Deckers Outdoor Corporation

you up for questions. If anyone has any difficulties hearing the conference call, please press star zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded. I'll now turn the call over to Erin Kohler, Vice President, Investor Relations and AMP Corporate Planning. You may begin.

Hello and thank you everyone for joining us today. On the call is Stefano Carotti, President and Chief Executive Officer, and Steve Foshing, Chief Financial 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 1995. All statements made on this call today, other than statements of historical fact, are forward-looking statements and include statements regarding our ability to respond to the macroeconomic environment and the impacts on our business and operating results, including changes to global trade policy and fluctuations in foreign currency exchange rates, our current and long-term strategic objectives, the performance of our brands and demand for our products, anticipated impacts from our brand, product, marketing, marketplace, and distribution strategies, product development plans and the timing of product launches, changes in consumer behavior, our ability to achieve our financial outlook, including anticipated revenues, product mix, margins, expenses, inventory levels, promotional activity, anticipated rates of full price selling, and earnings per share, and our capital allocation strategy, including the potential repurchase of shares. 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 10Q. 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. PLEASE NOTE AS PREVIOUSLY DISCLOSED, THE COMPANY AFFECTED A SIX FOR ONE FORWARD STOCK SPLIT DURING THE SECOND QUARTER OF FISCAL YEAR 2025. THE SHARE, PER SHARE, AND RESULTING FINANCIAL AMOUNTS MENTIONED ON THIS CALL HAVE BEEN ADJUSTED TO REFLECT THE EFFECTIVENESS OF THIS STOCK SPLIT. 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. Please review our earnings release published today for additional information regarding our non-GAAP financial measures. With that, I'll now turn it over to Stefano.

Thanks, Erin. Good afternoon, and thank you all for joining today's call. I'd like to begin by congratulating the entire Decker's organization on another exceptional year. For the full fiscal year 2025, Decker's record performance included revenue growing 16% versus last year to just shy of $5 billion, gross margin expanding 230 basis points above last year to 57.9%, operating margins improving 200 basis points over last year to 23.6%, and earnings per share increasing 30% versus last year to $6.33. We are incredibly proud of our talented team whose dedication has driven these exceptional results. Our team's focus on the long term has proven to be a winning strategy, driving incredible progress over the past five years, including total company revenue growing at a compounded annual rate of 19%, HOCA adding approximately $1.9 billion of revenue, UGG adding $1 billion of revenue, gross margin expanding 600 basis points, operating margins increasing 750 basis points, and delivering an EPS compound annual growth rate of 32%. These results demonstrate the strong foundation we've built and provide a powerful framework in which we continue to operate. In the nearly four months since our last earnings call, there's been a significant amount of uncertainty introduced as a result of shifting U.S. trade policy. While we expect impacts to our business in fiscal 2026, we do believe that our company and brands are highly capable of responding to challenges with the ability to adapt to consumer and marketplace shifts as needed. Our disciplined approach has yielded two industry-leading brands, UGG and HOKA, each with distinct products that operate in differentiated marketplaces, giving us multiple levers to adjust in this period of uncertainty. We are confident in our long-term strategy, which remains guided by a consumer-first mindset. as we see an ability to drive increased adoption of our brands through awareness-building activations globally, elevating our product and creating meaningful connections to grow our consumer base well beyond today's footprint. Dedicated to being brand-led, using the strength of our authenticity to continue to gain share across expanding categories, seasons, and applications. Supported by innovation-focused advancements, emphasizing our unique ability to create products that are both technical and comfortable and can command leading marketplace positions, all paired with our consistent, globally-driven approach that aims to balance U.S. and international profiles as international growth outpaces U.S. growth. We also aim for a balanced channel mix of 50-50 DTC and wholesale across the company. These building blocks of growth will be enabled by our talented and creative employees and fortified by the financial and operational discipline we've demonstrated as we continue building for a bright future ahead. Steve will provide further specifics on how we're thinking about the year ahead, as well as a financial recap on our fourth quarter and full fiscal year 2025. Before that, however, I'll share some brand highlights from the year just completed and some updates on how we're looking at the future of these captivating brands. Starting with Hoka, our fastest growing brand. Global revenue in fiscal 2025 increased 24% versus prior year to $2.2 billion. Hoka revenue growth versus last year was robust across channels and regions, with wholesale revenue growing 24%, outpacing door growth. indicating share gains with existing doors as we increase brand presence. DTC revenue increasing 23%, driven by continued global gains in consumer acquisition and retention. International revenue expanding 39%, and now representing 34% of global revenue, up from 30% last year. And US revenue rising 17%, now totaling just under $1.5 billion. The Hoka brand success across channels and regions continues to benefit from efforts to build brand awareness around the world. According to our most recent proprietary brand awareness survey, consumer awareness of Hoka in the U.S. has now reached 50%, which is a 25% increase from the same point in time last year. And across international markets, awareness has increased to an average of approximately 30%, which is up from approximately 20% at this point last year. This represents meaningful progress in our continued journey to build HOKA into a leading global performance brand, achieved primarily through deepening our global investments in brand building initiatives, adding points of distribution across key markets, and most importantly, driving innovation with product newness and technology upgrades. Opening Hoka retail stores in influential locations contributes to this progress and demonstrates our commitment to brand building efforts. Just a few weeks ago, I was able to attend the grand opening of our newest Hoka flagship store in Shanghai. This first of its kind flagship, which we are more appropriately labeling an Experience Center, is the highest and most comprehensive expression of Hoka to date. The Hoka Experience Center features a high-tech testing lab open to all consumers, a shoe personalization station, a community hub for hosting unique consumer experiences, exclusive products, and much, much more. I saw firsthand the enthusiasm from people exploring the store immersed in the origins of Hoka throughout as they experienced the full breadth of the brand's innovative products. We're still in the early stages of building out the Hoka brand's physical DTC presence. This experience center gives us a concept of engaging elements to deploy in future locations over time. At the same time, we continue to leverage our valued wholesale partners to further expand the HOKA brand's in-store presence. As you view the progress in awareness, both in the US and internationally, as inflection points that indicate a growing appetite for a wider HOKA distribution. Further, the Hoka brand continues to level up both global brand campaigns and major product launches. The recent Everybody Bondi campaign, our most successful globally integrated campaign to date, reached a massive audience, generating record levels of impressions and widespread press coverage around global markets. On the product front, Hoka made great strides in fiscal 25 with key advancements including introducing category defining technology for pinnacle athletes with Cielo X1 and Tekton X, continuing to elevate well-established franchises with technology upgrades to the Bondi, Clifton, and Mach, and diversifying the assortment and marketplace with all new innovation and run specialty focus differentiation in the Skyward X and Skyflow. Through our most advanced innovation to date, including material and foam enhancements and unique geometries, the brand is expanding the aperture of consumer adoption. Hookah now has five franchises that each deliver more than $100 million of global revenue, reflecting the power of the brand's top models and strength of the assortment overall. As many of you are aware, two of these top revenue-driving franchises are Bondi and Clifton, both of which are in the midst of model upgrades. with Bondi 9 having launched in January and Clifton 10 in April. The consumer response and feedback from our wholesale partners has been extremely positive on both franchises, with great appreciation for the enhanced ride and fit of these new models. Over the next three months, we expect Hoka to continue delighting consumers with compelling product upgrades in the race, road, and trail categories, including Rocket X3, designed for the highest performing athletes to set a new pace. Arahi 8, a highly anticipated redesign of our most popular motion-controlled road running franchise. And Mafate 5, crafted to absorb the trail's impact on the underfoot through unique cushioning. We are very, very confident these new models will resonate well with consumers around the world. I would like to thank and congratulate the entire Hoka team on another incredible year. Looking ahead, the global addressable market for HOKA continues to expand as more people are adopting active lifestyles. We see this as an opportunity to increase the brand's market share through a relentless focus on innovation across broader use cases. We like to say that we are in the early miles of a long distance run for this powerful performance brand with our global markets in different stages of the journey. In the United States, we developed a successful playbook. They build HOKA into a top-performing brand in specialty distribution, drives acquisition in the brand's DTC channel as consumers have the ability to engage with the full breadth of the product assortment, and creates opportunities for new consumers to discover and experience HOKA through select wholesale expansion as brand awareness grows. We continue to see substantial U.S. market share opportunities ahead through control distribution increases, expanded categories, replenishment, and further consumer acquisition in the DTC channel. Hoca is still emerging across international markets with our view that EMEA and China are the brand's two largest direct percentage growth drivers in the near term, aided by distributor contributions in other markets. In EMEA, Hoca is moving up brand rankings with run specialty partners in the UK, Germany, France, and Italy. It's one of the fast-growing athletic footwear brands with key influential sporting good retailers, and is expanding its presence with key lifestyle athletic partners as the brand gains recognition with the consumer. In China, Hokage increasing its partner footprint in key city with strong local operators, resonating as a premium performance brand online with a high degree of full price selling, gaining share in major road races in the region, and altogether building strong community engagement through local investments, partnerships, and athlete sponsorships. Through the strength of these markets, We expect to drive higher proportional international growth in relation to the US as we aim for regional parity, but realize this will take time as HOKA continue to expand in America. Globally, we remain committed to bringing more consumers to the starting line. While the origins of HOKA were primarily rooted in highly technical applications, the global consumer today has found HOKA to be much more than just the most comfortable shoe to wear for running down mountains. Whether running 50 miles, a 5K, a brisk walk around the block, or simply a desire to be more comfortable in everyday life, the applications for HOKA footwear are vast and increasing. Our plan to inspire a growing audience to show up at HOKA's starting line includes winning in road, developing products that allow athletes to run faster and longer with shorter recovery times, dominating the trail, delivering disruptive innovation across different surfaces and terrains, igniting and scaling lifestyle, infusing Hoka technology and comfort into products that authentically resonate with the lifestyle consumer, and accelerating fitness through lateral movement solutions that expand the use cases of our products. Although we have solid presence today in the road and trail categories, we still see much more room to increase Hoka's share. Lifestyle and fitness are still in their global infancy for Hoka, and we believe the brand can begin to establish meaningful market share in the years to come. HOKA has an abundance of opportunity in sight, and our teams are aligned on the path forward to maximize the potential of this exceptional brand for years to come. Moving to UGG, which also delivered another year of outstanding performance. Global revenue in fiscal 25 increased 13% versus last year to $2.5 billion. The UGG brand drove strong growth versus last year across channels and regions, with wholesale revenue increasing 15%, reflecting an elevated presence with key influential retailers that are enhancing the brand's global exposure. DTC revenue rising 11%, driven by continued global gains in consumer acquisitions and retention. International revenue expanding 20%, now representing 39% of global sales, up from 37% last year. And U.S. revenue growing 9%, now totaling just over $1.5 billion. UGG has built a universal love for its products through its iconic design and authentic brand codes that resonate across different categories. This is particularly evident as we look at the brand's fastest growing styles in fiscal 25, which include the Tasman, a shoe slipper hybrid, the Ultra Mini, a low-cut version of our original classic boot, the Lomel, a lifestyle sneaker rich with UGG brand DNA, the Disket, a platform outdoor slipper, and the Gold Star Clog, a slip-on shoe with an adaptable strap for versatile wearing. These styles have a number of important traits that further our conviction in Viag brand's growth initiatives in the year ahead, including recognizable visual identity, year-round wearability, global adoption, and resonance with male consumers. These attributes directly influence our perspective on the brand's future growth sources, which encompass elevating and expanding the global marketplace leaning into international growth aligned with our company's objective to reach 50% of our time, increasing adoption from male consumers, and capturing the 365 opportunity to develop year-round products. We're very pleased with progress made in the early stages of our Refocus Men's Product Initiative. Some recent wins on this front include delivering our first male-focused global campaign in over five years, featuring Post Malone, launching a male-focused collaboration with LA-based designer Reese Cooper, seeding product with influential European footballers, NBA players, and Hollywood A-listers, earning media placement across key publications like GQ Sports, Esquire, and Hypebeast, opening an exclusive men's pop-up at Selfridges in London, and tripling full-price sell-through of men's spring product in China during the fourth quarter, which benefited from new introductions such as the Lolo Mel, Tasman Lug, and Peak Mod. we see tremendous potential to accelerate ag adoption with male consumers and the teams working hard to make this a reality. Much of the ag brand's current and future success is underpinned by increasing 365 wearability. As I mentioned earlier, the progress we're seeing with the brand's faster growing styles is a catalyst for continued year-round adoption. Leveraging consumer insights and close collaboration with our wholesale partners, we're focused on extending the product wins we're seeing with the Tasman franchise, Golden Collection, and Lomel. To put this initiative in perspective, only about a quarter of the UGG brand's revenue comes from our first and fourth fiscal quarters, which align with the brand's spring and summer seasonal product lines. We believe UGG can continue to build these shoulder periods with products that are distinctly UGG, and resonate with consumers year-round. With an increasing addressable market for the AG brand, and with global trends continuing to shift towards casualization, AG is well-positioned to gain share across geographies, categories, and seasons for years to come. We have great confidence that AG will continue to drive growth in the U.S. and further believe that the brand's most significant long-term growth capture will come from international markets. AUG has proven to be highly resilient with consumers in turbulent times, and we believe the brand is well-situated to deliver sustained success over the long run. I want to congratulate and thank the entire team for their delivery of another outstanding year, and I very much look forward to their continued success. With that, I'll hand over to Steve to provide further details on our fourth quarter and full fiscal year 25 results, as well as our initial thoughts on fiscal year 26.