Earnings call transcript Q3 2023

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Operator

Good afternoon and thank you for standing by. Welcome to the Deckers Brands Third 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

now the go will Relations I turn and VP, Erinn Corporate Investor Kohler, Planning. Please ahead. call over to

Erinn Kohler

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

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

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

to other forward-looking and fact distribution for All brands, statements plans our than impacts in of logistics, our expenses, our statements objectives, promotional made statements, our foreign the and strategies, currency product fluctuations product include our activity, current our of including inventory macroeconomic level, exchange behavior, and are on long-term regarding environment margins, performance, strategic performance, brand consumer supply operations the demand products, on mix, disruptions statements changes today call of and in revenues, and marketing anticipated historical and strength and rates. strategies, chain this

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

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

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

in prepared were constant Principles Accepted to accordance management States, Accounting financial may not On measures in refer this the with call, including that United Generally currency.

to direct and sales were currency reporting opened for In basis, addition, the current periods. operations a constant consumer on prior comparable company the that reports throughout

The are exclude and measures be core important to, operating are may non-GAAP that indicative they items performance its operating that believes because unrelated of, company not indicators these results. financial its of

With that, over turn now I’ll it to Dave.

Dave Powers

everyone in to once Good execute highlighting were be pleased you another Erinn. against a Brands, Thanks, quarter Deckers deliver today’s strategic I’m afternoon, to to able consumer for and call. have here dynamic environment. successfully results objectives joining today our standout thank our record as for teams again long-term

brand business, revenue increased select both record year, a Our wholesale as more a a setting and million record diluted billion in fiscal demonstrating versus strategic third quarter progress consolidated line third across access delivering product results and the as while the increase XX% quarter prior through doubled of new share $XX.XX. market points. reflecting per gains $XXX DTC include, the its of earnings momentum $X.XX HOKA than and included significantly here during reported revenue, share

from XX% an XX% of this for when a up year the year, on drove volume all-time-high our third versus UGG basis, basis, to currency in X% adjusting increasing XX% an last DTC last a contributing and FX increase HOKA reported XX% significant XX% headwinds. portfolio XX%, UGG to shift, on international and increasing the mix with growing revenue in Total for quarter, constant the and DTC the business its both as of increasing to represent mix brand channel.

the selling promotional holiday the delivered continued performance our marketplace despite highly commanded Deckers respect brands our Notably, to with during exceptional quarter season. long-term progress full-price and in objectives. strong a

strength to avoid of more levels consumer the we our to the in low promotions past our management approach. marketplace well were extremely discounting experience through few did years, for normalized omnichannel as brands demand to products, able as our due While disciplined relative significant

continue brand organization the top-tier I’m allowing our prioritize profitability. to for pillars, long-term throughout to health and to leaders Deckers thankful maintain who our remain strategic committed

Our as further fiscal as our XXXX guidance we well end year, Steve will as this our in macroeconomic XXXX April. in positioned for environment. arduous details are about thinking brands fiscal for calendar provide we’re how updated well year the

gains last highlights get For a quarter a basis, up increase constant by currency on in in reported in across global was genders brand now, consumers. million, quarter, consumers third increase let’s the a as retained X% and Overall, quarter year basis. strong the delivered Global brand in categories, and with starting third was single acquired UGG but consumer down DTC low the UGG into driven XX% in the demand for for XX% digits revenue the a versus $XXX UGG. on

unique outset The the UGG DTC as resulted offset channels, fiscal shipment year, This discussed dynamics across all lower by impacted. which third expectation well revenue. unfavorable rate healthy impacts currency would the that of brands’ quarter included wholesale decline performance at was timing foreign exchange wholesale be an this from as the

temporarily inventory drove in shipments elevated channel. levels earlier of these the Specifically,

our activity. to result, strategies, to and a limiting selling reduce allowing inventory, the attention marketplace excess demand to in As marketplace need product through and UGG capture strategically brands’ shifted promotional channel, the DTC for in management the already line with upside,

of led products. as more products well as to style success the with Classic style The Throughout certain to such quiet and as styles. was find demand UGG, UGG have Mini of consumers these fresh versatile migrate consumer a year, iconic the out updates and that combinations strong, From fashions and to these for continues of stocks. derivatives uniquely Tasman, color are continued franchise perspective, to even

to We these buying the an to demand with supply. products, in fuel level to improved and aimed to we’ll tool driving the continue pull levels, combined high model optimize approach of at effective scarcity future for see measured as inventory approach Our some led this demand our to bounce marketplace.

ranked to XX XX Mini and segment Classics olds. Mini from year came the as the encouraged A unpaid resulting respectively. performed, segment third, styles quarter. topic this US, from brand to celebrities Short brands’ remain trending likely With Among continued also helped this Ultra drive the Classic seller, but generated the with we’re product styles the growth the strength in top the group, target gifting which age from Platform Classic strongest hashtag, number UGGs are list adoption through see popular second heat were respect to to of in the the the of and how social extremely one Platform brands’ these the which

this adopt versatile like has consideration US, consumers of Among broadening and continue the XX to Classic slipper of brand XX reached Slip-On all-time-high third their increasingly in segment UGG Tasman consumers hybrids seen iconic old in the the males an occasions styles. quarter, year as wearing UGG

heritage an the gravitated consumers [ph] well products for all-time-high winter [Fluff as boots on such male Brand as designed hybrids, heat as versions based brands of weatherized remains [inaudible]. Yeah] the these Beyond exciting like at iconic towards the styles audience. new target

these to new drive developed teams by and continues credibility high of was fantastic excitement Classics fashion Shayne’s most aspirational Supplementing season, build our through futuristic Hood profile continue awareness designer the a recent of including These to on audience Air, and several bringing The by heat Hypebeast. consumers. take products, in inline Complex founder which collaborations. Vogue, UGG to the line style Shayne covered outlets, with of UGG Oliver, was

the International showed revenue basis, XX% was down basis. DTC UGG shipments was down on From additional wholesale few an on attributed the years, last channel the quarter. a product regions marketplace currency versus product and year. to the being marketing, approach which led pushed as which globe. into grew growth adoption the This UGG ongoing consumers the activities completed in reset drive year years’ third brands prior included supply standpoint, to a last as Strength in a synergies UGG versus helping by and the the acquired in last disruption chain greater despite year, international reported versus is prior lapped international constant over largely retained revamped successful each across

more new with pleased program direct has a to this and the X also million which UGG members in over the a channel inventories into heading shift great the now normalized that activity We drive marketplace loyalty we’re feel brand season. more brands’ that fall. offset ability performance with continues The reduce through mix, Overall, XXXX promotional consumer strategic to helped very spring worldwide. business attract through massed consumers about

fiscal a of in to demand year brands’ strength compelling position expect never with We the finish been are that consumers globally the resonating for as UGG products has stronger.

XX% a of revenue the representing increase Global on reported year was HOKA. versus an to Shifting last $XXX third million, for basis.

quarterly record revenue for Another HOKA.

December XXXX. ago, of now the on of billion $X with XX-month eclipsed just over delivered, celebrated trailing quarters two billion quarter Just months, basis, HOKA a nine last ended achieving revenue and the brand has we the $X revenue

in points added HOKA revenue distribution through, each quarter in increased as to driven XX% far with consumer specialty a year than for as to growth versus which this and and XXX%, one marketing year. Fly the the increase has in Human channel acquisition year thus due rate retention period strength throughout been global HOKA relatively the has growth the driven than accounts the the fiscal brand select as share year, brands’ port of DTC We favorable allowing year throughout product improved third this primarily DTC been shipments were strategic slowly HOKA higher flow more congestion. Fly prior wholesale the comparable last by wholesale expanding campaign as year, the believe sell to respectively. was disrupted gains has last, key doubling catalyst And account on a a wholesale quarter with

the marketing a drive months. XX% XX% New targeted brand and quarter, and increase purchase increase on XX% over activations these in in in in six Chicago helped awareness, markets York intent third the During a City a next consideration

We seen for have popup well additional perform a effect created the also from visibility have continued halo believe markets stores by brand HOKA. to these which

increase in among saw XX year the a consumers, year-over-year of the drove the third and we particular, US during In EMEA old age largest significant quarter. who XX group gains any to

broad searching basis. increasingly to awareness and this Giving exciting demographic, been who new We making coveted the us confidence appeared and build hoka.com what to we’re for actively have the a investments from globally. product females is adoption in brand regular by on encouraged be

in with demographic, old but the points depths consumer. is the a deal trend. The Solimar but expose without still to great launched years new by cross our top XX serving specialize also of this this in brands’ to further styles five opportunity more shoe, is this and aged purchased example the landed in access a to quarter. of this trainer earlier by all see to dedicated marketing resonating HOKA XX of significant testing well females The perfect we males [ph], fall [Solimar] this target product

to According aggregated maintain the delivering distribution, run increased data, a in run with HOKA expansion core even year, turns by specialty above as margin points the beyond store specialty US on December, share average Importantly, product last the hyper-focused gross market has well X that delivered well. and during average. percentage channel brand versus channel highest the

In that continued extremely as terms the the wholesale in third our marketplace. to highly build in partner access points proud a HOKA competitive quarter, of we share performance are brands’ of market

strength maintain of performance able its on the with points new of high brand, exceptional. percentage HOKA accounts. demand strategic the to was consumer feedback With brands’ for been the early some even of with has the days HOKA in the incremental business Though access doors, full-price

being has best continued comfortable X in boot. hiking chosen XXXX the X the most October, Kaha was the GORE-TEX as sneaker Men’s footwear, side, award-winning and Health featured product noted introduce HOKA HOKA cushion, in the for Sneaker with the Awards On Bondi to

In Mafate for Gear shoe in best Guide as Winter rugged fast for X Speed selecting the addition, the Magazine published runs. Outside its trail XXXX,

excited XXXX planned beyond. to are what with the for fiscal come to product year for in Deckers for couple at the quarter us of come and starting a launches HOKA fourth is innovative brand, All of more and

basis. DTC global channel driving consumer which consolidated combined the UGG From $XXX in increased revenue portfolio, and saw on impressive reported by increased DTC’s and growth both a but dollar year, performance we X% year on XX% growth global retention DTC global of the which versus HOKA was respectively. million acquisition a basis, of wholesale, third DTC and on XX% majority and the a reported more entire prior perspective, volume the strong global strength quarter, was basis growth terms driven In over incremental by revenue. XX% comparable than and a last of DTC in DTC across versus increased XX%, driven doubled

from distribution global points side, wholesale incremental of strategic added basis the market consolidated increased doors Growth as accounts. on by year. and existing X% revenue HOKA driven a share versus with gains On as reported well business last brand was select

reduce the portfolio, through sell shipments brand Evidencing fall ‘XX for for increased where units existing partially by wholesale brand season, fall on For underlying this the wholesale the illustrating need during the lower inventory US UGG, total to in the and success volume as was XXXX. focused HOKA the activity. through selling increased in offset promotional UGG to the mid-single-digits compared heat

quarter, third brands the mix our With with which portfolio. XX% the ever quarter to quarter, able for taken the brands largest of long-term our through front, to were year DTC exceptional mix last year demand wholesale on capture increased the achieved represents combined DTC the this mix of business across In year. towards objective to great a entire third our our DTC actions progress our strategic highest historically from a DTC XX% XX% fiscal the UGG

design approach, to to talented like of to I and exceptional come that continually omnichannel teams The would the amazing products that new combination consumers disciplined our teams from market. these have our experience share with bring love our our compelling brands. out Alongside create products expect

to and update an that, further XXXX on With year our turn details over guidance. Steve the I’ll provide quarter on third to the performance fiscal call

Steve Fasching

are very to Thanks, brands in remarks, how dynamic our we express afternoon, a would operate environment. we I to to of continue consumer like Dave’s everyone. Dave the and Adding as performance encouraged good with

resilience healthy to fortunate marketplace, two product that are competitive brands We a and our differentiated primarily are highly and largest compelling very offering. proving their due in

impact. able currency, incredible to consumer macroeconomic a UGG flat in that relatively the year’s this UGG much included and drive revenue, delivered to compared reported brand exchange difficult revenue in the as deliver in to low-single-digits continues quarter, rate last as quarter. HOKA was In significant shown again While a growth record more constant growth of environment foreign

and in to organization’s long-term record decision-making Deckers unchartered disciplined strategic environment yet spending an continued another Our quarter. to to approach propelled commitment

let’s Now, specifics the get financial performance. the of to third quarter

in XX% an was comparison XXXX versus wholesale currency when increase impressive constant its expansion $X.XXX was and disrupted benefited more Growth billion, third from versus of HOKA, through continued XX.X% On basis, last quarter representing consumer than the prior global fiscal acquisition increases revenue versus quarter doubled a DTC online increased by Third due business and year. retention, increased revenue by which in grew of year. XX% delays last select with port market year’s congestion. HOKA also of from inventory wholesale last points resulted an partners. year and gains revenue distribution by easier to share were to quarter that strategic shipments driven

was to basis XX%, were for rates margin the compared gross offset year costs, XX.X%. margin quarter foreign last a XX significant drivers of reduced unfavorable material from partially Gross benefit in was exchange third from most which period. as is points freight the which the currency year’s prior up by quarter The

brand DTC more the for our mix year. and HOKA offset increased Additional faster last gross were with the and of closeout mix quarter normalized as growing increases channel implemented year. These the relative at from end margin partially wholesale, last in impacts minimal favorable from than promotions of discounting activity UGG favorable brand to benefits sales included price

spent in was the $XXX SG&A last third X% million, dollar million. up quarter versus $XXX year’s

the As a primarily shifted percent lower launch the fiscal fourth spring it through still quarter currency a align spent year-to-date marketing as to timing than foreign to the the headwind was basis December, campaign remeasurement. with quarter of XXXX. in of revenue, into SG&A sales points ratio and last remains XXX the due a HOKA of to we benefits from But lower in year, of

higher with jurisdictional share XX.X% favorable was a year’s to and primarily $XX.XX, to business. is year, share. last of is income $X results rate per last interest count last due tax than earnings relative These XX% year’s per more lower $X.XX XX.X%, mix drove than which higher share combined Our which to than and

prior and the $XXX the to inventory period billion balance with year, delays, borrowings. support XXst, was had during offset brand, continued time ended last due to inventory was $X.XXX sheet. point from quarter million, outstanding and this Inventory up being versus our HOKA of same UGG down Turning which we we the with the December cash growth factory of third in in year-over-year, year XX% At on light primarily to fiscal XXXX, the equivalents. some no

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

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

XXXX. moving Now, updated to year fiscal for outlook full our

upside XX% This to equates and being be XX% our continues billion $X.XX This our DTC market wholesale increase HOKA full a increasing to by global guidance year full to in previous are the of We billion. range up driven build $X.XX now is revenue year of up revenue share to access range across to brand expectations XX% as exceed points. to from XX%.

fiscal Reflecting brands growth low implies this with rate XXXX low the to the $XXX volume year as for first versus increase of reflecting brands’ the year implying last now growth HOKA The update, range, half, is compared expected high in is dollar incremental XX% balanced HOKA than across year. revenue total second now year. in that to XX% XXXX, greater slightly range revenue to more million fiscal increased than guide fiscal the year a half revenue XX% the the

HOKA strong to typical brands’ supply year’s lower see impacted expect last growth that the DTC from said, consumers driving than quarterly fourth the growth that robust demand wholesale will timing, continued With rate. chain to Due that rate disruption revenue run brands’ the channel. be in quarter in we

in events the on still reported down implying in laps the year-over-year quarter fourth decline be mid-single-digits prior to expected the revenue basis, abnormal UGG a is brand a as year.

kept late inventory on the which quarter wholesale would customers This procure fourth earlier orders quarter growth preferring prior year, cancel, to the reminder, they last for As is UGG to expected seasons. not arriving in in inventory, side had be fourth but instead the that future historically of their a in resulted year additional fall the repeated.

Additionally, UGG shipped in that last DTC backorder from year. benefited product January

Further, as rates most significant headwinds of UGG continues a exposed all from year. unfavorable the globally and compared most the last foreign our result, brand, to face to as is exchange an brands, currency

is of revenue as to in expected fiscal XX.X%, approximately to of for be operating percentage still full a is still sales be increased still margin be to is XXXX, the XX%; year our XX%. range SG&A approximately gross Beyond expected outlook margin XX.X% to expected

tax earnings And per approximately expected the now still in is diluted share effective to $XX XX%. our rate of to Our $XX.XX. increased range be is expected be to

As strategy this headwinds with in push, have the a year, combined the well, to second served year, of this and the company earlier half availability fourth on that, pushed us disruptive nature reminder, the placed last improve and how earlier hard year due played and pressure due products reported to shipped to of products percentage currency our of the has growth out, that quarter. the more this

said With we for viewing context, that full of we better measure this a holistically believe delivering the year. and expectation initial brands is fiscal progress fiscal fluctuations, continued are said, foreign this to year have as outlook, In making. are the our our the more increased currency we to from outset harsher what of on despite expectations increase at impact a our full year compared

additional excludes any considered does guidance share this nature, any note, may not impact one-time from that contemplate in charges Please repurchases. be and

uncertainties, disruptions, of confidence chain of no limited meaningful geopolitical strengthening recessionary and current further are risks changes but include, tensions. dollar constraints inflationary deterioration and supply expenses, pressure, which Additionally, labor US consumer pressures, related shortages, in to, the further assumes and and our guidance not

wanted state last year, As point the level the pre-pandemic time to delays relative provide to On has costs our further improve, levels. business. same they versus in and elevated end the freight of fiscal of corresponding our of continued around year the disruption, though we remain approach I context Logistics, to

While footwear a outbreak way. currently times the ongoing in impacting in transit is China material or not production

this hurdles, closely. experiencing and continue situation We watch are we’ll operational to minimal some

inventory expectations inventory, signaled as ratio of we’ve of sales few to to year. terms growth our throughout In the last see this over in in improvement was continued growth the quarters,

chain, the revenue as the increasing as compared good cadence as working still HOKA in both to about HOKA comparisons year current disruption of supply of satisfy still our While it’s to on anticipate and mix is dynamics which well over especially quarterly more based up to feel revenue the inventory inventory, position, levels, optimize even brands’ we We UGG. unique last demand. increased year-over-year

of discussed Regarding over influenced promotional last marketplace markdown become activity, levels we have few the has the as increasingly quarters, by activity. higher

full pandemic, model beyond a normalized brand. have particularly our a the prior brands avoided with there HOKA experienced update the promotion business, of UGG more of percentage maintained to levels the While return been discounting has historical flow. to high has largely additional price

managed which into capabilities, are the of positioned the expectations marketplace, margins, and DTC with dynamics earlier leveraging higher channel, our year. on exceeding wholesale Given original we channel selling gaining inventory is higher while at our dealing share the inventory, having and well the

of we’ve rates. to foreign an revenue, $XX impact fourth currency, impacts fiscal and on are at exchange remains to $XXX million. On from our headwind approximately currency the approximate expected we unfavorable million continued In our for XXXX year full quarter, results experience expecting the

base year another manage and to Finally, to expense deliver as finish actions exceptional the out we our to deliver look are our on made these XXXX tradeoffs reflecting also we we year, and took the fiscal results.

margin providing forward, business we areas While will continue which environment, in will technology, as highly gross everyone. are that to investments and fiscal this our are invest yet XXXX, those talent, In expansion. to especially for innovation, we all guidance see we critical success. start and will further Thanks, as to and those infrastructure, our year the expands, review support continued not organization competitive drive enterprise

to back his Dave call final I’ll remarks. for now And hand the

Dave Powers

Thanks, Steve.

strength of season, future Exiting and tailored of to navigate marketplace and strong by our encouraged holiday of are exciting in ahead. consumer the proud great our through our and a strategies the are ability to landscape have brands. unique challenged each the results we our confidence brands We managing

brands HOKA feel strong on we will positioned. partners heat the UGG and pull a we Both and well. believe seeing Deckers have we’re wholesale on operate relationships is brands in with With model, us built our well the key particular, brand serve

omnichannel strategic with you, Deckers’ We and success ultimately build capabilities to beyond flexible results long-term towards Thank success. possible to employees is the consistent more made who sustained aligned And our marketplace continue your behind support. our thanks call forces be continue sharing strategic for management, goals. of the model to we hardworking But on by deliver and above Deckers’ joining for driving brand everyone the forward to operating go us our look to as stakeholders all today. continued Deckers’ exciting company’s future.

turn operator With to over Operator? the that, I’ll the call Q&A. for

Operator

Thank you.

We with [Operator begin Vasilescu BNP question from Please go our ahead. will will Instructions] today session. now come Laurent Paribas. first the And Exane question-and-answer

Aubrey Tianello

Hey, is me for Aubrey Tianello everyone. guys okay? you Can This hear on Laurent.

Dave Powers

Yep –

Steve Fasching

hear can We you.

Dave Powers

Welcome.

Aubrey Tianello

for what how on Maybe talk the All in the in down last about the our versus start seeing side, right, quarter to XH. up taking slightly channel, wholesale ago? quarter, just being thanks X% that days it’s about Wanted questions. you’re channel talked you progressed think in I XX

Dave Powers

Yeah, you’re or about QX? half second talking the talking about you are quarter? What specifically QX,

Aubrey Tianello

The you on the quarter. X% slightly being in to up call. I the last in wholesale think XH spoke down But wholesale

know view can still if you whether give that’s or you Just something’s on color any changed? the

Dave Powers

just lot of timing the But detail last you more call let Steve specifics. and deliveries I know, think will in explain But versus goes Yeah, of I this a this it’s as year. on. he into get the

and But part of more and Steve I QX between don’t you that’s have the know QX. on then dynamic shifts color the So that. if big

Steve Fasching

Yeah.

QX, a everyone, year where – the QX, remind we I the in about year. when think shipped of year little we we QX you into again, terms know, the to that beginning impact coming of of in growth. and quarterly We bit to going wholesale knew discussion, what get QX to was at given last it’s this out just product alluded that

we would products we that of We had QX, to sell knew this So of to hold wanting product took in they impact didn’t and sell QX in. which and that opportunity year. wholesale participating customers the some QX

So expectation is knew between I see which again, didn’t We the in and much increasing little are our current QX of outlook. play full kind our better, we be it’s think, some QX year, bit out, we as why would we a guide disruption why and there quarters, year quarterly. to

But of and it chain from playing is see bit demand year, impacting our how year, see but strong you still right the we experienced I the It goes impact point opportunity I going were every products supply during through think with last strong the made we knew which sell sure this a to wholesalers. that to disruption to This continuing bit was, and to exactly little early we back we’ve remarks, take year wholesale opportunity know prepared in year. the make the is in we get an a through current which to pandemic in season, in is growth for have what that, seen.

with and continue well our And customers. brands to perform resonate

and numbers So as HOKA both on side, the side. see you on UGG especially the can the in

year percentage get we’re and on want again, year. race again, performance, that’s measuring changes, the the to quarterly for our So, of business with health the hung outlook don’t really pleased the up our on because on the really,

Dave Powers

for you they carry year, we’re on think shipments it last of into and take comping, were know, increased the happy that could sold and that HOKA, for inventory. inventory QX to in and knowing styles, you just has that Yeah, QX UGG, I brought to cases QX we both those we would it for QX know, at dynamic were kind they in But up in reminder, were happy you year. as time, wholesalers starved and QX core year, particularly And fill in now have UGG last know, this a that in some we, played out. brought and

partners as wholesale through strong full the very them of are is brands also then keep in activity situation, price a overall, But said, there. their promotional marketplace, our from Steve still lot you demand the know, But and mind, in inventory. sales own is the throughout working through healthy, they’re inventory and working

in bring they brands are brands. for who about careful fortunately, very very, they’re strong. So our And

prioritizing they’re have work they to environment. still lot but brands other of in from through inventory So this a us,

Aubrey Tianello

got a follow-up. I Hey, it. Very HOKA, then if And can on just clear. ask

is on through You you the that? opportunity Thanks. points HOKA to access the kind mentioned on the what in expand? Would channel there wholesale. maybe of expanding And outside wholesale Can like a little looks strategic just of strategy specialty more running? give detail there?

Dave Powers

who Yeah, about wholesale. I’m this we to is, are on very that. of HOKA in global would you say happy know, a selective we scale, talk And I sell to

the authenticity our prioritizing doors index that’s we the well. of growing we’ve as and butter like and very the mentioned we’re third specialty expanded bread brand. in places in the in run know, strong But channel, that’s And REI, always quarter. you We’re call the

in ultimately DTC on we footlocker now more value. too doors, of the want right much categories. right the in We’re but handful business know, to reasons, but awareness, because margin, through exceptionally as to right looking expand in in as continue the And as for lifetime then, get can of consumer wholesale, is to data, not And consumers, expanding really DTC, you we’re strategically you drive many through healthy create growth focused in wholesale, know, doors we’re front we QX, a all we saw drive sell and strong.

this ultimately is in and towards healthy you quarter. DTC So see can reflection this a strategy of it’s balance company, working a how good this a is XX% our being

Aubrey Tianello

so Thank you much.

Dave Powers

You bet.

Operator

from Komp question Please Jonathan ahead. with the Baird. And Thank be you. go will next

Jonathan Komp

side. ask from you’ve for brand. Good looks hard like the had UGG some were Yeah, heat just the about a It first incredible styles consumer want to that hi. few get to the of I afternoon.

platforms who Ultra? and And much have are but wholesalers the So in the type of from I’m of how what things availability forward? view some plans maybe for some just like that curious didn’t presumably would response you looking you point seeing want then your product, at

Dave Powers

I share you of those Yeah, inbox looking of can for emails with my people styles.

demand consumer not you to how we strong to much pulled we know, level in through I a it in little So up our anticipating know, inventory for as of be. the some would a bit managing higher them brand we’re invested how these new on you the back think take styles, UGG

sold you the those you the So Ultra the know, the Mini, piece. in know, cases to styles, platform Tas, out many styles,

so, And keep iterations of want wants opportunity and consumers, intact, the more, that in classics you younger is news DNA global that very on very, our But realized missed then well we’ve these there. resonating all brand we core are would extended know, And good The particularly consumer a scale. would some say more. more wholesalers I Classics, with consumers.

as we on know, through developing advantage you beyond. year et the we’re confident can and the styles, take that platform going you to path that continue So cetera these continue feel and of trends,

news. hungry strong you the good these is core is consumer and great demand and you that news there’s iterations table And But know healthy. remain for. Which than is better So, classics new know, were expected. on we some of the

Jonathan Komp

and XX the there when in follow-up, could than just That’s quarter on year changed old great. elaborate maybe Then a a maybe the third of is question, similar dollars. just higher I the little maybe accelerated revenue, the little what’s a A questions a set to fourth bit you HOKA. the Steve, XX the you of at of strength adoption? And demographic, know, typically, quarter look HOKA then on

reason from but comparison would that ago any why the I down the So third quarter looks quarter? different, Thanks be understand dollars fourth year again.

Dave Powers

Jon. Thanks, Yep.

on these side, happy with results. very yeah, you HOKA we’re So the know,

dramatically were of early weren’t adopting shift segment. And the so, category comfort know, year XX growing change the last yet, consumer obviously their were fastest to XX know, in core you I know, HOKA, it or was think, our you and of the longevity younger year in reasons. days – consumers old selling you it we the beyond, that but really we’ve as using own and then some in runners for, part to seen and people

So seeing, planned, it’s know, working HOKA, little you teenage raving of doing, you folks but girls planned, it. as et the faster people, traditional than a But as, collabs you’re and than probably and we we into brands trading planned. know, some a activities athletic little better the cetera, we’re boys with free from like marketing, about tapping we

just creating marketing exciting. doing the very in exceptional breadth are right of it right the putting know, XX. consumer, way. ages, job for an and it of think it’s product the I And our to the And you and right teams So it place, from product expands XX that brand that showcasing

on of but taking different work materials, are more extended of extremely treatments, colors the working styles, side, lifestyle some we’re that kind different doing that’s well, you And the core know, different lifestyle focused, too.

seeing important So that want this we the to be big meaningful play is out, we’re really to long-term. for which We great. a And think unlock that healthy younger consumer. this is and brand and

Steve Fasching

Steve. Jon, is and Yeah, this

goes HOKA disruptive On with bit, dealing year, dynamic. know, a QX right. little we’re the last it QX, back chain you supply Again, to

QX dynamic year. in year-over-year this there’s of So your QX. versus QX to comparison on and point a on Then kind the QX

into is we’ve we’ve that Dave in the had time marketplace. same as At been there putting you we more the know marketplace. know, the As inventory availability, said, more product

marketplace. we the want So control to

bit brand year. percentage comparisons it’s You know, our continues making to to management. terms, we’ll to going a to see of continue those this and last in how grow, to bit marketplace But disproportionate look the little we’re little how is grow because a again,

We also being introduced are that models have QX. new in

some there’s some change the deliveries quarter. wholesale in the in So of

we this that’s quarters, choppy growth brand little again, that year, a demand to between the strong demanding bit know, for wholesalers plan product. continuing to a and solid is you that overall are continue see, grow But

concerned there. the the DTC too recognizing So, managing the business, wouldn’t what’s managing QX get business, over on the wholesale marketplace, dynamic. I managing QX, going

in You choppy just quarters going on got know, this year. we’ve

Dave Powers

a well it’s know, very through know, and seeing there. consumer selling perspective, and at they’re quarterly the certainly full they and from but demand I is Yeah, you outs, the price don’t product think know you ins the

to pull year you our of at know, of and way have and the brand, back promotional healthy still this in high challenging and of FX and to sell rate come demand the high price level environment, marketplace. price, out margins, and very the both think momentum a and QX with – this look through, especially full in You environment, results I brands performed full and pressures,

we’re You know, focused on. what that’s

are And said HOKA and so, to you know, on in going we’re that. for And as I’ve been better to I and in a continue continuing And, before, the build these exceptional we brands the heat invest we see place that and this brands UGG the see. brand long-term. never

Steve Fasching

you we’re just last I think raise outlook. on, for know, the seeing again, our think we’ll year but, and for the And HOKA that demand thing then move full our I is in highlighted

is that raise driven that HOKA. being the increased from we’re by So seeing demand

marketplace. HOKA how it’s speaking in again, continue know, just see strength we and the resonating with the to You to

Dave Powers

And particularly, international.

Steve Fasching

Yeah, yeah.

Jonathan Komp

Thanks again. great. That’s

Dave Powers

Jon. Thanks,

Operator

will Paul go Citi. question be from next from Please Lejuez The ahead.

Paul Lejuez

being the Hey, thanks, can just a distribution how little if of maybe can that? in how And second, at versus And within been accounts you is in curious partners? bit guys. detail on I’m brand? has give Any driver whether that existing new maybe by sales versus then your you of Thanks. looks driven more each pricing a much DTC HOKA, curious more growth talk much color around about different change terms just wholesale? the

Dave Powers

expansion you you I questions. there in in outside globally. really of, HOKA, know, majority growth of would QX a good doors coming stores, expansion Yeah, new some is of accounts, wasn’t know, lot Dick’s the the in for existing from say

not gain pre-recorded you that that’s to continuing share, saw know, And market the just their run we’re you comments. a It’s in know, you across happening, board. So, specialty.

So, great But of full realizing retailers, go accounts power getting are the margins at and sell it the for wholesale this in through, healthy strong wholesale. we’re we presentations brand. better price as the

is accounts goes know, question, again, majority the consumer. the of speaking and the And to just, back What brand so management was you point, from at that right marketplace this other existing sorry? to coming which the

Steve Fasching

The pricing?

Dave Powers

pricing. The sorry. Yes,

and know, we through. of see we prices by styles haven’t in evidenced the both past of of really and this sellout really resistance the slowdown raised brands have coming any you we UGG the a seen any, fall obviously into price increases period, know, some You sell in these QX some in and didn’t to HOKA, that,

And is full is, brand to and the price they were it. worth these The prices And to willing so some consumers. I think higher. the of important though you product were even meaningful pay know,

Paul Lejuez

can was that. the magnitude What share year-over-year? the If of you increase

Dave Powers

think X% brands. across it like about overall I was Yeah, is both

Paul Lejuez

Got it. Thank you.

Dave Powers

On lifestyles.

Steve Fasching

the On lifestyle.

on price didn’t do we So – didn’t like raise – again, every we

Dave Powers

yeah. sorry, Correct,

Steve Fasching

price of products X% the HOKA on raised and styles UGG We beginning the was called was all the on styles but then it of season. some the in styles. today’s the wasn’t select of year. the certain It at around some beginning fall it at year, that And on point was

Paul Lejuez

generally? adjusted introducing for were assortment price that an And you into when mix is you higher styles even the higher number

Steve Fasching

bit, is wouldn’t but little up The I a say different. pricing significantly not

Dave Powers

lower think and resonating But and providing board. it sees the know more when the and you to priced we’re price Minis and the No. consumer willing think also a and the that In average may across Classic price know, bit little know, total affect excellent UGG it’s the for you Tasmans I we’re them the that value I doing, of it. strongly quality with than and you slippers some pay

Paul Lejuez

Got luck. Good you. it. Thank

Dave Powers

Thank you.

Operator

question be And ahead. go will from Nikic the from Please next Wedbush. Tom

Tom Nikic

just I for Thanks my ask taking want question. everybody. Hey, to about UGG.

– supply for you you brand? last your it’s that basis or how we sort know So sort UGG last mean, brand? wrap head it times, you should just, I what kind think a on dynamics mean thing stuff of you is things around wholesale. – of – year, it between But been and know, what is more obviously wonky normal grower the this algorithm given the this normal like how and grower fairly know high-single-digit know years think basis chain you you a the the growth know long-term we been have of think of couple a or I COVID think when to around have about is a about I like normal wonky I under of hard mid-single-digit the when

Dave Powers

from with that still that of and dealing certainly off coming inventory we’re the marketplace you Yeah, to COVID know, related mean of I of the out. some balancing peak, normalization is the business, refilling

probably looking know, And just right low-single-digits, now, we marketplace. now, at sit the where so and we you as to right reset be prudent we’re

are marketing collaborating leadership design getting the teams know, this Anne am teams I we’re day. for way this and and brand, know, very the better under You the and pipeline new globally the the at you every excited about product

globally. but And now, The inventories it’s make we sure we’re navigate healthy. the and the correctly. are managed there, think Right still I clean trying so set well marketplace extremely and opportunity is to

have to brand, here for exciting. there. long-term the But We think little work some is inventory and I outlook this a bit through

you But sit still is I shorter-term, in little more and bit environment looking we of the know, the HOKA, growth. macroeconomic challenged. a that say Different because situation than now at hyper that’s, would knowing know global we’re where the low-single-digits, it’s you a

heard a while of managing And And it’s the globe fine-tuning across about haven’t consumer improve each the and to margins. of name. healthy or marketplace business yet so a UGG the being driving the assortment to product meaningful lot obviously household the segments, is of brand people globally, a DTC

Tom Nikic

follow-up if And real just could I on Understood. margins quick.

mix kind channel cetera. off XX months you about know FX, a So next you guy some brand a the guess, But of seem rolling good bad like mix, bit or know, you et talk did freight a good promos, guys and you would gross normalizing to discounts and whatever. kind over would normalizing on think and well, I it or as margins, know guy be turns but from there the of I

margins? So, EBIT margin of like to growth can the about seems time? over higher EBIT And we want margins invest see you bright to creep gross a brands, there’s know but know through like, in you you know, how should the outlook definitely fairly the I think we drop

Steve Fasching

not Yeah, to going I guidance know, take that it Tom little remarks. one. bit we’re this what is prepared you yet. in said the Steve, I’ll And And giving a

are experiencing where gross seen it QX coming that’s model the we you’ll it in it you as freight. from margin, QX, see And so, in in in, largely you’ve improvements

QX, seeing we’re that, quarter, we’re freight seeing come right, going that from current benefit the rates In So you we’re increase. to are down.

Overall, FX is, you there an still know, headwind.

lower to the in in see ocean come guidance, freight, levels current it’s a improvement margin what you’re gross on be we’ll the basis, for seeing are you with at quarter. our than but through to we as So lower year, can see some going continue

a currency, us. Currencies be there So what your in point It’s little to with kind a see right. happens turned to mid-to-late bit of tailwind, will of we’ll beneficial QX. more

a still ago. it’s down We’re some of from seeing that, but year

what is could your to So improvements to gross the see happens. we’ll for there, potential contribute know, you that point, some a There margin.

this and we’ve business we And within year what held also going haven’t given belt to to nature business will be where our as of especially investments off it. business, the continue so to some tightened the with guidance use But on we’re gross in you do range we margin on expect deliver of competitive next year, guided, to to expansion. brands. this we is evaluating and And guidance, there that the some I what we’re said, our that know, in invest deliver we’ve on within doing while we’re

And so space. that relevant investment is this keeping in us leading critical and to

do are is margin something that with going clearly gross So some of expansion. to we that

businesses we’re see we margin well, opportunity I’ve that years some when an right, gross some of exceptional to business and do there’s we’re the this it opportunity, ago. delivering we’re going strong proving looking that results. Now, we of that make it’s to couple sure at a first, But expansion, in said as did investing before, of Yeah, because upside. their reflect

We’re operating many well of terms our peers above in of profit.

So to got we keep in this invest continuing business. to

you make that So, yeah, we them investments there to business. have is, in there’s but know, also

Tom Nikic

Yeah, year. this yeah. Understood. Thanks guys and best of luck

Steve Fasching

Thank you.

Dave Powers

you. Thank

Operator

ahead. from Kernan Cowen. question next from the John And will be Please go

Krista Zuber

for Krista is Zuber this John. Hi, on

Just – and of see how the wholesale? where your of in you or Thank is on wanted back channel, what inventory level kind levels you. to terms the DTC of comfort by inventory question circle on

Steve Fasching

is speaking the levels we the you think think the through have of indicated we that, would year. be so something working to it something I know, year, demonstrated that inventory, beginning this And was – at inventory we’ve we, this our I Yeah, improved. that

we’ve inventory making. signaling again, remarks, prepared improvement efforts doing level that again, we’ve actually the in said decreased, we’ve some the the been that As of and UGG work been on

You is know, HOKA our what inventory. doing we’re increasing also

got have a to those got XX%, sales. you to growing inventory you that’s service when So quarter

have been So increasing inventory. we

as inventory look I in terms You opportunity we to still optimize of know, think levels. out further, there’s

growth things look work we on bit growth with inventory about line, to comfortable those But feel we begin to of to where to we’ll today it’s sit But and that’s our that brands, our at more as in on the with with positions, of chain. inventory, about everything coming continue comfortable optimize normalize, we the always relationship feel little supply inventory a for work going especially sales continue when levels. we’ll there’s our of the improvement, we to much room improvement,

Dave Powers

I in perspective, place and would is I channel think inventory. know, say good channel you the Yeah, with from the a

speak able styles last were UGG to inventory and fill know, back bucket, getting year, key so in the You we in in we’re to HOKA.

sell healthy how think exceeded reflected you it’s the throughs and DTC wholesale know, So I very a in, that’s growth healthy globally. in quarter. in Still place

credit teams managing know, in a know the our again, perspective, and addition And, brand said the number on So from market But environment. I a know, would you this how managing you in health and marketplace Steve what to good say, marketplace levels. things and to a about shape. you in channel we’re are

Krista Zuber

Thank you.

Dave Powers

You bet.

Operator

Trading. the Please go And Poser next with question Williams ahead. from is Sam

Sam Poser

part Good DTC? or but I always give whole I guys for for Erinn, afternoon. you what wholesale can thing, us you ask, and of please know the Erinn, giving thank

Erinn Kohler

Sam, Hi, thing. sure

So distributor you. for the brand is global what wholesale, quarter including by I’ll give

which for million, is predominantly other gives $XXX million. Sanuk, for $XXX for million, $XX then that And UGG, Teva, million. you $XX for will that So HOKA, be million, $X Koolaburra,

Sam Poser

to for Komp’s I given commend you you, to John I should Steve, And question. your you. President Thank want think answer run

for to going from at business at QX. has look wholesale accelerated the I’m it and business, historically, if you DTC ask if Could you HOKA you – So give again. look QX

question that the be will QX? than So revenue HOKA anticipate QX is, do you higher

Steve Fasching

right. John think that question, I answered And

I take given sold QX, not we’ve got to that’s our so we aren’t that QX. year. why expecting year, right. we’re careful what you this that in, given be we I guidance. why focused people quarters, the as said, we for And business are numbers well want managing on sold QX, It’s this the quarterly have – we’re through underlying DTC, on growth in that when not on as Again, So between what as dynamics

we’ve get as more year, within that, before, where worked in And got dynamics early. trying products quarters know has We right. this I well to for we’re said us,

perspective So we is the want know to right you how of business make trending. sure we the have

on when mix, right. you an look play impact reported. Now, That’s then revenue to at going

at to selling a the are when that So little channels due looking in. volumes volumes, we’re bit we’re right different

equates guide right we’re where dynamics. But again, you I Our levels. year focused careful aren’t so the full is be the to a and on QX, people want out that a XX%, know, to brand we there. of QX volume demand coming similar there It’s grew out quarter

get to going in, see it opportunity and confidence sure want And then we’re again, in we’ll sell what get we has make again, tremendous product going HOKA. an there, happens. it to we’re then in to to have we through, So,

got wholesale a brand within know need marketplace. we’ve same red – this And a managing that to don’t we that our hot lot of to goes have We that’s that the but time, well, are at to there management. competitors marketplace to the of confusion, we’re a perform lot inventory contribute that the continues channel,

in great don’t dynamic. want worked about. people not get up talking brand I That’s So is shape. QX, to QX what we’re a about

Sam Poser

to some you talked of situation the because The as properly. new, you sounded launching one we’re think this about which to trying to about HOKA, not more model get I’m up is I related now this, QX. shoe And understand. know, you excited I trying you spoke in of but pretty UGG, though, that And this as after But question, you worked is, Dave, about, are is spoke with

would QX direct QX? then you launch to mentioned it in in just wholesale to and maybe Steve first, that in that it scenario launch consumer

those want brand things will you real and in not other retailers thinking I’m new make from Where, far really not market? you it, know, you then brand I know, necessarily mean, to bringing about? theoretically away I your understand you’re you that bring things as mean, is you’re so trying the it what how mean, worse. because products take just demand than and manage – from some I as probably product to high

Dave Powers

what the that, bit QX is that launches performance heavily they you’re Solimar. I think QX little small I also a the introduction, marketplace looking some want ship you channels today, you be of DTC, in first know, you at are in and in talked And and know, the transit Yeah, to so volume heavily. small new launched know, about drivers time also, those then you in had to And just know, on no. in weighted your see invest to buys own those a in wholesalers, before

of Yes, yes, QX, So, steal they’ll still you scale of Yes, business from point But share has small. new. those the this in exciting. market they’re the some XX% also And that some is competitors. at shipped are on why increase. then inventory which the see they’re

Sam Poser

in is know a then given sorry about in can QX know think to big And last you. on you relative direction year. assume you give basis, you your about smallest Got for fourth some quarter. increase to is and the – that the on the wholesale quarter, really us wholesale on fourth second – in on UGG going quarter? the just how Can swing happened a in you QX you’re big not But the it’s that have which I guidance, would it since

negative to though the be it much down negative mean, can, negative the going going give than is is probably DTC because to XX bit. like have know, a does it there down something that us a it the more sounds be negative? I a You DTC XX – handle wholesale is handle

Dave Powers

selling DTC, and you really are I we know, out is already those you new there know a DTC was as hot said, Yeah, QX in we think in you with golden of I that results mean, some stars styles introduction selling exceptional in the sold know, fumes, QX, out. have

But been as we’ve anticipating as inventory new of these through. of into yet, kind didn’t levels, of managing sell styles hot demand styles. there’s some not that for So some buy our these heavily we

struggling to they’re leftover wholesale see XX%, throughout yeah, down, purchased know, hot quarter. with are core it DTC, the the kind styles, for what still the than they the still the year. inventory like from you you of side, XX% in you going range know you’re On what classics, know, More in we they the just have new

and the brand understand know again, sell in through at to trying health is But this market are through? wonky quarters, like, how brand a it’s look of health tough. and if we’re that’s what but dynamic funky back we person but marketplace, the what to to as said, model go one focused I on got the think the of the already selling things and you it’s and you I you’re

Steve Fasching

again, last Well, brought UGG I more you from year. down it in so that mean, have you of the of QX QX, year, in QX QX shifted being much costs and to this

so different matter a where not – of to really is. expected. It’s scenario more trying just And a it triangulate that’s That’s not than that’s health.

Dave Powers

– Yeah

Steve Fasching

Thank you.

Dave Powers

Yeah, absolutely.

Operator

Chris Nardone And with our of final question today Lynch. America ahead. Bank will from Please come Merrill go

Chris Nardone

strategy way guys, see about can China elaborate And to any back, you last, build HOKA, afternoon. lockdowns if given a on quantify, business, the both you. you Can and ground UGG little there’s the HOKA to expansion know, Hey, your good if in for three specific for you bit talk on your potential businesses? know, what maybe you’re seeing UGG years? Thank over then you the can two and in the the you

Dave Powers

Yeah, sure.

COVID you think being know, and that not lockdowns, over our the exceptional brands know, managed from give things our listen, you considering able teams and know, to think on challenges team, way But management I spend, leadership in marketplace. I to so three and quarter. right in hard the years we’re all there, in last have you out know, consumers in it’s as the You they year-to-date comment the far now China, I the coming with shape this the of marketplace and

are they’re in you boxes we’re well. So relevant, healthy, performing employing that marketing brands for and the tactics strong, UGG, doing they’re demand, partnerships, we’re extremely over those the in consumer, fashion reaching locally checking all that younger know, the collabs both more in the there brands, are being

long-term start we team you’re come back going night, brands. year to talking a But to be into that’ll that, business And dynamic I back chances, mind to feel that the for know, but in massive going know, and our really see next I you for see, China Keep to finish you start consumers isn’t what to we’re good year. and You I not do other for see was we us come think this and heading consumer have us out. yet, China domestically the you’ll And the only think aspirations. globally. know, an interesting about of other

HOKA with way that up like, going and own But just We’ve an in way it, we expansion, you we way like the far authentic we’re resourcing so set know, managing to good. like the we’re our in the way. for the specifically see then the because the HOKA the we’re on we’re door continue so to marketplace, we in working stores, marketplace we’re tremendous creating on opportunity long-term. path awareness partners And in invested

signs gives big that this we’re of be our confidence time. a from a our And and success partners far, and lot us stores retail can good so over seeing

Chris Nardone

Thanks.

Dave Powers

You bet.

Steve Fasching

bet. You

Operator

call. concludes now today’s thank Take gentlemen, you concludes earnings question-and-answer and you We And care. that And third joining conference session. this Ladies fiscal Brands disconnect. quarter XXXX for Deckers so may call. much our

Deckers Outdoor (DECK) 2 Feb 232023 Q3 Earnings call transcript