Deckers Outdoor Corporation

that this conference call is being recorded. I'll now turn the call over to Erin Kohler, VP, Investor Relations and Corporate Planning.

Hello, and thank you, everyone, for joining us today. On the call is Dave Powers, President and Chief Executive Officer, Steve Fashing, Chief Financial Officer, and Stefano Carotti, Chief Commercial Officer. Before we begin, I would like to remind everyone of the company's safe harbor policy. Please note that certain statements made on this call are forward-looking statements within the meaning of the federal securities laws, which are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements made on this call today, other than statements of historical fact, are forward-looking statements and include statements regarding our current and long-term strategic objectives, anticipated impacts from our brand and marketplace management strategies, changes in consumer behavior, strength of our brands, demand for our products, product and channel distribution strategies, including direct-to-consumer, marketing plans and strategies, disruptions to our supply chain and logistics, our anticipated revenues, brand performance, product mix, margins, expenses, inventory levels, and promotional activity, the impacts of the macroeconomic environment on our operations and performance, including fluctuations in foreign currency exchange rates, and our ability to achieve our financial outlook. Forward-looking statements made on this call represent management's current expectations and are based on information available at the time such statements are made. Forward-looking statements involve numerous known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from any results predicted, assumed, or implied by the forward-looking statements. The company has explained some of these risks and uncertainties in its SEC filings including in the risk factor section of its annual report on Form 10-K and quarterly reports on Form 10-Q. Except as required by law or the listing rules of the New York Stock Exchange, the company expressly disclaims any intent or obligation to update any forward-looking statements. On this call, management may refer to financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including constant currency. In addition, the company reports comparable direct-to-consumer sales on a constant currency basis for operations that were open throughout the current and prior reporting periods. The company believes that these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to and may not be indicative of its core operating results. With that, I'll now turn it over to Dave.

Thanks, Erin. Good afternoon, everyone, and thank you for joining us today. I am thrilled to be here sharing and celebrating Decker's incredible achievements in fiscal year 2024. For the full year, we delivered revenue growth of 18% versus last year, nearly reaching $4.3 billion of annual revenue, gross margin of 55.6%, a 530 basis point increase over last year, operating margin of 21.6%, and earnings per share of $29.16, representing a 51% and nearly $10 increase over last year. These extraordinary results are a testament to the success of our long-term strategies and the execution of our hardworking employees. Over the past four years, Decker's revenue has grown at a compound annual growth rate of 19%, adding over $2 billion of incremental revenue. We also substantially expanded profitability as earnings per share has grown at a CAGR of 32%. With the scale of our organization's growth, We are continuing to bolster our foundation through investments that support the long-term success of our leading brands. HOKA and UGG have become two of the strongest and most in-demand brands in the footwear space. They are continuing to win with consumers by infusing performance and fashion into products that embrace their respective brand codes. Building on the outstanding progress we have made over the last few years, our teams are laser-focused on the significant opportunities that lie ahead as we seek to build HOKA into a multibillion-dollar global player in the performance athletic space, grow UGG with premium products and elevated experiences that enhance consumer connections, expand DTC through engagement, acquisition, and retention gains, and advance our international markets through targeted investments. Our robust and innovative product pipeline, comprised of relevant and distinct products, is amplified by our marketplace management strategies, and gives us the confidence to continue progressing on these initiatives as we create the future of DECRS. Steve will provide further specifics about our fiscal year 2025 expectations, as well as our fiscal year 2024 financial performance. But first, I would like to share some of the brand and channel highlights. Starting with the brand highlights. Global HOCA revenue in fiscal year 2024 was $1.8 billion, representing an increase of 28% versus the prior year. For the year, HOCA growth was driven by increased brand awareness, with the U.S. rising to approximately 40%, and international regions, on average, reaching just over 20%, global DTC, which increased 40% versus last year, market share gains with key global wholesale partners, and most importantly, success with new performance innovations across the road, trail, and lifestyle product categories. From a brand awareness standpoint, these are significant strides for HOCA. Across the board, HOCA is experiencing significant gains on both a season-over-season and a year-over-year standpoint. Aligned with our strategy to solidify HOCA as a global player, international regions are driving particularly strong gains in awareness, increasing more than 80% versus the prior year. Global consumers who identify as runners remain our highest awareness group and continue to see strong increases, but we are also seeing really powerful growth among consumers who are more general fitness oriented. While HOKA is increasing its awareness across all age groups, growth is strongest among 18 to 34-year-olds globally, with brand awareness among this influential age group nearly doubling year over year. We believe the continued progress introducing HOKA to new consumers around the world has resulted from our increased investments in brand marketing through the expansion of the Fly Human Fly campaign, including greater out-of-home digital and physical assets, dedicated and enhanced sponsorship of both globally recognized and local running events, such as UTMB, with HOKA becoming the new title sponsor, enriched engagement with social media across various platforms, and a greater retail footprint that allows for community-building activities like our HOKA Run Club. We are pleased to see these investments paying off, not only through increased awareness across markets, but also by growing brand consideration and purchase intent, some of which is happening in real time. We are proud of the great progress our teams are making, but also recognize that HOKA still has plenty of room to grow awareness, consideration, and ultimately market share across all global regions. HOKA has an amazing opportunity ahead as the brand continues to win with consumers around the world and we look forward to facing this challenge head-on through a relentless focus on product innovation and authentic consumer engagement. From a channel perspective, HOKA continues to excel across its ecosystem of global access points. Recall, at the outset of fiscal year 2024, we noted the brand's focus on building full price market share with existing points of wholesale distribution through a pull model and increasing the mix of DDC through consumer acquisition and retention gains. The result of our disciplined marketplace management strategy achieved both goals with HOKA delivering record gross margins as the brand benefited from maintaining exceptionally high levels of full price selling despite operating in a more promotional marketplace and shifting mix to DDC which increased to 38% up from 34% in the prior year. I would also note that the HOKA brand's strong growth through full price selling in the wholesale channel was accomplished primarily through market share gains with existing distribution and greater efficiency with recently opened doors relative to locations that were eliminated. Regarding HOCA DTC, revenue growth was driven by global increases in acquired and retained consumers, which expanded 32 percent and 44 percent, respectively. We remain encouraged by the growth across markets, with the U.S. continuing to deliver strong increases in alignment with the global averages and international regions increasing more than 50% in both acquisition and retention. These consumer growth figures are leading indicators of HOKA brand adoption, highlighting the brand's ability to both expand the scope of HOKA consumers and retain existing consumers through consistent product innovations that deliver an unmatched wearing experience. As we continue to introduce HOKA to new consumers around the world, We view branded retail stores in key cities as an important consumer engagement vehicle. Just a few weeks ago, Hoka opened its second European retail store in Paris, France. Though only open for a short time, we have been very encouraged by the consumer feedback, conversion, and broad product adoption. We are excited for Hoka to have a footing in this important market, particularly as the location expects to see high traffic during the upcoming Summer Olympics. On the product front, HOKA is driving growth and consumer acquisition through innovative updates and new introductions across a diverse assortment of footwear. The HOKA brand's fiscal year 2024 performance was primarily driven by road-running favorites like the Clifton and Bondi franchises, stability staples like the Arahi and Gaviota, both of which received updates during the year, trail conquerors like the Speedgoat, Challenger, and Stinson franchises, and everyday performance lifestyle shoes like the Transport, Solimar, and the Kawana. We expect these styles will continue to contribute to the growth of Hoka moving forward, but are also really excited about the brand's ongoing efforts to constantly infuse new innovations into the product assortment. Back in February, we highlighted the launch of the all-new Cielo X1, which represents the pinnacle of the Hoka brand's race offering. We have been in awe of the consumer response to this incredible shoe, which sold out almost immediately in the initial launch colorway. While we don't expect to drive significant volumes on this very specific ultra-performance shoe, we're excited and encouraged by the consumer demand validating Hoka in this category. Our progress in this more niche category is designed to emphasize the brand's performance roots, even as we expand the consumer aperture to more commercial styles. With respect to these broader, more commercially-focused products, We have been impressed by the consumer response to our latest update of the Mach franchise, the Mach 6. This completely redesigned silhouette was upgraded with a supercritical foam midsole and strategic rubber coverage on the outsole for greater durability, while remaining our lightest Mach to date. Sell-through of this versatile and responsive style at our wholesale partners and in our DDC channel has been exceptional, with the Mach 6 becoming a top five style across all of Deckard's since its launch. Innovation is the Hoka brand's top priority, continuing to develop groundbreaking products that energize consumers around the world. We are fortunate to have a phenomenal roster of Hoka athletes who we will continue partnering with to drive greater athlete-enhanced innovations into our most pinnacle products, while also further developing the assortment to segment and differentiate Hoka distribution as we continue to scale. The recently launched SkywardX, is the perfect example of new product innovation that benefits our segmentation efforts. This all-new style was developed as our first carbon-plated shoe that is designed for everyday runs with maximum cushion. The Skyward X has a revolutionary suspension system to pair with its convex carbon plate that gives the runner cushion for impact with a natural spring forward. This style helps elevate the Hoka assortment, sitting above other max cushion styles from both a price point and performance perspective. This allows HOKA to widen distribution on other styles while the SkywardX is targeted for specific accounts like run specialty, top strategic performance stores, and our DDC channel. As we methodically open new access points for HOKA over the next year, we continue to fine tune differentiated assortments across geographic markets and channels of distribution. I could not be prouder of the HOKA team's incredible results over the last year. We are pleased to now have a proven industry leader like Robin Green who joined us in February leading the team and are looking forward to the positive impact we believe she can have to drive HOCA into its next phase of growth. Moving on to UGG, global revenue in fiscal year 2024 was $2.2 billion, representing an increase of 16% versus the prior year. For the year, UGG growth derived from the key initiatives set forth at the outset of FY24 as aligned product marketing and commercial execution drove global increases in DDC acquisition and retention and expansion in international markets. These results are a testament of our powerful product engine and disciplined product management strategy. The UGG brand continues to maintain important relationships with valued wholesale partners while delivering strong results through the segmentation and differentiation of global marketplaces. With the allocation of core products driving high levels of full-price sell-through and lean inventories in the marketplace, UGG has become a leading brand in wholesale while funneling upside demand to the DDC channel. For the year, this contributed to global gains in both DDC acquisition and retention, which increased 18% and 17%, respectively, contributing to the UGG brand's 22% increase in global DDC revenue. This is a truly impressive result for our DDC channel and speaks to the work our brand, marketing, and PR teams have been doing to maintain high levels of brand heat year-round, from seeding products with global and regional influencers, creating compelling product collaborations with prominent brands, and showing up on the runway at fashion weeks around the world, to deepening consumer connections through elevated brand experiences like the Fieldhouse or a recent Formula One activation. The UGG team has consistently developed interesting and on-brand content to stay top of mind with consumers. We believe the continued focus of our teams on working with local individuals across global markets has helped UGG connect and resonate more effectively with international consumers. Whether it be partnering with Hani from K-Park Group New Jeans or the collaboration with Gallery Department expanding access to influential retailers in Europe, these efforts have helped establish UGG in its healthiest position to date across influential international markets. This contributed to UGG delivering an international growth rate of more than two times that of the double-digit revenue growth from the U.S. market. The success of these initiatives drove significant shifts in the composition of UGG revenue aligned with our long-term strategy, with DDC increasing to a record 50 percent of mix and international increasing to 37 percent of mix up from approximately 30% three years ago. Both of these shifts were margin accretive, and when combined with exceptionally high levels of full price selling and benefits from select price increases, resulted in record high gross margin for the UGG brand in fiscal year 2024. Of course, this is all underpinned by the UGG brand's ongoing creation of compelling products that are resonating around the world. What impresses me most about the UGG brand's performance in fiscal year 2024 is that the brand drove a 16% increase in revenue through single-digit unit growth with significantly fewer SKUs than the prior year. UGG was able to achieve this because of the increased global alignment on the brand product assortment, creating efficiencies on marketing stories and inventory purchasing. Last year, we spoke about the UGG team's focus to reimagine iconic styles, and that is exactly what we saw play out during FY24 and what we continue to see consumers excited about in the upcoming fiscal year. The UGG product team continues to delight consumers by creating threads that connect new styles to existing icons. Over the last couple of years, we've seen this take shape with the Ultra Mini, inspired by the Classic Mini, Platform Classics, inspired by the original Classics, and the Taz, inspired by the Tasman. These are just a few examples of product evolutions that have helped UGG build the shoulder seasons outside of fall and winter, attracting new consumers while remaining rooted in the brand's heritage. Keeping an eye on the future, UGG continues to build upon franchises that are a reimagining of existing icons in new categories. The Golden Collection is one we continue to be very excited about. UGG first introduced the Golden Star Sandal a couple of years ago, which is a strappy sandal inspired by the original classic boot. This style has continued to blossom on its own, and we're also seeing great enthusiasm for new adjacent styles in the collection, including the Golden Glow Sandal, a water-friendly, colorful version of the original Golden Star, which has become an instant hit, and the Golden Star Clog, which was spotted on basketball superstar Kaitlyn Clark shortly after she was drafted first overall to the WNBA. Outside of the Golden Collection, UGG is developing compelling new products in the slip-on shoe and sneaker category, which includes the Low Mel, sneaker silhouette inspired by the original new male boot that continues to sell out quickly as new inventory comes into the marketplace, and Venture Days, a rugged outdoor take on the original Tasman, which sold out quickly in China and was recently worn by Formula One star Pierre Gasly at the Miami Grand Prix. These emerging franchises, along with complementary styles, give us confidence that UGG will continue to capitalize on high levels of brand heat, and demand to deliver strong performance for years to come. Congratulations to the UGG team on another excellent year. Moving to our discussion of consolidated channel performance, SECRA's fiscal year 2024 results reflected the success of our omni-channel marketplace management strategies that continue to preserve our brand's premium positioning around the world. By tightly managing marketplace inventory, we were able to drive strong full-price sell-through, increase market share, and capture upside demand in our direct-to-consumer channel. This led to outstanding DDC growth, which for fiscal year 2024 increased revenue 27% versus last year by adding nearly $400 million of incremental business. DDC represented 43% of total company revenue, which is up from 40% in the prior fiscal year. DDC gains resulted from strength across brands, with HOCA and UGG DDC increasing 40 percent and 22 percent respectively, regions with international and domestic DDC increasing 37 percent and 22 percent respectively, and consumers with acquired and retained increasing 21 percent and 24 percent respectively across all brands. On a DDC-comparable basis, revenue increased 25 percent versus last year, reflecting positive engagement and conversion of demand for the great products that our brands are bringing to market across both online and in-store direct-to-consumer touchpoints. From a wholesale perspective, fiscal year 2024 revenue increased 13% versus last year. Growth was primarily driven by high levels of full-price global demand for the UGG and HOKA brands, which resulted in healthy sell-throughs at our valued partners as we maintained lean inventories in the wholesale marketplace. We are entering fiscal year 2025 in a position of strength because of the successful execution of our omnichannel brand and marketplace management strategy. As our brand teams continue to delight consumers with unique and innovative products, our commercial teams will continue to execute on this strategy, working with our fantastic partners to maintain our brand's premium positioning in their respective marketplaces. With that, I'll hand it over to Steve to provide further details on our fourth quarter and full fiscal year 2024 results, as well as our initial outlook on fiscal year 2025. Steve?