- Earnings call transcript Q2 2023

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Operator

Good afternoon, and thank you for standing by. Welcome to the Deckers Brands Second Quarter fiscal 2023 Earnings Conference Call. At this 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. like recorded. everyone would call this I being is Instructions] to that remind conference [Operator turn call now Investor I'll the Relations President Kohler, and of Vice Corporate Planning. over to Erinn

Erinn Kohler

today. you, for thank and Hello, joining us everyone,

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

strategic securities of strength our repurchase on fact for our shares and and Safe intended of forward-looking the XXXX. of and Private that which year including established we made from include forward-looking in statements on certain Securities laws, performance, long-term anticipated revenues, are potential Before gross and the statements currency everyone uncertainties. mix, today, on I expenses, the and historical fluctuation statements levels on our exchange environment Harbor operations plans considerable chain, foreign the the and statements and product activity, All Safe this These the and like of impact demand changes and to regarding would brands company’s our strategies, product forward-looking begin, are are macroeconomic within of behavior, COVID-XX qualify by current inventory statements impact our strategies, promotional supply marketing statements meaning the statements, margins, call brand of of performance, rates. our for policy. pandemic objectives, business consumer distribution products, fiscal the of than this federal Harbor remind call to Litigation made Act subject to the Please Reform are note other liability risks of

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

filings, of may accordance measures company this because performance Accounting items The in that they with XX-K required its other in materially financial on Principles and currency and The annual unrelated may results. specifically for report of call, any the that, were the be York the States, rules prepared of Form and statements. unknown SEC statements. Except update involve the as factors law now including Exchange, forward-looking sales management indicators current by in non-GAAP differ these our Risk are obligation United refer and by predicted, company cause on the that are numerous New Generally direct-to-consumer the on and uncertainties disclaims not statements reports or reports actual some basis these a indicative to over has results exclude it operating listing quarterly from risks Stock turn to assumed Further, forward-looking XX-Q. that Dave. Forward-looking implied periods. open its results On not were to constant any Accepted throughout to that I'll or uncertainties its risks, the may constant expressly that the its in known financial including company of company and prior or important measures Factors any currency. believes reporting intent section to operations core With Form explained operating of comparable

Dave Powers

of amidst afternoon, Good our delivered Thanks, towards environment. long-term pleased a for strides you make discuss the challenging to with continued joining everyone, vision Erinn. and macroeconomic our be strong to call. today's here you by I'm today portfolio strategic we brands even thank results as compelling

XX%, like of results details how X% for term $XXX XX% further largest on towards goals. year our our and second But versus progress of increased In the revenue two I'd half to Decker's on to first the quarter provide strength longer HOKA will drove quarter, compelling in Steve million. revenue prior quarter, call. second demonstrate later our growth focus UGG now, the respectively. and For brands, the

into HOKA mix, build through to performance profitability is vision our product, acquisition grow long-term and space, top-tier major consumer brand's diversify DTC a our player while investments, maintaining through overall. retention the UGG geographic of in for athletic levels and seasonal company the the multibillion-dollar drive markets reminder, international strategic business further a As and

focus are into continued selling the fiscal the on our against With our outlook and moving year-round thus of peak far have fueling the the at year. the current time, the early with progress HOKA for marketplace same season, products brand's brand, UGG in-demand of ahead made we while the annual demand we pleased

growth growth of versus acquisition year of year capabilities strength DTC to of results creating the headwinds demand two is fiscal last of propelled and long-term XX% omnichannel brands increase revenue ago, XX% first I a progress, year external organization. reflect track Deckers’ approach with multi-pronged thus last reflecting demonstrate XX% operating the last versus brand deliver revenue, last first delivered and years up the through XXXX, last our our revenue despite nimble in XX% of UGG year, years international two our of our managing aligned strategy and HOKA the to the to because and for of driving revenue from objectives consolidated Results success which flexible and the half. on ago; HOKA, now As brands, growth factors model, towards managing vision continue with Deckers year, currency versus to and half delivering representing progress XX% growth with able while growth versus quality while our this X% proactively XX% for our for our of on of our XX% of versus a like XX% we profitability. XX% growth have consolidated which far revenue increase

and in channel and into updated on dive the and highlights the with But call. brand the Starting UGG. guidance and executing. first later well-positioned for now, second in for continue of details the environment the I'm confident macroeconomic ability second performance let's team's for quarter half. on to compelling are the the will brands further thoughts fiscal half provide Our Steve year, our

UGG. passion year to having and earlier impact Anne UGG, Anne reminder, UGG group, which on a As the Lifestyle Fashion experience, the impressive a as of the brand vision a pinnacle key the focusing consumer bright is our vision expanding wealth the experiences more the approach and with everything and demand purpose and last strategic center looking a a consumers products editing maximize and her and brands. expression of in years, includes aligned an With consumer the of on UGG creation, Spangenberg over and it to seeing leave joined Anne's Koolaburra Anne a with clear include is design experience, vision brand elements company refining few that of brand of clear the few I'm this puts of into at forward the to the ahead. future strategy product proposition, of brand's product base is through UGG to UGG impact the integrated UGG of doing, UGG elevating the focused the leader prioritizing which already DNA brand's implemented

to Global results. second versus UGG X% $XXX Moving in increased half last million. to revenue first brands year quarter the

product generating focus UGG Classics has talking first the of coverage the also multiple done that of to UGG introduction the the prior XX-year beyond press fall elevated Classics, tremendous marketplace quite Classics team UGG has high revenue of and the world. expression Classics from countries on complement core top a ensuring The started. is For brand's UGG some the been the and through of consumer olds, models styles, UGG while XX product Classics. and the levels and spans maintaining to pinnacle core around half, in being a strategy top job, season versions Classics product diversification just From increased TikTok. the fantastic allocation platform the developing brand trending for getting to fashion franchises literally on remain interest and going the Platform already brand's of appeal to viral over in critical year. about UGG special iconic consumers standpoint, Keeping time X% UGG. segmentation XX are broadening new our most amongst essential spotted forward We've on

core the first uptick increased in than versus that DTC year, them, the Mini than respectively. platforms, the original Mini the a Additionally, XXX% excitement Classic we've seen also half XX% building revenue around inspired more significant last Ultra with more the Classics and and Classics in demand from as

styles, has UGG success the to Classics, continued Tasman. has find hybrid which latest of and with Beyond the greatest been example

that Fashion that the franchise this UGG to event specifically the brand. has was one that continued style year's the to by being opening feedback a of recent Milan, year, see the influencer DNA. being the to team's top the growing by the strategy across olds. into globally and which from most Paris concrete the Like broadcast the consumers brand's for eight already opportunity feeling the style, With been it engagement Feels Like platforms, that love early female UGG consumer cast brand's with UGG UGG We've popularity XX a the is this to Tazz Tasman Driving via Tasman featured and XX-year-old the to half social about in launched markets to community year, campaign designed were last by Further group, age deliver coincided cohort collaboration of Week leans ambassadors attention Beginning brand's Xpm year with that fall, each appeal introduced movement brand and on runway We're led provided UGG feedback style influencers ceremony individual adopted popular first who the style diversification. are a the campaign the the and this consumers and a increased of and a dubbed second unified been with Tasman's the in excited the leans success for UGG, respectively. message to and during male XX amongst through and the continuing of DDC. surveys, a global category an on a and on encouraged UGG the this the comfort brand marketing key Feels UGG consumer most five among with purchase UGG For markets, with core genderless speaks top the a number local XX-year into an as derived global to the campaign and enhanced as overall brand collaboration was XX these popular with the prevalence style in survey. as platform of at to

thus the the last from seeing for XX-year ugg.com are We visitors to site, far, two-thirds of response second the more retention increased new quarter, UGG DTC the brand. consumer grew search business the the site Asia versus as consumers for response old last EMEA interest US doubled year. XX% been with in increased year, in year, XX% global tremendous XX% than Pacific and The XX to year, last DTC positive visitors versus versus has versus globally prior

revenue First US half activity as was wholesale driven the lap regions significant international prior the by year. from refill

increased last key We're markets across is implemented having well few this versus growth latency of proof holiday million, season, international last for over our $XXX the for we of of results which marketplace period still half to points, but leading a chain be exceptional in year. some increase with early to availability feel the revenue benefiting as driven the years. the continues HOKA, last to lapping the is improved supply but building XX% UGG global brand's and growth growth always, revenue come. regions HOKA returning from first overseas to relative access busiest through last the record HOKA, to is Shifting inventory globe. strategic due XX% to first year, awareness positioned the by brand quarterly last in quarter Additionally, market initiatives second All-in-all, year half is with year-to-date encouraged ecosystem to we've the door global increases. count revenue a UGG seen the brand's successful for for reset remain of increased share versus the in of cautious year by

build US. access increase to designed to addition include for share XX majority the year, two new accounts China growth and in these market, brand owned operated growth points points, awareness consumer of accounts, responsible are market Japan awareness expanded monobrand the greater and build HOKA has stores this access with made HOKA brand some serve is stores to in the to geographic five access of strategic notable which Each stores with distribution and While and existing locations. the pop-up

Los content in In to addition, and the HOKA brand exciting highly campaign has the FLY out-of-home search terms world, York in out visible drive FLY XXX% rolled increase cities Angeles. around New a in helping HUMAN

rate DTC growth XX% for Overall, With increasing into global we've HOKA brand's first these half, in DTC has second. respectively, the exceptional across from and HOKA increases retention and accelerate seen XX%, the driven the efforts, acquisition, first quarter markets. the

driving All are of in these increases actions brand awareness. incredible

a nine US, two awareness the last among Decker's Mont-Blanc, and HOKA world. the have brands the most proprietary augmenting of global and maintain for and help the consumers HOKA sitting around across to sponsorships continued Series, runners we but all Over to positive Outside of the awareness, awareness sponsorship percentage significant low share regions marketing threshold, continued is the shoes with much which HOKA of crossed years, athletes recent build global is results, with tracker achieved total. this even brand the brand higher explosive In lower, tracked percentage, UTMB of brand the on XX% has seeing event extreme growth Series. HOKA points du even credibility Ultra first HOKA well-above year's similarly saw UTMB awareness opportunity is brand's the the the performance in with World Trail as One race year expansion, example last improved which participants, according study. sponsoring XX% the highlights campaign. the teens

wearing trail the the in first brand's Pommeret HOKA Coinciding aforementioned series becoming HOKA focus Mafate the in update UTMB year's to footprint an ultra launched category. highlights share the the in segment. is trail and Speedgoat purchasing Speed markets, market innovative building outdoor this growing course's alignment trail with complement focuses competitive for XXX-kilometer consumers the X, hiking series style a Mafate trail UTMB which leader been the placed the global the top brand trail. in order exceptionally The race HOKA to brands heritage Ludovic brand's in HOKA The the on the from Speedgoat, TDS HOKA shoe. designed to exciting terrain. Additionally, diverse HOKA shoe athlete strong with the conquer a is spigot the event, to which Early brand's reads as have across on in broaden is UTMB

cushion purchased compares franchises XXXX, made and most lightweight have in We HOKA for these believe share. is their the two franchises and has unique experiencing market these now XX with their that to fiscal products from growth platform the immense top Thus favorably both HOKA in DNA the way apart and hiking, that of of far, HOKA. For this Kaha hiking are Anacapa building year sets because maximum styles franchises competition. that bulkier the into

focus strong we're running results Importantly, also as is hiking, while growth seeing and core exceptional really like growth Bondi. in new trail with delivering of the such categories HOKA and styles

support for portfolio launch riot XX style brand more global of earlier, the among the DTC volume the was was of X more even XX-year-old year's evolution top-selling the the entire increased in most five Bondi, the Bondi Bondi brand's got brands despite than quarter, X the Decker's just latest launching awareness across of the brand's franchise I impactful August. eighth was more Bondi the of this It globally second and last With first to addition, in doubled the mentioned plush as softer With a style consumers. comfortable. top half flagship

to selling, Best the the to increase of crash regions fiscal that continued date has an few this Bondi long look to Road HOKA balanced throughout just fueled perspective, categories. named both for global success From product acquisition year the Shoe XX% beyond. half a a by forward DTC, first innovative performance and balanced SELF With Awards. extended as Sneaker distance. featuring months already Congratulations Fitness foam as GQ strong and exciting lightest channel a increase rest in products growth by all-new Awards both XX% more was shell well built delivering HOKA the soft the and and been and We the the and transition for in team in consumer of provide wholesale across In rear in and retention. a geometry, Certified the X the pads Running

growth, half overall driven growth returned for in the brand's DTC Strength significant also growth UGG the doors the additional XX% from rate half leading brand international regions. grew brand's to first consolidated HOKA the a a quarter to versus On second, increasing first into to continues the the primarily to and from brand QX, increase DTC even driver in channel year. benefiting X% growth was the First for select half first HOKA be wholesale, half in in of last the year direct-to-consumer versus global XX% revenue half. wholesale wholesale half. as global with also first UGG versus the last global year. share market strategic revenue the first growth, accounts. the contributed to in contributed first accelerated XX% gaining prior brand increased by the the and

great we half our see is strategies performance have DTC that of demand half, to allowed which our continue to as environment present build while the And into omni-channel we quickly, time. capturing the marketplace evolving first at Our our demand same of in may challenges strategic with brands outside back highlights retailers, share the the brands, market while strength marketplace our for control. management the move

However, line on context call our through control towards of the year's the we work objectives. full over top well are bottom and I'll With turn our guidance. as that, reaffirmed year are you our to quarter performance, that teams variables who further on the as Steve, this second will within focused details now walk as

Steve Fasching

Thanks, Dave, and everyone. afternoon, good

another quarter its Deckers to UGG results of elevate presence second to XXXX a of first continues quarter globally. year and in of exceptional fiscal strength. growth, drove the in just delivered Dave strong finish half As the position HOKA covered,

largest complex lifting now persist, fiscal heavy team's our the of confident in and historically dollar. most of macroeconomic our demonstrated the most challenges we continued ability quarter, US plenty on in even operating ahead and is to execute I'm there our plans as are While strengthening notably

will our balance on brands the omni-channel any in lean sheet may our dynamic provide navigating market opportunity We we occur operating share. that building shifts marketplace and strong capabilities, model to sustainable remain to flexible nimble continue long-term as

Now second of into results. the details let's the quarter get

was XX.X%. of spend inventory; was price season offset increases airfreight majority usage, brand was mix $XXX HOKA excess exchange an $XXX expansion by a XX% by year's versus higher versus year. quarter higher million. half primarily Growth XX% favorable delivering last ocean compared the as XXXX a in Roughly in basis, in benefited $XXX driving versus freight margin second was HOKA, initiatives from the and driven versus currency rates, rates, to revenue the XX% couple UGG fiscal levels HOKA year, was well years, revenue XX% XX% growth. with the move the which down million, implemented for grew $XXX foreign increase for margin last DTC quarter constant was disrupted shipments benefits impacts increase last SG&A marketplace last year. which reported with quarterly with the low representing million, brand quarter record margin events of gross decline year's of in million, reset the On up prior higher in of XXX primarily spring promotional from revenue dollar brand Second exceptionally driven of reduction to in through quarter unfavorable by international last partially as additional past closet from of which wholesale and activity basis as regions utilizing the prior points currency the XX.X%, second over Gross year's UGG from as the year. a lapping increased is

spend revenue. than to percent last a was a advertising revenue, primarily XX basis of percentage SG&A as of higher higher As due year, points

above for prior was diluted share of $X.XX Our culminated XX.X%, year. in quarter, tax to which last is rate earnings XX.X% diluted $X.XX compares for These the per results year's a the $X.XX share. per earnings which

HOKA At to brand. outstanding up of million, period, million September bring continue with XXXX, same year, $XXX we XX, to from versus we last Inventory September no had $XXX point the in was Turning primarily as balance momentum the ended brand And cash sheet. XX% equivalents. with the in time product during we and our borrowings.

the at $XX million repurchased During price of shares average $XXX. second an quarter, of worth approximately we

repurchases. of As $X.X the had September for approximately XXXX, remaining authorized share billion XX, company

into for moving updated XXXX. year our Now guidance fiscal

consolidated share prior guidance. reaffirming are diluted operating per We revenue, and margin earnings

some to XX% growth a year this to revenue now as a have SG&A be fiscal versus $X.X additional of XXXX to range still larger reported is to that additional in one-time a increased now per further is variable dollar. may any be the rate range the reported in XX% expected the Gross down helping HOKA negative nature now year, as to of repurchases. prior pressure XX.X%, and between offset margin to currency be approximately XX%, result charges headwinds $XX.XX. expected mid-single any share XX.X% is billion impacts. offset primarily gross be not expected savings to well US we as from full primarily Please a be margin strengthening of due digits continued reduction in currency to that reflecting XX%. note, contemplate earnings guidance $X.XX basis, is and margin expected approximately from share XX%, $XX.XX which considered billion. now now of excludes impact sales and approximately increase range now UGG of to is expected due guidance reaffirmed reaffirmed Operating diluted expected And includes be to Tax to does anticipating to impacts, promotional Our on to activity. as With XX% currency our guidance, to last of up incorporated. a help percentage

recessionary geopolitical economic of and are operations our tensions. further including pandemic deterioration inflationary dollar the and shortages, the conditions, labor constraints COVID-XX confidence of disruption, ongoing limited and changing current US to, from chain further meaningful expenses, uncertainties, guidance which pressures, impacts pressures, and risks not but include, and strengthening supply our Additionally, related assumes consumer no on

the business of year. context our still on arrivals standpoint, our part we the remains container and has predict. we are good experiencing approach state to compared additional logistics From year. some feel a timing of as delays the percentage busiest of and led for But improvement on a to last both inventory a of which we as to reduction transit difficult basis times, in in transit about the dollar Now,

to costs that down, caution margin container a the that fiscal but won't quarters. our to freight would few gross neutral in we improvement of report remainder year. have pleased With am first for have headwinds this come to from said, we see the turn experienced start for that ocean I Additionally, that in half are expected the

With to our times prioritization country hold of on the improvement bring no transit in freight fiscal of a sale, to we've expect year. earlier the seen and air level we strategic in levels material in inventory use higher longer this and

date XX% our inventory and growth during move the the compared strength inventory as our recent of of Additionally, below compared higher year, levels. rate were to which September to quarters, some have promotional levels to levels the at seen inventory brands operating quarter, ability with we with as normal through moderate last same point, XXth, year-over-year inventory

sales still demand see particularly part inventory we've against we for brands, are are the our While exceptional in disruption. future growth hedge for outlined likely the to we opportunity to HOKA, chasing with outpace

in this updated on more year shifts in of Embedded activity season macroeconomic to increasingly related like relative excess for very clean full portfolio touch and environment. few largely experienced clearing been promotional have as little some on environment, promotional been years. in to gross promotion spring so this exceptionally the expect guidance our far the On product years, last over topic year, we of I'd promotion the we prior brands, our with UGG given margin, has of increased a across levels to the interest. of how currency level inventory, low have the we Further promotion

expect of the we first tune no margin. and weighted approximately revenue our our year revenue impact total, point impact half basis dollar, have gross margin of seen million $XX currency fiscal million, the second business weakening margin basis XXX $XX impacting gross In gross signs is full to XXXX. are of and a driver to half for points updated increased brand. our anticipating currency rate impact change impact negatively With This a now approximately our a primarily XXX half, outlook. we approximately being a For UGG the of by primary second in we the currency headwind the to

maintained, our our and being US has our outlook. line continued been As levers of the incorporated, bottom full dollar are to strengthening remain operational an variable despite guidance with top raise track year we reflecting original the from on underlying

the as growth would price be HOKA driven activity. mix and margin by flexible Excluding the would the with guidance we as model XXXX, our currency his of reduced neutral and offset balance the impact margin call the year, comparison This ability fiscal now projected Thanks, I'll expansion set our in in our fiscal half the leverage airfreight Though of negative being usage, operating strength out year. to of brand overcome gross operating to well currency fiscal final our clearly, marketplace indicate to fiscal year. expansion back to this competitive prior I And hand deliver for there increases Dave outset am to guidance benefits partially increased by promotional first in ocean pressures, of much compelling for brands of is at and everyone. remarks. now the freight the confident

Dave Powers

Steve. Thanks,

uncertain around more in in markets, where change transitional strongest footwear a global our and season. perform we resonating engage brands still Classics, excited the attract Tasman UGG about for to with operating But an assortment driving the delivered can as half led are this excitement and elevated We that the is space said, fiscal campaign we to day. interest bulk XXXX. Mini. the year of of brand's expect still The continued Paired within are ahead. are marketing results environment platform two again, that quickly, the UGG to of which is fiscal core, acknowledge new and compelling hybrid With first well year that the is as well like things diverse Deckers have the across consumers that styles positioned it's product to important continue the is in fortunate and holiday, Ultra every well holiday by heat strong

of Our powerful broader our a management and pressures confidence strategic management, XXXX, brands gives in the achieve can guidance me with paired even the year set impact compelling organization that the that financial disciplined capabilities will forth face for omni-channel space. retail fiscal marketplace macro

advance company's period forward dedication here do our communities busiest employees, XXXX be be Of a of the for and that, for Session over and call to all the in exciting efforts Thanks, deckers.com, week none hard for continue joining your Question-and-Answer operate Q&A. I'll do We With to ahead turn us our of to we to beyond. stakeholders everybody, thank operator encourage today, where and highlighting our the look great the Report of Deckers. at good look continued support. and you future be next sharing Responsibility Corporate of further take who the at the our to and also posted we'll this our course, work on I'd will I'd FY of year. launching thank without that listening to in possible everyone like will Operator?

Operator

you. Thank

Exane question Vasilescu from go We [Operator will first now ahead. from comes the BNP. Instructions] Please session. begin question-and-answer Our Laurent

Laurent Vasilescu

should and I'm there. congrats Maybe rev on nuances to like I you're by strength On looks me the quarter, to Tell a had the know maybe that unpack Thank CC ask but expecting you as years consider know, I Steve, very X%. wholesale or reported But environment. a my X%, it's XQ the taking wanted a between we And you much Dave, in if rest not in basis, shifts should question, wrong any anything model such basis, that bit? XQ? year? solid But typically revenues results this guide. afternoon. I and we to Good versus How X%. XH for much over we can about implied it grow grow don't you DTC? about Steve, you've in on of guide the shipments. due consider

Steve Fasching

Laurent. Sure, Yeah.

back So don't the just on little half quarterly and we bit you're perspective a guidance. of give give right, to

models everybody's think, out, which year the are much we're expected, bit half. a first way little is seeing the play more how So it out know I to different, in I think but the is, laying and growth we I

disruptive last So of I availability. terms context very in and half year, think, first was of remember inventory product our the

percentage product year, see in so intended year. are, this to do you when we of first we shipping out increases the more big clearly benefiting HOKA. half And as That's the in the earlier

growth see it in bigger setting half can as the as in, well numbers, started coming last a see year. year, the year, Last second more of was from as You half to inventory the we up UGG.

comping now you year. half bigger are we that that last against saw So

increase. our level applicable a remember, not same fourth year. only to the But, of that guidance. to significant So HOKA half you seeing percentage percentage in bigger second still quite we from but with had comparing lower quarter. half quarter get second we're with a see, basis, growth last UGG Again, that percentage that's not because as HOKA, We're why the growth, very big was to And clearly well.

and out said, again, not playing improvement, as to coming I Embedded out is largely operational So, the from we're year increases guidance quarters, that's our expectation. to in breaking our updated HOKA. related is an much but

the mentioned So now guidance up updated I of we're before XX%, for seeing so of to XX%. HOKA see was year to growth continuing of terms it XX%, strength. in it kind in full my

that. So you're seeing

remember, we more replenishing the growth wholesale, with is as think was other year were last year. thing, channel last the I

against So the a year wholesale comping in business. last we're replenished year

business. slightly you're a overall, to seeing is percentage strong, year But strong demand see well, out very signals wholesale So start trending to strong. the a QX. lower on The very going growth playing

again, knew we've that growth And this reason this because disruptive last and So, or nature year as of knew is there growth the this lower the would we but still said not half be movements of did quarterly year, again, guidance was of half. give give year. between percentage with quarters we and in the going strong increases, part we second is dollar bigger much don't before, to be first that

Dave Powers

And headwinds on but from add we of objective. the confident that's well. fact to And as to that. significant able significant FX can across healthy the as our deliver we've some our potentially, its season a of now deliver, just significant feel that really the we're guidance optimize on the despite spending that that a and some team organization, of strength back really headwinds, of And aligned we're right promotional-free We've the we're can. these proportional to to and still proud the and leadership headwinds we front going would I despite brands margin we half margin been planning a standpoint, of time maintain lot year. And

Laurent Vasilescu

very question, a on follow-up you Thank then second UGG. as helpful. And much. a Very

UGG Maybe it on you it you Dave, of XX%. International that was the that it's And going I'm that? number Europe? with on Thank start probably Is would What's for be up reported. probably XX% to it that Is DTC Japan? basis, then, Anything digits mentioned just something over very low think, ballpark UGG CC late this cancellations grew a that? unpack single Was driving there a down helpful. kind to I quarter. guess, or maybe I the regards on side? you. US just can

Dave Powers

around with playing internationally. how way, the the at in few sure. particularly like years working fruits in diversified much and UGG pleased positive work been really younger transitioning Classics things Yes, of We're see markets to starting a US those are out we're brand in a did we consumers. and that ago We've

more showing key But so, brand. is up the really And factor are a that the think styles, well I regions. resonating campaign, we a platform styles than global the are in are those we marketing local key

up with not we're Institute generally some China local local more also to closely purely the Fashion working that influencers partnerships to great spread local We've us That's and we've is done showing giving we're with. with this campaign. regions. in butter aggressively of got in the designers before. influencers celebrities, peanut more consumer and something just collaborate understanding a with So past -- key in And the versus of global access a

consumers best and leveraging regions, going both now. local those relationships after So surgical and business in very as driving the we're a also assortment that we're getting the distribution, but healthy on we can, right that's and

covered macro And it's challenging see wholesale of had off to continuing. of to with the well. a at it's UGG in good Despite is right good. so it's things tremendous that said, and last we've obviously, our like some turnaround, are said, in international this China some in it the see still region that performing great really the to both and I like doing are more So year now, just well. and a versus shipping in A level brands we little Europe overall, nuances the And US, and this see I But environment, in start. it's year. challenges,

Laurent Vasilescu

Thank you very much. helpful. Very

Dave Powers

Yeah, okay.

Operator

The from ahead. Tom next question Please comes Nikic Wedbush go Securities. from

Tom Nikic

and the rates in that rates have for those guess you dramatically for much businesses take -- I run anything FX I the were any changes changed would rate how prices have not what done markets given the dramatically, three like it of you taking kind the of there guidance do over has mean, question. changes very adjustments different on in sounds just the you from relative like side, my make Is shifted the like margin FX make rates do to the anything or been today. just exchange and last there? months, you Thanks and values pricing or and FX to they've the trying it -- raising

Steve Fasching

this Tom, Steve. Good Yeah, is question.

you're correct. did a are we has been stronger currency dollar. say outlook. basis, increasing And operational increase our yes, this constant I we is, think offset US on by That a

why that's holding It to we're we're business. offset that increase seeing an the in the guidance. is So

as price know, year. we terms increases, increases In on introduced pricing have of HOKA you this

that have season opportunity something impact on at pricing. this other that adjust an QX. it's we in but therefore, some going styles isn't not It to are really once difficult in that pricing. increases look starting in is forward, anything to season change price year. in can We UGG And, there It's selected will you're

Tom Nikic

got quick I've And follow-up. a

Just I channel, UGG year bunch that that planning and recall a you a a quick away on pretty mean, meaningful shipped in it causes to and -- the it for or holiday said of partners last the on had of difficult you are back fiscal you for wholesale stuff follow-up so the the in QX, the have wholesale XXXX. a compare I impact release back half? that it pack QX. Does the shape half, had

So want I that. on touch to just

Steve Fasching

it's a Tom. good Yeah, question,

That experiencing But supply think as significant terms thing in QX again, especially chain year out and to not your breakout. in we're the related I to QX, giving point, So were quarterly recall QX, of, to QX, last was to we ports, to of at able were clear as the up congestion QX. build products in have ship -- not liked we QX. started a ship disruption, up lot as in would that we much at the ports,

more year regular were shipping would we we than a QX last in So normally in do product year. what

some of You would QX. have that seen more in

on The other too. in is, QX, side the a we saw demand DTC good

quarter. So that the was another buildup in

currency. still we're that and significant Again, by it's foreign the overshadowed strength So US dollars impact on of building business. of the the

growth, the we see currency. on hit get level So do you necessarily front, don't international with because of that the

in especially So we QX. last very half year, comping strong a back are

And the There US back exceptionally impact. it little quarterly just the half. gets bit so, we're last cadence building but back for quarters, of on by is strong of again, two year, it's business strength year. not currency changing half the overshadowed and some necessarily the an between the shape dollar the a This

Tom Nikic

best And the season. much. holyday of very luck Thanks, in

Steve Fasching

All right. Thanks.

Dave Powers

Thanks, Tom.

Operator

Next question ahead. from from comes go Jon Komp Please Baird.

Jon Komp

over should a Thank low promotional just margin at Yes. embedded your versus if in previously picture, Good the just about afternoon. the the on thought you. second margin? gross any that you all, maybe Steve, confidence a maybe for Can what follow-up changed maybe be for margin half. gross change in your time? business assumptions bigger XXs second assumptions then, Hi. you And half, how talk the you gross

Steve Fasching

Yes.

question think, I last right? It on. everything depends, first, it on answering going the that's depends

XX.X XX.X. majority guide, again, to on because that driven. year the The is of we that's margin large a full gross the decline, So provided, what currency

quarters large for the calculate big QX is And first model biggest. and recall the you being that just are item second So one calculate do the your the in what and to other just you half half, delivered of driven of with further bulk when and your us, QX decline strengthening by is the US you QX dollar. we

business, going direct international are in wholesale front. feel we QX, to business have of on that currency the we So because more more impact

again, that. change So promotion increased a slight or currency. large an there that the majority into driven component foreign -- is of is is of a But, factored reduction by

Jon Komp

Could mentioned a maybe, what to And marketing you've impressive pretty of summer? improvement Got you your a launch you in share HOKA. bit then Dave, awareness. campaign this reaction to it. I following the the on little know more switching Understood. seen

you HOKA? next for be as year, how going forward this curious, contributed you marketing the for the year what for growth at And most HOKA, of what terms looking are here could to in into that. incremental of think Just and has balance

Dave Powers

received uplift we Yes. happy and it's marketing remarks. resonating York more in New would to prepared we're FLY with metrics results We campaign all mediums. a say, off. around to funnel on incredible. has And the learning the on globe. the and It's lot, with and very And the we're paying kind are marketing, spend. of how with very received are been of L.A. It's our the early I shifting HUMAN from have In different very been And of consumer. experiencing shared the additional FLY well top globally. some partners that those money of

we're continue So going to to that. do

continue for to indication to know, we the we've to brands in just marketing going unified move campaign of top money this that said we're you is when powerful As through more a very get talent. a and global and a now, this the has impact. And years of for positive many our invest great brand some funnel

us. ways different for lean our into continue and with consumer. that that's learning We're explore so a And connecting to going new of to

run very have But That's Free as continuing launches. our the major before, distributions bolster about People QX. just from We exciting in launch for tremendous to -- US. going of in up our a talked to the product. we're we've pipeline need lifestyle as a we're of healthy we're in We some be Clifton such X we we're launching I forward, going coming And trail. lost and And think dominant HOKA exciting response getting to opportunities in us. and have for hike. some

fashionable more all the so in hitting reach it's extending it's cylinders. of And our brand. on a bringing consumer. And It's really, younger,

over just we just surgically here. So it's and to a and months. to next launches, optimizing matter and at -- But where awareness margin creating We're really focus sell-through a level. there's want the of six focus drive our opportunity the focused we upside spend where lot a our of optimized want marketing on top

Jon Komp

Great. Thank you very much.

Dave Powers

Thank Yeah. you.

Operator

from comes The question Jay Please UBS. go next Sole ahead. from

Jay Sole

want I Great. Thank much. to Dave, follow-up you so the on question. HOKA

build the I evolved be is multibillion think dollar brand. for vision on could year? us vision in the billion? long-term currency then, $X year, multibillion, months? What that Anything you. a constant has into the guidance just for you put over any three down but could that And mid-single you Maybe think to is the on opening for HOKA Steve, I a billion, helpful. your the you mentioned around remarks, do full elaborate guide how the see UGG can you your you last And would that you digits, give for around $X you Thank mean just numbers if potential HOKA? said

Dave Powers

Jay. question, Good Yeah.

script growth-on-growth for for and is the of more in of international product with the now, product, business, well experiencing all single we performance in obviously, around only non-runner that digits multiple distribution, more opportunities. The HOKA, regions. the still we're the we're awareness that very It's that brand think in expansion XX%. the lifestyle and categories I into just the doing scale finding said we're the

or just a running, like trail, see the omni-channel doing opportunities we is this to it a before, markets that path category awareness both This don't math a the I've brand. is said is brand a Brook. And our in running global as Face you head-to-toe, than the more as a eventually a opportunity. hike like clearly there's on more dollar when a North Salomon distribution, increases, so And start multibillion

and aggressive, feel create design product brand. approach, we our talent and So have we dollar our our marketing teams, multibillion category going we're the we're to we at management performance because are a are next functions up in we opportunity some tremendous elevating bolstering re-looking to stay

Steve Fasching

very is Jay, it's then, constant single-digit UGG more On an low like Steve. And decline. this guidance, currency

Jay Sole

impacted it, talk in what's last November, And October And you. was just about and year? then okay. year? in to weather expectation this negatively that October say by compares can Got the you started? weather How versus specifically is fair And is your last Thank year the US?

Steve Fasching

ahead, Yes. Go Dave.

Dave Powers

press to New the product of the lot those a I seeing and some both of mean, mean a we early Ultra the I products. mean, just Europe and products, Mini our good. far, of Tasman. we've about I all in they're of in gotten compelling also in And launches response in incredible so the York. from Yeah. way. runways we're so spoke great platform Influencers, wearing Ultra

the Classics think extended campaign on our advertising, with consumer. marketing feedback well sell-through these resonating very good is that, really We're the I getting exceptional. and is the of

we pleased. going we're heading we're to try very And confidence, So again, out as we're and is with we're to be into But healthy. an to a can seemingly come going heading optimize clean sell-through and that of in best lot environment full promotional. but price

Jay Sole

so Sounds much. Thank you great.

Dave Powers

Thank you.

Operator

Sam question Please Williams from next The Trading. from go Poser comes ahead.

Sam Poser

taking for Thanks question. my

by give can you wholesale to revenue before my Erinn, is please, brand? I what us get questions, the normal -- So on question, the

Steve Fasching

counts question. that Sam, one Sure. as

Sam Poser

you because just on should put it doesn't it No, there.

upfront. You everybody tell just

Erinn Kohler

Okay.

the Teva, is million million; in million; $XXX it, quarter; brands, $XXX wholesale, and total. UGG million $XXX million; Sanuk, other $XX call So for $XX wholesale, XXX $X HOKA million; the DTC of

Sam Poser

you. Thank Okay.

Okay, two got for looking questions so built I'll ask just are into the just those expectations you're in headwinds for that do and What I'll and looking FX third The the all your one half? guidance in my And you're now replenishment what? quarters? UGG the for more. are I for total your fourth for questions. FX, What back together.

Dave Powers

Yeah.

on as for the there's currency second said back company year. $XX of half call the script, the So in we half, the million the headwinds in of

Steve Fasching

half. back Just

Dave Powers

of in then And replenishment… terms Yeah.

Sam Poser

full On headwind like the the gross margin, margin, gross growth That's for though, the half? the the what's on back for the year? on just

Steve Fasching

back Correct. on $XXX million half.

Dave Powers

Do get you double info? right check just that quick. real the I'll Yeah.

Steve Fasching

Yeah.

million the can full and first you the then half impact, then on the and million year half $XXX second So impact, back impact. on $XXX into

Sam Poser

that down My it math demand DTC and business, to centric, the does But it's that's then business assume with fourth a would DTC versus looks very of looks strong. percent how US? US isn't UGG the good. quarter -- just in and from wholesale international break third like and scenario? Because And exceptionally is the like what the UGG, I

year, about how mean, thinking from you are DTC especially I of neutral can wholesale UGG or for and do a So just DTC? currency -- the you balance whatever, in the for a

Steve Fasching

Yeah.

So second half we're down little wholesale, a bit. looking

again, up. then looking and brands, we're all DTC, So global;

speaking, single high half single-digit-ish low wholesale roughly back of So digits on the up down and half. on DTC kind second the

Sam Poser

last with a But Is given way and that was UGG I fair strong mean a by that's is would it wholesale down just high assume FX, that think offset would lot, balance it? how that year HOKA. the to about increases different

Steve Fasching

QX. earlier a question, wholesale QX, had year, to with the went that last we that were in dynamic, lot that went out half. incoming that of inventories second because arrived part again, we as wholesale We depleted And in is in the especially out replenishing inventory lot a Yes. specifically, had

Sam Poser

Thank you All right. much. very

success. Continued

Steve Fasching

All right. Thanks, Sam.

Operator

from The from next Telsey Group. question Please, Telsey ahead. comes Dana Advisory go

Dana Telsey

afternoon. Good

about As where to last and of you're you in, in of or on coming progress it's DTC, you more terms are you. expanded productive, of you're strength Thank seeing more goods distribution and the where What your own the about calls you and one DTC UGG planning how outlet the side, talk and when about are forward? distribution. through eliminating from looking you for channels seeing for channel, mentioned the then you position? on going of in And think wholesale both whether given price HOKA full DTC, had its the

Dave Powers

Dana. Yes. Good question,

UGG, happening. in there So extended really distribution isn't

distribution that been globally. So opening. accounts hard establishing closing we're than sticking that, we framework tight working at We've to more our have

an we trying mode we're So have with tremendous the relationships with players expansion not We're distribution an in to UGG. strategic work DTC. optimized that consolidate, in for really

DSG bit Sporting doors, in optimize job DTC, expand a different. up we're For HOKA, to up are to in want not We fall, in and But a expanding we're doors we little obviously great the DICK'S I'll going massive Coming Goods. it's strategically in US. but QX example an a two to with that. you give scale, with XXX this doing

is enter seeing little brand Locker. strategically because that so we're existing bit. seeing DICK'S demand use in in we're Sporting we're So lot. distribution we seeing is the we're and now, a distribution, in right What distribution expansion we slowly account accounts either we a that, distribution to expanding we're and more to those with Foot quality DTC. to beyond new but have. productivity with really that a the brands. doors and opening accounts From productivity very going of channels up accounts testing sell-through into doors full expand much like seeing We're a are the to there way. more DTC -- in Foot of want then, for building strategically. really and higher rates don't we our And the similar perspective, and new-ish lot in have, growth price exciting, we're Locker and we we're And need what still then thoughtfully But that in Those Goods learning a the isn't continue any are

use high also an didn't so inventory that tight in new retention. shift beauty year exit can margin, strategically that of DTC a we we that some and but of at the probably were excess. between customer last for And wholesale e-commerce to model easily healthy have we is our channel use as retail. pretty acquisition goods One and we omni Inventory, the any

we data little make our the strategic and heavily but more consumer get more you've versus and own in perhaps past, You'll our accounts sales seen see those the UGG bit a money that's on marketplace. discounting websites in in we on than because HOKA the

use to and to this profit can, also drive engine as we want strategically DTC control as we and as So an much acquisition. and growth

Dana Telsey

Thank you.

Operator

Stifel. Please Duffy Jim last Our from ahead. is question go from

Jim Duffy

Hello, you. Thank guys. operational I'm hasn't from standpoint, that Really sure been an work nice easy.

on My So question, diversification. UGG kudos product wanted the team. to focus to I

and some traction it speak North highlighted been styles progress. international America? great perspective Any a that Is markets? you specifically you Tasman the provide international great. of the in also the showing UGG markets? uptake to lagging US phenomenon, Can diversification MINI centric or there could in is would Has be like You

Steve Fasching

a styles. acquisition it's fashion our more Fluff opportunity with and excitement the big was No, a now because younger interesting seeing success The had Classics consumers, is Yeah. around such great for fashionable us we've extension. more and there's the question. fund. But a with right it's And what lot you're

But on Classics a diverse and international consumers. in product brand level. bringing is team We're well we've distribution, serving to diversification on on behind fashionable into incredibly a over accounts as of bringing with this these generally the way. heritage Classics, bit is going more taking is right little new classic platform more in a which the well. speaking, kind the product well more trend there little Tasman where allocating as a that trend. back And for more was a which people is in last year. job The has more done That So is expanded as pulling with a offering, big is are out is globally, bit our selling a we, behind younger the purchasing We're well example, managed inventory. now now as consumers, on, incredibly core years, and tremendous International last know, often. Fluff, Europe, we're China of having three moment you US back

markets they in is the higher also bit region the international Classics a So markets, The in in, would us Asia opportunity the product big also, been a which of to the which they different one UGG of that, have brand the is to very much forward, have which those I resonating. but one penetration a a it's a versus is all category gives that sneakers resonating some overall, Pacific penetration well little of say, lean difference of higher more going capture. US, but have just cadence into for

working is strategy great. So

into You're on to be believe well. share which from space still will going that market coming functional more product margin next to year, see and focus ASP an classics others and accretive some we in and expanded as

overall, and new men's very resonating bolstering well optimistic. of to and lots work got at opportunity, we've product the we're on do more putting So category. moment some But that is marketing behind the

Jim Duffy

more. one fourth just think Then a about we HOKA made helpful. to brands? point that on UGG-specific you difficult Is modeling quarter Very some the as of should Steve, clarification. that comments comparisons in that there well more seems element those

Steve Fasching

There Yes. a is element. HOKA

QX. the year, QX for I thing important So inventory. to really QX really were last in And that in remember arrived starved was there think both we and HOKA

demand in kind was had of QX. a we fulfilled So that being pent-up

And so HOKA year. that of and you we're last saw a this in year, QX spike comping big

– So as as play does yes, HOKA well QX a UGG. in that part

Jim Duffy

guys. you, Thank good. Very

Steve Fasching

End Jim. Q&A Thanks, of

Operator

concludes conference has our session, now for you the question-and-answer and attending presentation. concluded. Thank today's This

You may disconnect. now

Deckers Outdoor (DECK) 27 Oct 222023 Q2 Earnings call transcript