Deckers Outdoor Corporation

Good afternoon.

Sending an increase of 16% versus prior year. On a constant currency basis, revenue grew 15% versus last year. Growth in the quarter was primarily driven by broad base UGG growth across regions and channels, delivering $1.07 billion of revenue with global DTC increasing 20% as brand heat remains robust with all DTC regions exhibiting a double-digit percentage growth in the period. and continued strong demand across the HOCA ecosystem of access points, with particular strength in the DTC channel, which increased 38% versus last year, contributing to the brand's total revenue of $429 million in the quarter. Notably, HOCA's DTC performance for the quarter was aided by global increases in consumer acquisition, which was up 31% versus last year, and consumer retention, which was up 35% versus last year. Additionally, I would note that this quarter's revenue growth was aided by a higher percentage of full-price selling as well as the UGG brand select price increases, both of which contributed to dollar growth outpacing unit growth. While we will always manage our brands with the intent to deliver high levels of full-price selling, the level we experienced this year, particularly for UGG in its peak season, is one we don't expect will always repeat. This dynamic, combined with a larger than expected impact from price increases due to the strength of performance from affected styles, is part of the catalyst for our increased full year expectations for UGG growth. Gross margins for the quarter was 58.7%, which was up 580 basis points from last year's 53%. As compared to last year, gross margin in the quarter benefited from higher mix of UGG full price selling, freight savings, select pricing action and favorable brand and product mix, favorable channel mix with DTC continuing to grow faster than wholesale, and favorable foreign currency exchange rates. While we are exceptionally proud of these remarkable results, we remain mindful that the outsized margin expansion seen this quarter is above normalized levels and is not something we anticipate will repeat to the same degree. While we do see opportunities to continue to deliver top-tier profitability through our key strategies, items that we anticipate may not repeat in a normalized environment include the extremely low levels of promotional activity achieved for our two major brands, considerable benefits from UGG pricing actions, and very low freight costs that are now on the rise, as well as other potential macroeconomic factors such as foreign currency exchange rate fluctuations. SG&A dollar spend in the third quarter was $429 million, up 23% versus last year's $350 million. As a percent of revenue, SG&A was 150 basis points higher than last year, primarily due to investment in talent to support key functions within our growing organization and higher marketing spend. Our tax rate was 21.9%, which is lower than last year's 23.7%. These results, combined with favorable interest income relative to last year and a lower share count, drove record diluted earnings per share of $15.11, which compares to last year's $10.48 diluted earnings per share, representing EPS growth of 44%. Turning to our balance sheet, at December 31, 2023, we ended this fiscal third quarter with $1.65 billion of cash and equivalents. Inventory was $539 million, down 25% versus the same point in time last year. And during the period, we had no outstanding borrowings. On inventory specifically, I'd note that with the strong levels of selling that we have seen this year, we are now below normal operating levels for the current size of our organization. And heading into next year, we expect to see incremental inventory investment to keep up with growth. Today's inventory position reflects the upside that has already been captured in the quarter just completed, which could have a small impact on sales in the fourth quarter. During the third quarter, we repurchased approximately $100 million worth of shares at an average price of $507.95. As of December 31, 2023, the company had approximately $1.05 billion remaining authorized for share repurchase. Now, moving into our updated guidance for fiscal year 2024. Based on the strong demand experienced in the third quarter, we are increasing our full year revenue guidance to be approximately $4.15 billion, up from our previous guidance of approximately $4.025 billion. This increase now equates to full year growth expectations of approximately 14% versus last year. From a brand perspective, we now expect UGG revenue growth of low double digits, up from our prior expectation of mid-single digits. This full year increase is the result of the strong DTC demand that we experienced and fulfilled in the third quarter. Full year HOCA revenue growth of approximately 25%, with strong third quarter sell-through driving wholesale refill upside in the fourth quarter, reflecting our disciplined marketplace management. In addition to our fiscal year 2024 updated revenue outlook, gross margin is now expected to be approximately 54.5% as UGG experienced high levels of full price selling, including key styles contributing incremental margin from price increases as brand heat continued to drive strong demand. SG&A as a percentage of sales is now expected to be approximately 34.5%, as we have identified areas to accelerate spend in Q4 with revenue growth exceeding expectations for fiscal year 2024. We believe this additional spend, part of which represents top-of-funnel marketing opportunities, gives our brands the opportunity to defend their current positions of strength, setting the foundation for the future. Additionally, I would note that some of the third and fourth quarter spending timing dynamics relate to unrealized FX gains recorded in Q3 that we expect will be offset in Q4 as rates have recently moved in the opposite direction. With these updates, we are increasing our operating margin for the year and now expect it to be approximately 20%, reflecting the improvement in gross margin experienced. Our effective tax rate is now projected to be approximately 22%. And finally, with these updates, we are increasing our diluted earnings per share expectations to now be in the range of $26.25 to $26.50. Please note this guidance excludes any charges that may be considered one time in nature and does not contemplate any impact from additional share repurchases. Additionally, our guidance assumes no meaningful deterioration of current risks and uncertainties, which include but are not limited to changes in consumer confidence and recessionary pressures, inflationary pressures, geopolitical tensions, supply chain disruptions, and fluctuations in foreign currency exchange rate. This guidance update represents a $3.25 increase on the prior top end of our diluted earnings per share guidance range. Based on the success that we've seen this year with strong sell-through and high levels of full price selling, there are a few business dynamics related to the fourth quarter that we would like to highlight, including U.S. wholesale shipments that went out at the tail end of the third quarter this year that have historically occurred in the fourth quarter. meaningful revenue from UGG closeouts last year that will not repeat this year, and low levels of inventory on key styles that have been driving the business this fiscal year. We of course still expect to deliver a strong fourth quarter that is now projected to round out Decker's fourth consecutive year of at least mid-teens top-line revenue growth, while also consistently delivering exceptional high levels of operating profitability. We would note that some of the benefit to our operating profitability we're seeing are outsized and may not repeat in future years. But we remain dedicated to delivering operating profitability in the top tier among our peer group, even as we continue to invest in our organization to enable future growth. As we've said in the past, if revenue growth comes faster than our ability to keep pace with investments, some of the related profit expansion may flow through to the bottom line near term. However, we continue to recognize the importance of funding our strategic initiatives moving into next year and maintain a focus on the long-term vision for our brands. We will continue to be disciplined in our approach as we enter our final fiscal quarter and begin planning for next fiscal year. Our largest brands are two of the healthiest and most in demand in our industry. With a robust balance sheet and our diligent operating approach, we are well positioned to drive future success and look forward to providing more details on our year-end call. Thanks, everyone. And now I'll hand the call back to Dave for his final remarks.

Thanks, Steve. We are extremely proud of our brand's year-to-date performance, which have produced record revenue and earnings results. As we look beyond fiscal year 2024, I believe we have an incredibly strong innovation pipeline for the UGG and HOCA brands, giving us further confidence in our ability to build upon this year's exceptional growth. Thinking into the next few years, we believe HOCA remains our primary growth vehicle with considerable opportunity for both region and category expansion as awareness of the brand's innovative performance product increases further and continue to position UGG for growth through the development of category hybrids that celebrate heritage brand codes to resonate with target consumers across global markets. Decker's strategic focus on marketplace management, omnichannel strategy, and flexible operating model continues to be the driving force behind our sustained success. We remain focused on executing against our long-term objectives while continuing to deliver high levels of profitability and driving shareholder value. Additionally, I'd like to recognize and thank all of our employees across the organization for their consistent and dedicated focus to driving results aligned with our long-term strategic vision. Our employees continue to go above and beyond while upholding Decker's values. Before we turn to Q&A, I want to give Stefano a moment to say a few words. Stefano?

Dave, thank you for the kind introduction, and good afternoon, everyone. It's a privilege to have been named Decker's next CEO. During my tenure here, I've had the chance to grow with Decker's, as we've made significant strides building beautiful and innovative brands that resonate with consumers around the world. I understand and appreciate the immense effort it has taken to get us where we are today, and I'm passionate about our people, our organization, and the continuation of our collective success. I believe Decker's is well-positioned to continue cutting through a highly competitive marketplace and take advantage of the many opportunities ahead with the support of our dedicated management team and all the good people at Decker's. Over the next six months, I look forward to working with Dave, who has become a great mentor, colleague, and friend to continue executing on our strategy and ensure a smooth transition. Thanks Dave, back to you.

Thanks Stefano, and thank you everyone for joining us on the call today. We look forward to sharing more next quarter as we continue to build towards Decker's exciting future. With that, I'll turn the call over to the operator for Q&A. Operator?

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your telephone keypad. Should you wish to cancel your request, please press the star followed by the two. I would like to advise everyone to please limit their questions to one question and one follow-up. Your first question comes from the line of Tom Nikik from Redbush Securities. Please go ahead.

Hey, guys. Thanks for taking my question. And Dave, congratulations on a great run. And Stefano, looking forward to working with you. So on HOCA, so it kind of sounds like you're embedding a little bit of a reacceleration, I guess, specifically in the wholesale channel in the fourth quarter. Um, is that just, you know, inventory levels being really lean? Is it, you know, selling of the, the, the new product? Uh, is it, you know, door expansion with, you know, Dixon footlocker? Uh, if I would just, you know, kind of unpack, uh, you know, how, how to think about, uh, the drivers of, uh, Hoka wholesale, that'd be greatly appreciated.

Yeah, sure. Happy to answer that question. And, um, first of all, I apologize. My voice is a little rough. I'm fighting a cold at the moment, but, um, Yeah, we had a great quarter for Hoka Q3 as you heard from the results. Right on plan, right on strategy. The teams continue to execute at a high level globally. And Q4, it's a combination of things. There's a lot of refill orders that will be going into wholesale, fulfilling that demand and getting back in stock as we head into spring. And then as we mentioned before, we have some real exciting new product launches that are coming out in Q4 as well as planned. So continue to be very strong momentum. Executing on the strategy, Q4 is looking solid for us. No new doors at the end of the year, no net new doors. We'll continue to evaluate that based on how the market performs and how HOCA sells through. And we're very pleased and optimistic about this quarter ahead.

Sounds good. And just if I could follow up also, just one on UGG.

Obviously, you've had a couple of great holiday seasons in a row. What do you do for an encore next year?

Yeah, well, it's a good question, right? I mean, our history has been a little bit volatile. But listen, I think this is a new era for UGG. We have an incredible new leadership team. The innovation pipeline is resonating incredibly well with our global consumers. We're expanding categories beyond our core icon styles. And the momentum is real. This is the most exciting quarter I've ever seen for UGG with regards to global brand heat, global sell-through. Every region, every channel is performing well with the UGG brand right now. And we were light on inventory. We had an incredible quarter of growth, but there's still opportunity. And we're going into this coming fall with a position of real strength with healthy inventory levels, clean marketplace. We had some price increases that didn't slow us down. And we still think there's a lot of demand out there to be had across the women's, especially a lot of the icons that we were successful in this year. But with some new introductions like the Lomel, the weather hybrids and men's, we think there's a lot of upside still for this brand. And we're going to stay the course and manage this marketplace incredibly tight, as we have been, and prioritize DDC. And that formula continues to pay off major dividends for us.

Yeah, Tom. And just to add to that, as we look at the success that we had in Q3, this is where our marketplace management works. We are containing that wholesale channel. We're flowing some of the demand over to our DCC channel. And this is really where you're seeing the power of that work. You see it with the gross margin expansion. And so that's a model that we're going to continue to reinforce next year. And we know we're leaving demand on the table. And that's by design. So we continue to build heat with these brands by controlling that marketplace distribution, flowing some of that excess over into DCC, and leaving some demand on the table.

Sounds good. Thanks very much. And Dave, best of luck in your future endeavors.

Thanks, Tom. Appreciate it.

Thank you. And your next question comes from the line of Laurent Veselescu from BNP Paribas. Please go ahead.

Good afternoon. Thank you very much for taking my question. And Dave, wanted to wish you the best for your future endeavors. You will be missed by many. And Stefano, it's great to have you on the call. I wanted to just follow up I wanted to follow up, Dave, on some of the, you know, there's some targets out there long term. There's that $5 to $6 billion target, 50% DTC mix. Is there anything that changes over the long term on these targets that maybe you want to update? And then could you maybe also provide, Steve, I think you maybe kind of alluded to sometimes you'll over-earn. you know, with that 20% even margin for fiscal year 24, is there a right, like, resting heart rate for even margin for this business long-term?

Yeah, Laurent, good question. So with regards to long-term strategy, I think it's important to stress, particularly with the coming up, that we are still focused on what we've talked about before. So, you know, Stephano and I are sitting here saying, hey, there's a major change that needs to happen It's more about continuing momentum that, quite frankly, Stefano and his team have helped create. So the targets that we spoke about before, those are ranges that we've talked about. We think there's potential to get there. It's not a hard target. But the strategy is in place. The way we're managing the marketplace and the way they're presenting these brands in the market to our consumers, where we're connecting with our consumers, just gives us more confidence. especially coming out of a quarter like this, that those targets are achievable. And I think the quarterly results represented great examples of how we're migrating closer to DDC and more business through DDC and then building more heat for these brands over time. So as we get more consumers into the fold, that'll continue. And we remain incredibly excited about the opportunity for HOKA, but also for UGG at the same time. So stay the course. Lots to get after still, particularly with the strength of the international markets coming on now, and we're confident we can get there.

Yeah, then, Laurent, kind of on the operating margin, you know, and we've talked about this before on prior calls. You know, the way we look at the business is kind of a high-team margin business. You know, and as I've said in the past is when we have an opportunity, when the business runs so well and delivers margins above that, like we've seen in Q3, we will let some of that margin run through. We're not out just to spend money for the sake of spending money. We carefully watch where we're placing our investments. And when we see the opportunities to invest, we will take that. And that's the way we approach kind of every year. In a given year where we're seeing such strong full price selling, like we did this year where our brands and product are in such demand, it's a perfect case where we can flow through some of that. You've seen that in prior years. But at the same time, as we've indicated in our full year outlook, where we've raised it, we're also looking at where we can continue to invest in our brands because we know the competition is stepping up as well. So this provides us an opportunity that when we are performing well, We'll pass through some of that, but at the same time, we're looking at the long-term health of the business, and we'll make the right investments to continue to drive this business forward in the long run. So that's our approach. That's not going to change. It's working for us, and you can kind of see how that's driving these types of results.

Very clear. And as a follow-up question on the UGG business, Steve, I think you alluded to some timing shifts between 3Q and 4Q. Maybe for the audience, could you quantify that number? And then, you know, going back to Tom's question about next year's encore, Dave, Steve, Stefano, we are getting that question from investors like, oh, just, you know, 15% of growth for this year, for this quarter, it's going to be that much harder. I know you're not prepared to guide for next year, but any indication on the order book for next fall would be very helpful. Thank you very much.

Yeah, so I'll start. In terms of some of the shifts, what I mentioned in the prepared remarks is, yeah, we are seeing where some of the overperformance of Q3, because again, as you know, we haven't guided quarters, where we did see some earlier wholesale deliveries in Q3. That's slightly impacting our Q4. In terms of our full year, we have raised our full year, and that's really a reflection of the strength that we've seen in Q3. Because we haven't given quarterly guidance, I know everybody's models may be a little bit different. And so it's hard to say specifically kind of how you're looking at it. The way we've looked at it is some of the business that we thought may happen in Q4 did come at us in Q3 as the sell-through was very strong. And so we took advantage of that and we were able to kind of shift some of that product. Generally speaking, what you're seeing is The business has performed better than what we expected. We have flowed that through on our full year lift, and we're seeing Q4 kind of as we've seen it with a little bit of timing shifts. But overall, I think the takeaway is incredible performance in Q3. We've flowed that through. We've lifted our full year. Business is incredibly strong, and the demand for our brands is there.

Yeah, and with regards to, you know, coming up into fall of 24th, We're confident. We see UGG now as a growth brand within the portfolio. Will it be double-digit 15% like we just experienced? We won't be planning for that, but we still think there's growth to be had. I think it's important to remind folks that UGG is in a very different position than it has been in the past. I talked about this in the last call. We used to sell primarily classics, classic short, classic tall, different colors, iterations, and a few slippers to go with that. And the distribution was pretty similar across the marketplace. UGG is much more diversified now. We're selling boots. We're selling slippers. We're selling new hybrid innovations. And we're starting to sell our version of sneakers. And it's a younger consumer. It's a more diverse consumer. We have segmentation in the marketplace globally. We have a lot of untapped potential in the international markets. And we're going to continue to play this through with the strength of our product innovation pipeline and the strength of our marketing teams to continue to drive this as a growth brand for years to come.

Super helpful. Thank you very much for all the color. And best of luck, Dave.

All right. Thanks, buddy.

Thank you. And your next question comes from the line of Jason from UBS. Please go ahead.

Great. Thank you so much, Dave. I wanted to follow up on some of those comments you made about how much more diversified the product line is today. Can you give us a sense of, in the third quarter, You know, what percentage of the business was Boots, kind of the classic two and sort of the derivatives of that versus sort of the newer stuff, new Mel and, you know, some of the, you know, your versions of sneakers and some things that's really kind of different over the last couple of years. And if you could sort of compare that to where that was, you know, a couple of years ago, that'd be helpful.

Yeah, I don't have the exact specifics on that, but I will say, you know, the core classics are really just a maintained business at this point. So it's not like we're purposely trying to shrink those. Those are still healthy. We're just managing that category and that product better in the marketplace. But the growth is coming from some of the newness, you know, the Taz, the platform style, the Ultra Mini, and then, like I said, some of the sneaker versions and the hybrid winter programs. And as you notice, we launched UGG Extreme, which is our first, you know, serious foray into more performance products. So this is a brand that has really broad shoulders. I've always said that. And I think now we're seeing once we get the right design DNA into these categories that are really innovative and distinct, there's really nothing like this product in the marketplace, we have a lot of runway. And so we're going to continue to innovate, continue to attack these categories with a focused assortment of DNA product and connect with our consumers in a segmented way. And I think there's still a tremendous upside there. Lots to be confident with the UGG brand. I think this is an indication of the new leadership that Ann has brought to the team and the discipline in the marketplace, as well as our innovation pipeline. And we're optimistic this is going to continue at a healthy pace going forward.

Got it. Understood. I'll try to ask it a different way. Hopefully this is okay. But it's just so fascinating what you've accomplished with UGG. Can you maybe just tell us, if we just think about the business where it was five years ago, mainly boots, What was the total addressable market for that category? And sort of where do you – how would you size the total addressable market for UGG today, given, you know, the sneakers that you're doing and all the different categories that have emerged? Let's give answer to that real quick.

Yeah, Jack, you know, it's a good question.

Clearly, the addressable market has grown everywhere five years ago. I think, you know, another way to look at it, and I know what you're trying to kind of get at is, you know, what's the future growth opportunities for UGG? I think what we've seen, especially in this last year, is how UGG is being adopted for different use cases than it was five years ago. And so that total addressable market continues to increase as we are seeing greater adoption around our product. And so to Dave's point about what we're excited about, what we saw in Q3, We're seeing heritage products resonate with consumers, but iterations of that where we've created newness in categories that consumers are adopting. We've also talked about some of the demographic reach, and we're seeing a younger demographic come into the brand with a strong excitement. You've really seen that come through in Q3. It's what's driving some of that DTC performance. And then we're seeing it grow internationally. So as you recall, five years ago, we talked about how we were going to deliver the progress in North America and then export that success to the international markets. And now what you're seeing is those international markets growing at a faster rate, albeit smaller dollars, but at a faster rate on percentage terms than we're seeing domestic. And that shows you how the consumer is embracing the out-of-brand across the globe in different use cases. And through the last couple of years, what we've learned is through some of this casualization, the adoption of UGG for different use cases. And we're continuing to see that demand grow, and that's what gives us excitement about where we can build this brand.

Yeah, and the last thing I would say, if you think about this brand five years ago, it was a boot brand. And we've had that stigma attached to UGG brand for decades. quite some time. And I think that those days are in the past. You know, we have a product that is resonating in different categories that we've never had before. And I'm really excited about the low Mel that, you know, it's our version of a sneaker. And I think that's going to be a bestseller for years to come and start, you know, potentially taking share from some of the sneaker brands out there.

Got it. All right.

That's fascinating. Thank you so much.

Really appreciate it. Okay.

Thank you. And your next question comes from the line of Janine Stitcher from BTIG. Please go ahead. Hi.

Congrats on the results, and Dave, wish you all the best as well.

Thank you so much.

I wanted to take into pricing a little bit. Yeah, and could you elaborate on the price increase there? How big was it? When did you take it? And maybe how broad was it in terms of the styles? And then curious about any future opportunities for price increases. And I guess the same question for Hoka. I think you've talked about being pretty happy where the pricing is there. But do you see any opportunities just as some of your peers potentially look at taking that price?

Thank you. Yeah, thanks, Shane. And great question. You know, we are and have been, we have been and will do continue to look at prices strategically. And so some of the decisions we made this year were really just on a handful of styles in UGG, but in really, you know, some of our best sellers or proved to be our best sellers. So that's why you saw the exponential impact of, of revenue on some of those styles as they perform so well at full price. And the added $5 or $10 made a big difference on a lot of units. Going forward, we'll continue to evaluate it. We don't see massive price increases broad-based this fall. We're still evaluating that, but it'll be selected by market and style if we do do that. And then the same approach for HOKA. You know, we're comfortable where the prices are right now. We think we are providing incredible value for the dollar. There's opportunities to raise prices a little bit here and there as we continue to roll out more innovations. But pricing, growth through pricing, is not a strategy of ours. It's pricing appropriately the product in the market for the consumer, and that'll drive our decisions.

Yeah, and Gene, just to add a little bit on that, you know, as Dave said, it was not across the board. It was very surgical in terms of units that we identified had the potential to absorb a price increase without much consumer resistance to it. And that was significant. And so it was not a lot of styles. It was on styles that we knew would do well. And so it was surgical in the sense of, you know, those high-performing styles. And it drove a big portion. So, you know, just in terms to quantify it a little bit, in the quarter, you know, our gross margin from last year was at 580 basis points. I think the other thing that was a big contributor, along with price increases, we didn't get promotional. This was a full, strong price sell-through quarter for us. So of that 580 basis points, about 340 of it came from not being promotional and the price increases that we experienced in the quarter. So a big driver of the quarter. And as Dave said, we're not looking to price increases to kind of continue to drive that. We're going to be very careful about how we place price increases and how we contemplate it. But this year was one year that we benefited from it that we will not necessarily see in future periods.

Got it. That's helpful, Keller. And just in terms of the growth margin, it's fair to assume that there might be some more promotions in the future as that kind of normalizes if the price increases stick. So at least a portion of the 586 points remains structural.

Yes. Yes.

Perfect.

Thanks so much and best of luck.

All right. Thank you.

Thank you. And your next question comes from the line of Sam Poser from Williams Trading. Please proceed.

Well, thank you for taking my questions. So, Aaron, we already have UGG and HOKA. So, could you give me Teva, Sanook, and the other for my favorite question? And then I have other questions because I wish you'd just give all of it.

Sure, Sam. So, real quick for the third quarter, total wholesale and distributor for UGG, as you mentioned, you can count, is $403 million. HOCA, $252 million. TEVA, $20 million. SUNUP, $2 million. And then other, largely, Coolaburra, $24.5 million.

Thank you. Okay. Based on what we've seen so far in January, it looks as if – well, first of all, Dave, congratulations. Totally awesome for you. I'm very happy for you. And I hope to get to see you before you sail out into the sunset off the beach of Goleta. Thank you, Sam. I appreciate that. We're seeing a lot of sales in your own retail stores around New York. I'm hearing that your wholesale accounts are getting small hits. but are you gearing a lot of what's going on in the fourth quarter for UGG to really more so than usual, like just pushing it to your DTC, given that a lot of those orders are people are just trying to get whatever they can, so you're going to feed yourself a lot more?

I wouldn't say that we're forcing more inventory, purposely away from wholesale into DTC. What I would say is I think the teams have gotten better at allocating the right amount of inventory for our stores so that we're not missing sales when the customer comes in. And we've been guilty of that in the last few years, not having protected some of the inventory in this kind of demand. Some of that inventory can get sucked up by DTC or wholesale fill-ins, so we're protecting it better than we have for our stores and just making sure that we're balancing out across wholesale and retail and e-commerce as best we can for the consumer and how they like to shop. It just so happens, though, when you have this kind of brand heat and momentum, if there are wholesale partners that are running low on inventory, they're going to go to our stores to find it and our websites to find it. And this is an indication of what happened. But it's also a strong indication of how well our pull model is working. And when you have a pull model like that, it does help generally benefit your GDC business a little bit more.

Thanks. And then lastly, you sort of hinted that was a new thing coming from Decker's X Labs. I heard that it might be And I've heard from some retailers they've seen some of the product for fall, and I heard it might be under the Anu Reborn. Could you give us some color as to what may be going on over there?

Yeah, well, I will say it's exciting for us. You know, we established this Decker's Lab innovation engine a few years ago with the help of John Luke, who is one of the co-founders of HOKA, and that has been quietly continuing. building as a force for our pipeline for all of our brands. So, you know, some of the innovation you're seeing in UGG and HOKA, and we'll soon see some of that in Teva as well, has come from that. And one of the things we uncover is there's an opportunity for a new kind of sneaker brand. So we would put this under the category of a super sneaker brand. It's pretty exciting. It's more sophisticated in styling. It's made for really all-day wear, but it comes with a lot of the technologies that you would find in a performance running brand. So, carbon plates, different foams, different, you know, more modern materials and cleaner lines. A little bit elevated price point, above $200. And obviously, it's early days. We're excited to launch this into the market. I'll let you know the name as soon as I'm allowed to. But stay tuned. In the next few weeks, you'll hear about the soft launch, and then we'll head into, you know, March and April in a more robust way and build from there.

Thanks very much. Congratulations again. Thank you.

Thank you. And your last question comes from the line of Jonathan Kamp from Baird. Please proceed.

Yeah. Hi. Thanks. Good afternoon. One more question on UGG. You know, in a different forum, Dave, I think you recently highlighted long-term potential for UGG to still double revenue potentially without a timeframe attached. So, Dave or Stefano, could you maybe share any more insights, how you think about, you know, those comments in relation to the long-term opportunity for UGG? And then just separately on HOKA, can you share any retailer feedback on the new styles, thinking about, you know, the CLOX, the SkywardX, the Skyflow? Just what are you hearing, especially on some of the premium product you plan to bring out? And any thoughts on sustaining leadership or still growing and core run specialty while you, Eventually, thoughtfully expand distribution.

Yeah, I'm going to let Stefano answer the HOKA question, then I'll come back to the first question.

Yeah, on the CLX launch, we launched today, literally, so it's a bit early to say how well it's doing. I was looking at the results.

They're quite encouraging, but it's early days.

Yeah, and then regarding the UGG brand, I actually don't remember saying doubling the business at some point, but that's okay. I would say, listen, we still think this is, we see this more than ever as a growth brand, and we think that a healthy growth rate for this brand is mid-single digits, and that's in line with managing our marketplace and growing effectively in a smart way. Does the brand have potential to be doubled at some point? I think if you If we optimize potential in men, then we, you know, we start to build our apparel engine a little bit more. Anything's possible. But right now we're taking this one year at a time and really, you know, strategically and methodically building it in line with our marketplace strategy.

Okay. Thanks for that. Just one more, if I could sneak it in for Steve. Any comments on what bonus or incentive bank rules look like in 2024, given the strong performance and just how to think about that? potentially year over year and a more normal year for 2025? Thanks.

Yeah, so good question. So clearly with the performance that we've got going on in FY24, we are accruing for an increase in performance-related compensation. That resets back to, you know, approved budget levels. So on percentage terms, we're not quantifying dollars, but on percentage terms, clearly the expectations, so I have a couple months left, but given everything we've seen so far, very strong performance. So there is an increase in performance-related compensation in FY24, and then we reset that for FY25.

Okay. Thank you all again. Thanks, John. All right. Thanks, John. Thanks, John.

Thank you. This concludes today's call. Thank you for participating. You may all disconnect.