two share claimed product run based service, a styles share According summer perspective, gaining the a over the and continued number has of this at HOKA Clifton steady maintained position NPD's pace. the U.S. dollars channel. ranking and tracking to the retail market each since, in gaining while From brand's month on icon specialty brand Bondi

at with accounts, these HOKA continues the brand's grow a pace. business rapid the While by driven direct-to-consumer are to strong partnerships wholesale gains

drive also of year. as HOKA doubled been the the aided number consumers XX. to For the both has the have third compared the styles, XX X Rincon and these Carbon DTC as with direct-to-consumer has brand Helping prior consecutive doubled the business gains, younger average. aged This to to over purchasers introduction by of the over-indexed quarter,

is consistently teams and launch of product an ensure impressive driving to the traffic the Web to collaborating ecommerce brand HOKA on done align to product The site. timing, job have

the trail the launch half the regions. volume update last double style more During coming X. Speedgoat flagship volume quarter to third brand than running international year's sales with the shoes, over quarter, launched with from The propelled an the

channel. is as ceremony, opening brand category experience has beyond and Pacific to the direct-to-consumer traction the brand featured both The The of the well Speedgoat. also sold beginning the our part domestic Asia lifestyle Tor wholesale with brand's HOKA from Ultra, trail collaboration across

business international units quarter recent inflection speaks brand's HOKA the for sold than for for the internationally that overall, the first HOKA. of runway time global think domestically. this higher brand units terms sold In the for opportunity has and points the well We were

Moving to million Global in Teva and third respectively. million line Sanuk. were quarter with in and expectations $X.X of $XX the sales

due timing the shift a to While deliver in full on year-over-year is Teva to was year. the track distributor brand European orders, fiscal down of its

quarter, announcing During the launch spring the with be line. will product Teva coincide of significant a XXXX to fourth its brand update

reposition Meanwhile, the to team an decision channel, guidance focused the as distribution exit the remains specialty The distribution. brand. continued to as from in face on in as it is exploring decline opportunity Sanuk brand's our as effort healthier Sanuk challenging brand well warehouse it to the service anticipated headwinds

the versus that quarter With performance, second as primarily It HOKA expansion in to consecutive third EMEA, our by revenue due sales from of prior channel HOKA. in versus wholesale is domestic three year, HOKA foreign as driven as currency respect being double as slightly UGG, International the for digit. year, UGG year grew was growth offset negative by to by largely expansion rate. Koolaburra, pressure the X% well global noting international up well prior exchange and wholesale the our domestic worth reset increased wholesale in QX

out UGG versus to online, consumer which as of execution a deliver perspective, by week the by comparable The our From prior last in to pleased in and improve annual fourth up with capture of domestic in one up the X% of closet end to quarter brand's HOKA. total has year year ability DTC delivering of the history. E-commerce event drive X% year. performance sales to continues consumer is been closing I’m the third compared we which all UGG on UGG driven of year direct increased sales included moving primarily very Deckers' by the DTC quarter. quarter order last looking led to our the sales versus to largest growth gains direct strength another channel, strong demand. to remain I'm our to season forward brands by focused

over more an I'll well updated provide Steve third now as outlook to as performance, our fourth to fiscal the year. the financial full for call hand details quarter quarter on and

Steve Fasching

good and everyone. afternoon Dave, Thanks,

As we've been able emphasis of all the with top in our success HOKA, in to exceeded a driver you of our third expectation as with to just our increase been while brand on build investing heard, tier UGG, and maintaining an engagement year with this an performance consumers heat The men awareness major of the drive our and our the quarter digital strength brand to disciplined has organization's approach brand. brand in including profitability. speaks marketplace, levels

and year our driven million the more last high better detail Revenue Of was provide the reorders and and business, the X.X% end quarter kids' Neumel the range million in-season approximately the Fluff channel. than net our by by with and up our better in Koolaburra driven strength with $XXX an $X for direct of by full million, anticipated through $XX walk as across by partners, year in the business, by consumer guidance $X outlook wholesale now well driven and I'll the the $XXX brand. approximately updated UGG to captured delivered fiscal domestic versus as globe tremendous in results the quarter above new million. million and brand million XXXX. million the HOKA expected franchise than fourth was reorders male third led was franchise, of revenue, to results you $XXX $X

UGG UGG captured largely in timing With QX performance QX the the business million shipments. as sales related with DTC coming upside wholesale we from earlier million balance of were $XX and $X the approximately that in previously earlier anticipated from

in domestically international see macro impacted and to brand's challenges we in as brands While beyond the our region. our brand saw European UGG was business, in which growth both anticipated the continue we expectations, UGG issues by

from plans for up to basis beat approximately result were domestic was XX The guidance our business, points above consecutive the delivering strong margins high UGG our coming price Gross lower with third selling over basis year wholesale gross XXX year. promotional implied and last in XX.X%. sell-through margin and points full activities

expectation, UGG in revenue mindful paired environment of international pay remind higher improvement commercial for strength continue of drove domestic the as year. the wholesale UGG While the dynamic to we margins our did with as increased our to compared the above we last brand experienced we promotional activity market

up an From compared non-GAAP year's of GAAP million. million expense compared million to dollar and XX.X% was standpoint, $XXX.X last spend of spend to year's XX.X% last $XXX.X spend up $XXX.X to our

initiatives. we expense which de-levered our prior year, our a in As of sales, invest with versus percentage key guidance was implied as the aligned to continue

early from brand's anticipated $X.XX December came from reorders of better range guidance earnings $X.XX high $X.XX, per to the the $X.XX share Koolaburra $X.XX our wholesale promotional higher per year's $X.XX The impact $X.XX business. results domestic our than compared of of per UGG from late from approximately domestic range results year's previously wholesale expected these The of last $X.XX. and $X.XX of last January, activity HOKA the and in share of earnings and beat sales in in earnings guidance to business, lower to UGG $X.XX drove for from GAAP end share non-GAAP

rate our For the tax of anticipated quarter, XX.X% compared our tax was rate XX%. to

million $XXX as credit cash XXst in in have under to December sheet the equivalents same our at $XXX,XXX year. up And last was compared versus short-term last point we balance line million, were Inventory X% $X.X year. as million. remains time borrowings $XXX and Our strong

to financial With the our delivery full third the I've again of you, the with year. quarter results our us fiscal execution that just shared raise expectations allowed has for once

range growth UGG, brand that opportunities look distribution globe. fourth we million momentum for to of we and focusing million XXXX, $XXX As the be in quarter in With $X.XX. the UGG our and placed in on across range $X.XX fueling of said our expect behind controlling a high outlook sales forward, to the to per of updated we the HOKA within the importance earnings share and $XXX fiscal

pressure due guidance high range; down to XX% expectations the teens; to approximately mentioned of Fourth mid brand revenue XX% X% and shift previously restrictions includes HOKA, shift while distributor of the Koolaburra the the component be to exit into Teva demand warehouse and still increase risk the early, expected year last current compared increase expected And inclusive to quarter high in mentioned travel Europe, a DTC XX% in reset up of previously QX; the of lower high-teens, UGG quarter; it's ongoing to business to in a planned related to expected into QX. approximately potential Sanuk China. to to business in in to due down timing the related

In fourth by fuel earnings distributorship continue Teva lower margins, to continued European currency the as planned growth expense quarter to we gross is initiatives impacted per our and due further growth pressure. guidance share addition, brands, and primarily

to Moving full the year outlook.

overperformance for quarter, are the outlook raising the With year. of our the now we full

our now to the an are year $X.XX guidance, $XX fiscal increase range million guidance of increasing $X.XX billion the billion, our For revenue previous to be we of guidance high in end XXXX range. of on

expected flat to revenue to updated single still reach outlook to XX% upload $XX revenue expected expected million. HOKA Koolaburra down mid range; still grow the approximately expected expected at still $XXX be to still is to flat; in is approximately brand is digit; million; Our revenue UGG revenue to Teva revenue Sanuk to the approximately level be now is include be and

the the Turning remainder P&L. of to

the our as activity $X.XX than expected to expectation sales experienced approximately increasing quarter; below slightly tax now rate full quarter third be to be approximately $X.XX operating slightly we XX.X%; are are percent per XX.X% be and margin to of now our the expected XX.X lower on or range of in projected raising to to projection through XX%; count in with are raising year fourth XX.X%. as passing share We promotional better still be are our earnings a the approximately million and the for margin we shares increasing we SG&A at a our are share gross of be still the to

in through just improved Our blowing margin outlook points the expected in by This updated lower raise our outlook a represents equates earnings guidance, XX driven improved HOKA per brand improved better from third for by than in margins on gross the the driven high on share experienced promotional margin, to end cents quarter. fourth is $X.XX guidance the our predominantly environment, from over operating $.XX the from of which $X.XX basis fiscal the an $X.XX of the and year, quarter.

fourth and of XXXX the effect fiscal well year future any the charges, for Our potential as guidance as quarter any excludes repurchases. non-GAAP share

second our we would Due remind events, pricing. update quarter annual sheepskin our our to like I change everyone earnings in an to expect During to fiscal XXXX. no on October, provided call cost we current for sheepskin

we are gross impact year. volatility margin update that one please does to place, for costs this next prices. note our used of only which mitigate in and of not the guidance constitute is within such As business, course margin sheepskin commodity contract normal gross component have our of are Again,

it to remarks. With that, I'll his back for Dave turn now closing

Dave Powers

Thanks Steve.

X% XXXX, revenue X% of track final last quarter the we on full our line we representing now guidance accelerating year to year. top are with raised to of over are increase another As year growth deliver fiscal in

our foundation updating earnings working to look groundwork call demonstrate to plan confidence, the with us continued year's may. our in at ahead organization's to I forward strategies are opportunities This of results our approach next will and you enable continue are Our that in during evolution. and yearend

quarter closing, support. history. efforts organization, like delivering the all entire to in for to In I'd Deckers of you collaborative our appreciation the continued Thank share my their and by stakeholders our largest for demonstrated

now are for we that, With Operator? ready Q&A.

Operator

from begin And question-and-answer Komp first session with Baird. will Jonathan question [Operator come will now We the our Instructions].

Jonathan Komp

margin out and I like in to performance but the maybe margin I wanted and just holiday. so UGG was weather about question environment yet, strong. the the performed a the broader maybe start on looks was during particular mean helpful

starting your And with in given so there? think the gross maybe how exceeded the expectations especially you think margin and to why compares tough the fourth margin just about then quarter,

Dave Powers

managing been classics go and is Jon, and I let back the get with before, away we've clean team in some I'll from way the I'll distribution our product has quality Steve marketplace you diversification think reliant. But give of less brand believe and Dave. specifics into and you that. this said the we on this the distribution context that to becoming weather we're the if

the the is weather But have That did consumers throughout how market, that particularly the drive diversification And the some said full to top-line seen are activity, related engaging upside American you're to we've over promotional think North us we within seeing pockets healthy weather that of product but of on in seeing based had also just what margins, chase past. the were we're quarter. products carry QX. price this didn't I sell-throughs and we've with beyond we struggle into and of because strong,

strength the sales little American just marketplace long-term the the in bit soft and to well contributed promoting DDC at a on diversification started clear trends. January chasing the department of full that the off focusing we've places, on was helped based the brand We But So versus channel it. challenged not just and expense in brand's top-line, as stores results. wholesale consumer price of seeing you're of the all the North struggled in quality short brand top-line, of on the and and health the those then for while the and product the

Steve Fasching

Jon, Steve. is this

marketplace. product We also that we definitely Having marketplace compelling clean said, Dave what didn't in nice think I setup a have As helped. saw helped. so was the

have a quarter. for was into So we going wholesale in a did setup the into And the quarter good then start channel the nice us. cleaner

was guidance, guidance driven what we side we business. our we our promotion the the from largely in have or that better on in what component did So domestic in the of implied

some what related had happen, on with on in were the thinking to the And points what points, probably basis international. a thought kind QX, would basis of we QX. margin did promotions We little then did bit just we strong note increased XX quarter to promotion. XX related than to sell-through, have a But clean our from we better the we've

we we So some factored of into that removed promotional that conservative have QX.

Dave Powers

the also on then And efforts. by the strength as helped thing well is, UGG as QX of was diversification kids last men's of at the growth, XX% some augmenting

Jonathan Komp

brand, for maybe of then looking of One, seasonal categories, some And UGG guess when sneakers forward may non-cold the Maybe think reset coming other long some And so versus just Europe there questions. reset, you sandals the have some weather up how look you are just be you UGG kind you just men? the kind just of categories. think the for separately the where I you the of drivers status actions two men, highlight of and at maybe and still the any on then update ongoing. of

Dave Powers

fall, helped iterations we are which that the men's You we men's. as had to building there's major franchises drive of tremendously is years and as is the couple term nation that new the know, really male this we within UGG younger business in campaign, and couple last are a script, consumer think the the and opportunity, franchise. providing well called of long mentioned new over resonating that as in been business, a male We've that healthy within in brand emerging the first what

become also We've that expanded kids. and in into into and women's, five top the a it's now women's style business

that's younger excitement with consumer resonating domestically will and that it's both creating to the continue on, franchise and some brand, definitely in and that's the we diverse build So more a internationally.

of The showed year, QX part about past which franchise. other the QX It's Fluff this a strengths that continued is focus our And quarter. year. and into you a next this talked of going one, lot big

we traction to that getting as just consumer really use men's in the think product be our that and had beyond innovation eventually lot We also going lot exciting actually from well. have as a expanding into Yeah the demand pipeline occasion extending male of a in that is and the of kids We business well. in Fluff for some franchise current

the So franchises. those be two would lead

launch In after collaborations addition key the retail recently exciting had high in Paris, ignite Japanese continuing end excitement opportunity partner in with as PR sneaker to that, to we are with We we going level aggressively and the markets. and influencers. exciting been for at brand just just an some really the have the and

there, prices EMEA, with the to reset a three similar the in reset. through getting cleaning we a or bit this U.S. But We're through the what four years market a influence through that. quarters can in through, sale regards we're couple for now. we've I'd one talked can of we full-price up ago, challenging in we up of more With about very went little multiyear midst that the inventory, because cleaning we're classics, there. it's distribution, U.S., year working focusing say to like on probably just the controlling It's

Europe the issues macro in Brexit then the particularly with some business cetera. the and et right retail UK, in also now There's happening

We're a it long-term from looking controlling we're perspective, So And taking top chasing not slow. to at line the this, this looking as keep the over discounting we're I marketplace. going. said,

on the can EMEA for the couple what's that we and domestic and we that's maintaining so some continue to afford long-term, elevating businesses resets of classics of help the focus of through the as those to in strength strength the the in next will business make great And about of years.

Operator

Please Our go ahead. next Wells with question come Nikic will Tom Fargo. from

Matt Gulmi

Tom. on Congrats for on quarter. Gulmi Matt good is This

retail at UGG. do for look inventories Just first And another holidays? How strong the quarter of couple questions here, on out coming of HOKA. then

wondering you margins. And I guys the to at up expanding of Just brand? distribution point want on about think follow what

Steve Fasching

channel from but that strong still the we're where we bit in seeing. good we've really up the a were gotten sell comfortable that of good. the care year little ago, through a feedback inventory, take I'll QX. And It's with levels really

inventory fit the -- quarter. coming we're about think where I we out So of the feel good

Dave Powers

exciting the continue to think regards we HOKA, and going also but script, only all the story, quarter things in And to Deckers in success all momentum marketplace we had And said an the is to accelerate. With the as the for brand are regions not for is internationally. in in we this channels. The exceptional. of call,

distribution is a take things distribution. I that think working of well one is From of the very control standpoint, to

that based focused taking the term short enhancing globally really, we'll don't plan. channel but we broad maintaining distribution. our outdoor and distribution we run smaller our in short on positioning really a specialty couple more in really exploring and So of have expansion term, options In are share the test the

RAI is being we're partner with APAC is And having And region Europe then in a ours great in seeing of success also replenishment driving and as you're and them really also channel, and key business our playbook as others. to opportunities strong implemented critical our and that is margin very new site. own that the but well. in acquisition growth e-commerce the this the and and

we're ecosystem continue while. additional the that We're the elevated purchases wholesale course in HOKA showcase where our distribution at the brand for it stay to a to calling Web going site. we're in we this to And tight going So path. a drive down and

Matt Gulmi

should about year of peak last relative one just then lot investment think or memory. recent year how been Should margins. of a this think that? year spend as SG&A There's on we And to this

Steve Fasching

can one in. take I this think I'll Dave jump and

We've things our that of we've taken we've part of a profit the especially done, expense out. we plan. of lot a lot of seen, think that have work taken as the I one as improvement

the increase are brand where the you're seeing rebuilding current investing results. in heat, moving and year, in we into new the delivering and it's as of we're As some we're initiatives those initiatives, that's

give watch continue But and important part how and we're appropriate of they with as we're think we the So on increasing spend, something be brands marketing at we year, to investment. kind able investing we're as an year. this that are it's that we'll But it's going to feel our spend rapidly in guidance is to through the of more looking so component growing next marketing variable closely. we're that that

Dave Powers

we're unique excellent that key job on have an an across handle say of in our very growth making And right the think can drivers we're tight would men's, UGG to incredible the organization, operating done in ultimately a Koolaburra. I talked also SG&A which in and margins. but sure HOKA And have Yes. organization organization, we leverage, just where we the the position the and overall, about areas I sized identifying we across teams mid-teen have we've apparel, we getting healthy

in brands, of opportunity the allowed our to very in we It's to we're which We're growth sharing a fighting channels. do. of the invest environment. And competitive for all these need further

the and able We have based and brand, being expense. we the to expenses return I and but EMEA challenges to shifting fixed to the the And in from need the of through. and some are adjust growth this in work also seeing results Steve variable that we're on tightly, managing very on teams marketing revenue,

And we're case, happy as things We're to with continue going we're confident places, are So to it. we're as long the seeing returns. we're investments the there. those in very and fuel going how right that's that making

Operator

next Dana ahead. will Telsey from Group. Our Please with Telsey question go Advisory come

Dana Telsey

and everyone results. Good the on congratulations afternoon

And at the store stepping of on terms were the timeframe think components and stones sales of what what that the in delivered? progress As forward? quarter, about should you what the Thank that lastly look for European is business, this you the you. show same to we Europe generated comp going the your business and complexion would

Steve Fasching

take I'll the one. first

up was X.X%. comp DTC Our

strongly. out But As we very don't e-com. you performed and know, e-com retail break clearly

for part of retail within think down. was kind most but expectations I the our

And something something for about talked couple the and fleet performance. how you It's last really looking it's of we're how improving know our years of constantly that we're we're shaping so at. that we

to how going continue we're an plays to that go retail monitor, clearly, market. in element important strategic we something So to

And that's it's so we a some that And closed. that continued have of going that working are that improving be been at. And on and we're to in to the going have underperformed, look stores underperforming. those for we've something area

we'll to and we work as continue that monitor something progressed So that's along.

Dave Powers

challenge declines European had region. And a some that with year one three that is UGG would reset. the and specific regards Obviously, coming to the year an brand we're I calls. our mentioned. EMEA in we'll out We of regular we I of marketplace. just some But do quarterly we're having clarify to I say, business, of that Dana, really our the consideration in challenges for indicator planned everyone real and basis, on best to would and to a updated expect that that that keep see through track

have then business see drive We influencers brand start really growth would tools and you'll excitement conversations out this consideration. internal our to probably to marketing, in lot around in for at ramping region, FYXX, with a of using to marketing I point. level influencers return And say digital local FYXX, in global versus the that up

Operator

will with Sam next Our go Poser come Please question ahead. from Susquehanna.

Sam Poser

well we what as production regard seeing they a production lot little the Can timing China have coronavirus, bit with of out consumer of and now, the there the you're of you're initially talk as also a what done as with China and but well. seeing about

Steve Fasching

with start can jump in. that I'll and Dave So

in do demand most have side, a more From haven't of of this any issue. out at we side a I seen a supply point so coming of there, our on think, disruption a as we factor we said, Vietnam, the supply little product side. from bit is

we said, and restrictions demand China related put an to I in in have the China. around element As

still it's said, very early. also I As

know it's we're So up. from issue, But how this develop. in point, things going see supply Vietnam is shape to a supply how good this the hard of and it's really end coming we'll out at with going our to of go but to majority where

Dave Powers

on to Yes, really that. to add have I don't much more

we regions in have kind what Chinese the in But Steve this business other They of the as result now, the it's we've global Shanghai, We of of to the right us think team in are business do wait quantified. and consumer in to said that. I rest challenged. and does Guangzhou. impacts teams marketplace, a got and as have we just not think a see, for retail

next impact monitor bit see to impact But There eye also continue as that a we being on may closely health don't our the going development we're it significant well forward. of months. But over kind few a internal work the and little be on teams. of keeping obviously a close to the and the to going business

Sam Poser

then percent international correct? What there. well, what business of is of DTC HOKA, Is and is then secondly, -- entire versus that that And regards questions that I've domestic a in to percent is digital? couple is

Steve Fasching

DTC is at digital this all point. Yes, correct.

Dave Powers

So back to the Steve? mix,

Steve Fasching

specific domestic we given international. one-third from kind the On on I think less and HOKA perspective, dollar breakout numbers. little -- we're of haven't it's and about two-thirds But a

Dave Powers

we is in in also Europe that saw sales this we time business as unit the or international first mentioned, that the the U.S. the And eclipse

in keep there bigger distributor mind of So and much business it's wholesale large a business. portion largely a

a price because across there adoption around globe, us average growth, on shoes excited excitement we're which means which feet It of means But product more more is lower the the just on is about unit more increasing. opportunity gives that. the internationally. the So

Sam Poser

subsidiary take, JV would subsidiary to I when model there? do model? would scale distributor of to a into the and JV you And -- a you when need out flipping go about what or it At mean you think and

Steve Fasching

that right now. share regions. We're I'm nothing opportunities in there Yes, long-term evaluate all to for to continuing

distributors. supporting we're And helping market, the staying building and brand the course our so, now right subsidiary

We have our with market. Canadian done that actually

fully by the be years first about or it ago, that that this in Japan run So successful. FYXX and very did in owned We four and year us. will is proved three

So it's we're we sure to point. making do get of that and we as that the operationally ready this, look considering outlook something at we that to long-term if are strategic

Operator

with next Duffy will come Our go ahead. question Stifel. Please Jim from

Peter McGoldrick

this look question. Peter And grown you And marketing have evolved deliver all, my you Thanks increases at the in this can speak was recognition? as first you with interested, for on you for McGoldrick further, HOKA I product the seeing consumers? to to to as as outside Jim. Hi, are continues brand plan. then scale? brand Where strategy taking the and is recruit younger to

Dave Powers

new think HOKA the who consumer, go to so the the are is benefits well X question, consumers faster Carbon the overall that areas with answer I to provides. the that resonating work Those from we're want two seeing cushion still and introduction, but product experience younger want Rincon.

HOKA we're experiences going continue going we're tell in that. to continue to And real So consumer the that. to do using we're product formula to

So fast have authentic we up to doing globally, leveraging the campaign, region, been innovate time-to continuing consumers diverse field the in staying consumers the reps efforts channel, continuing right pace. marketing and that sure some making the to as that the the through a cultivating of younger across reaching show really are to events at we're

growth younger about by penetration brand adopted is consumer. across of great what's now large And a and being we the seeing the excitement breadth And and diverse are board. into it consumer the the is

spend So in that we're we're that to to cultivate continue taking. going marketing approach just see and you'll increased that the and

introduction we're the that to X of continue And pipeline, and product key forward speed we're Clifton core to the to and that continue and as we've In we'll build at the to the successes Carbon very as had with the And pleased franchises board. product going of opportunities well. that great looking Rincon our evolution expand see across going go. a on Bondai product in is The evolve.

Peter McGoldrick

that risks you given on for on drought the us you're and locked know any situations I you that for there? in fiscal situation, of help sheepskin be any in Then think may considering the about year, size Can the sourcing or fire exposure next 'XX Australia.

Steve Fasching

bit just we normally little Yes, but clarity. that a give I of update you can give

covered comfortably we the XXXX, and next we're over in with and that be an for So really we're covered that of we have into able XXXX. have comfortable year position feel update. provide XXXX definitely But fully XXXX the well and we're more into to we so we'll for supply covered locked the

Dave Powers

been demand mind product UGGpure that, phase in the to diverse product and pure and that's have that leveraging to of a and fashionable helping twin the balances addition different and growing alternative it's in sheepskin And opportunities as points for retail as that out as we get an into for more well. line margin and materials as development keep more the sheepskin, we price proportion also

Peter McGoldrick

Neumel or Then classics like and last than is is, bag. how one in give Fluff an that with franchise the franchises any emergent on Can Yeah? update us the how you bigger much holiday 'XX core big

Steve Fasching

know seen So few last hovering women's just years to turning total XX%. We're the above been now in XX%. you closer classics, below we've XX%,

So controlling of how women's classics with we're franchise. of that on allocation purpose is the part distribution

the that by working. is And that as are Yeah, the also strategy's areas, you men's success fact in and Fluff some seeing of that in other bolstered such

have progress We the we markets. in make need more that international to

little those finished the and bit we a still and see Fluff, the as same we markets are Those But the those classics. the penetrated, more in allocation being and you out know core hope in to and increased overall. results the international markets the work, less of some Neumel reliant of in adoption categories the segmentation heavily the

Operator

Citi question next Paul with go ahead. Please from will Lejuez Our Research. come

Paul Lejuez

years? that HOKA and HOKA, progressing with about curious And the you're necessary long margin you on expansion what Just thinking HOKA term is you how investments margin in business categories? And over business, also curious how the of of versus the the several the that in next how other see pace balance percent business. do footwear Thanks.

Dave Powers

in first the point, the you we've about let second a range long just getting brand and the the Currently, million at of talked Steve footwear. when within I'll And of and beyond answer question part $XXX lot the runway still there's and answer I'll first look HOKA two is XX% about footwear. one. opportunity

that's to launch longer in this for well. just launch much appetite evolving that think we apparel within the is apparel the can is to the teams see footwear. the apparels. But focused footwear coming next continuing and be the But in market a five as share. for And business, brand opportunity and gear see which down GDC a do U.S. incubating three be years We're quarter, is an a to we beyond bigger take to road term, that only There XXX% going is what test. the are out on

Steve Fasching

But upside on the And and have business of then, that margin, more where helping margin. way domestic customers of Paul, the we for is online. the seen on margin drive on have we with migration depends that's happening clearly, about we're opportunity the a some factors. And thinking it number improvement

So is further migration as the are wholesale before, into talked down about to there repeat consumers the a channel, online get brand introduced as we've purchases. through they as

what bit earlier stronger So identified. we're trend, probably a to than continuing see little that we

the earlier And in is that at then opportunity conversion we distributor sales, capture from market business. as international look the to markets, got, how wholesale markets, question there own we to further the our we online both

So but a we're higher the to lot more margin growing the brand. still business, drive opportunity

drive through So with engage all is we're brand, customers we're engage bringing as and in them customers opportunity in, how that they bringing we further And for it's channels. about the how with online them. our margin

Dave Powers

increases, digital And then pace lifetime our gets the digital our exponentially better, seeing. marketing at total, that spend that growth to the fuel the marketing we're on And efforts to return mix of the long-term the we're our and value the sale. percentage as and that going that if online obviously, against margin for site a continue business capture Web consumer of we're of so of exceptional, that able is to

Paul Lejuez

to of back in indicate sort I remind just Can China? sales a think the of for you go you just you any I what And are us second? China didn't percentage question Can at in sourcing And that I'm Thanks. percentage China to sourced coming you of mean that you percentage point? China. that what don't anything this have just your be curious from Did is?

Dave Powers

results. has that I for of Not migrated only the have with as last opportunity view spoke our the of XX%, and bit about we're now, with to margins range coming done but little over into and improved migrating know, coming Speakers] Right the less, at it's teams China improved and of credit of long them have to risk at that -- we markets job. so and China of are out [Multiple margin the XX% the the we a risk from fantastic have the market. give maybe quickly company shipments out quality and you have where a three sourcing Vietnam the new in about what as beyond, is then that product factored we've years. And overtime earlier

Paul Lejuez

China? of percent And sales from

Steve Fasching

the relatively quarter what kind in and that current said Yes, in one to still of is specifically factored small. we've what we

when is APAC, that between split look of international of about kind is it's terms largely. of Europe, at markets, that of China we've Japan In half and APAC. And said percent you XX-ish now

Operator

will Mitch And our Kummetz question come next from ahead. Research. go Pivotal with Please

Mitch Kummetz

give growth was follow men's much have then in Neumel And UGG think could strong. business, now? year-over-year quarter. a more bit And to was on you I percent was I it said then the you saw you Neumel. it speak if if I you What could don't in little sounded men's XX% I like a wondering up total know up. particularly how UGG the color is of

Steve Fasching

Right planned now, it. tracking as is we men's

business. about years away at As the We're men you slipper total think there being We last the oriented XX% winter for fashion driven the now know, more from about classic really and few of different to younger, talking closer consumer XX% some we've it's traditional over But is been distribution migrating penetration. now with the by and potential to this business. time. franchise boots the of Neumel that the in and

of Europe consumer. is It early Asia perform the at which and in has Footaction, their to So distribution also We've the real the sport Footlocker both distribution opened days distribution introduction in EMEA the new it that lifestyle that extent to an some the Neumel core resonate, but has starting up at same yet, resonated market, and U.S. but strength journeys. hasn't in in to continued well. like it's

derivatives So the the which Butte and the in that students. down the is international exciting also level by which we're At younger of like more and being school, path. franchise, an leveraging and marketing Tasman ambassadors product new brand, to leveraging time, going success continue and that, slimmer to bit and has the we're in existing college consumer, the then styles is little seeing worn a age influencers leading well way leveraging our U.S., playbook which the Harkland boot and winter same collaborations boot for we're slipper, showing worked in that which is high high appropriate is the

as and translate we And fast can feel much working and iterate diversity the to I the also earlier as the male we consumer that the there we as opportunity. as on, of reach and to So to very to of well. are opportunity teams mentioned consumer the advantage take the the about the franchise think product, good of Fluff in is

Mitch Kummetz

beat. And then, QX Steve, just real the on quickly

$XX timing, get was said was the you million and $X wholesale sales roughly that. that of million think outside of I that I

able should that's sense you can want orders told the timing to forward You there better million you in that $XX have just a do Then timing to versus DTC. as was I said or outperformance know also how DTC? how not. of engage that or just if you can see quarter? How to the tie you

Steve Fasching

is thing our closet pulled year one we did we've event. forward So this

saw last corresponding pulled the we the we we to expected; week and year, January. one, saw This perform it So last we did what see things; December. start into it two saw had we January. of but year perform we it than in it we better low a of And

in that products saw we we case where So where selling first the part you week January. into of stronger might that know of the thought last trickle that was some really

And put buying December we in the so were late capturing that as the people low, sale and product earlier. timing the

Dave Powers

know, sense… makes You because

Operator

call take Stichter the last with question Janine from now of We Jefferies. will the

Janine Stichter

the in growing that's And Thank so HOKA, should expanded that would understand you the little more just bit much terms the there you from And versus of coming growing think also on really more becoming from kind coming distribution on better a at potential with of a How existing how could the growth constraints obviously one us one it's noticeable. in and growth brand then impressive then been we Just there? if partners? about growth small quarters? Is just level just there. you. of been that you've prohibit capacity Koolaburra, sell-through your anything is help

Dave Powers

lot give a So on is a I great for. we lot growth question. This would than or I first capacity, anticipated explosive planned teams it's had a of And the say credit. more the

to opportunity. keep So those really capitalizing been core not materials to but be quickly able that we the inventory not products flow only able the the capacity the sales, are on -- extent in fuel the production we're but and chase missing have of to teams

capacity. internally had acceleration within great we've our shoes we teams continue with half, last produce opportunity and the in feel on to be the to that also we preparing good partners, our been And discussions making with able factory that our of working brand, machinery sure closely this China the for partners, over And continued rate really but on have working closely the both a to of month about are growth.

at consumer, just we're our was for We're home with couple looking it. fall last as how the -- brand With which great, they years also noticed. well. regards with to the very We we expand through Koolaburra, Footwear Kohl's. is launched, brand about launch actually partner, This guys are successful excited very is business prices the you if performing at the had at haven’t a ways license how paying initial that strong. launch Kohl's. them are reaction that the had at to that to consumers a retail over by We've and obviously, retail

But just opportunities at go And we're term now. to a capture as had partners. expand distribution went And we're to We little existing some really around in be launch looking And had there's brand. we to things didn't footwear but this going to to going is to Europe. business to full after. be really looking on late the the business penetration We on fall, then something a not for so a we're of opportunity. deliveries products, incubating not It’s this opportunity soft bit able longer We're that lifestyle Kohl's. it capitalize really expand that and brand continue well.

Operator

concludes conference. you presentation. Thank for This well attending as question-and-answer our as our session today's

disconnect. now may You

Deckers Outdoor (DECK) 30 Jan 202020 Q3 Earnings call transcript