Deckers Outdoor Corporation

Good afternoon and thank you for standing by. Welcome to the Decker's Brands first quarter fiscal 2026 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. 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, VP, Investor Relations and Corporate Planning.

Hello, and thank you everyone for joining us today. On the call is Stefano Carotti, President and Chief Executive Officer, and Steve Fasching, 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 of 1995. All statements made on this call today, other than statements of historical fact, our 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 as a result of 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, including in response to price increases, our ability to respond to the dynamic consumer environment, our ability to achieve our financial outlook, including anticipated revenues, product mix, margins, expenses, inventory levels, promotional activity, anticipated rate 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 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. Please note, as previously disclosed, the company affected a six-for-one board 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 the 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. For example, the company reports comparable direct-to-consumer sales on a constant currency basis for operations that were opened 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.

Thank you, Erin. Good afternoon, and thank you all for joining today's call. Fiscal year 2026 is off to a solid start for DECRS, with HOCA and UGG both outperforming the first quarter expectations we set forth on our year-end call. In the first quarter, Our brands gain market share while maintaining a high degree of full price integrity. Hoka delivered its largest quarter in its history, driving strong sell-throughs during this period of key model transitions. We continue to make disciplined and strategic investments in our brands, and our teams tightly manage spend in other areas of the business to provide flexibility. This all led to Decker's delivering a great first quarter result. highlighted by revenue growing 17 percent versus last year to $965 million, and diluted earnings per share increasing 24 percent to 93 cents. The strength of our business continues to be driven by the remarkable growth in our international markets, with HOKA and UGG both contributing to Decker's 50 percent increase in international revenue while navigating a choppy U.S. consumer environment. Looking at the global marketplace, our first quarter results demonstrate that HOKA and UGG remain two of the best performing and most consumer loved brands in our industry. We believe that Decker's key differentiator is our ability to build premium brands focused on authenticity, innovation, and purpose. Our sustained track record of delivering healthy and profitable growth in challenging environments gives us confidence in navigating current uncertainties. And we believe that our brands and teams will continue to achieve long-term success. Our brands continue to be guided by the principles of consumer first, elevating our products to exceed the expectation of consumers in a more competitive environment. Brand led, leveraging our unique brand codes to deliver a consistent brand experience as we target share gains across categories, seasons, and product applications. Innovation forward, challenging ourselves to create distinct styles with tangible consumer benefits, and globally driven, balancing our business across regions and channels. As we build for the future, we believe these principles, supported by the strength of our fundamentals and operational discipline, will help us lead, adapt, and grow in the rapidly evolving consumer landscape. Steve will provide further details on our first quarter financial results and an update on fiscal year 26. First, however, I'll share more details on brand performance and how we plan to execute the remainder of this year. Starting with HOKA, global revenue in the first quarter increased 20% versus last year to $653 million. HOKA performance came in ahead of our expectations, but the shape of the brand's revenue growth versus last year was aligned with what we had anticipated, as global wholesale increased 30%, driven primarily by the strength of our international regions. with the U.S. also contributing to this growth. And DTC increased 3% globally, with international regions maintaining their momentum, which was partially offset by ongoing pressure in the U.S. online channel as previously forecasted. As you can see, the Hoca brand's international business continues to drive exciting and broad-based growth across all regions in both DTC and wholesale. EMEA contributed the most meaningful incremental dollar growth. as Europe reported record quarterly wholesale reorders, and DTC continued to be fueled by gains in consumer acquisition and retention. The APAC region is also delivering impressive growth, as HOCA further penetrates the market with model brand partner stores, as well as own retail stores in China. In the U.S., HOCA performance was aligned with our expectations. Marketplace dynamics are generally playing out as anticipated amid key franchise upgrades, resulting in the brand experiencing a similar quarter relative to the one prior. From a U.S. wholesale perspective, performance continues to reflect our disciplined approach to marketplace management. HOKA is driving revenue growth from increased selling, additional doors with key partners to satisfy greater in-store demand, and reorders as sell-through in the channel continue to outpace revenue growth. The HOKA brand's ongoing success with the wholesale channel highlights a continued shift in U.S. consumer shopping preferences toward in-person retail experiences. Our observations indicate that while consumers often search for deals online, brick and mortar stores remain the primary venue for full price sales, aligning with the feedback received from our retail partners. Our continued journey to thoughtfully expand wholesale doors plays well into this marketplace dynamic, providing HOKA the opportunity to build share and strengthen partnerships with key customers. On a much smaller scale, we also continue to selectively expand our own retail locations in key cities around the world, as we seek to build direct relationship with consumers and offer experiences that showcase the full breadth of the HOKA brand's product offering. These strategies help HOKA gain visibility and solidify its position as the leading running brand in the US, although they create short-term pressure on DTC due to our limited retail presence and reliance on e-commerce. Over time, we expect our DTC business to benefit from the conversion of newly acquired consumers to loyal repeat purchasers. In addition to the channel dynamics affecting HOKA, we have proactively identified opportunities for improved execution in response to evolving US consumer trends. As a relatively young brand, HOKA remains committed to applying insights gained from our experiences to drive future growth and development. Recognizing some of the execution challenges we've faced over the last six months, we're implementing changes that include adjusting product life cycles to ensure a steady and balanced introduction of new products across key categories, time to coincide with major shopping periods, while providing greater separation between launch dates for our largest franchises, tightening marketplace inventory targets on outgoing models ahead of product updates, and enhancing our HOKA DTC loyalty program to more effectively differentiate the DTC experience. It will take time for the benefits of these actions to meaningfully impact our business, but we're confident they will ultimately improve the consumer experience and facilitate more seamless key franchise updates in the future. With respect to our current franchise upgrades, the consumer signals we're seeing for Bondi, Clifton, and Arahi are quite positive. Bondi and Clifton are driving consistent and healthy sell-through in the global marketplace across channels and segments of distribution, evidenced by representing the top two running franchises in the U.S., according to Sirkana, driving very strong reorders and representing the top sellers among acquired and retained customers in EMEA, and doubling year-over-year volumes in China for the spring-summer 25 season. Building off the success of Clifton and Bondi, The Arahi 8 update has also been a success since launching at the beginning of this month. Early feedback in the U.S. has been very positive on the improved fit and feel, with particularly strong initial selling in the Run Specialty channel and in DTC. EMEA has experienced double-digit weekly sell-throughs since launch, and China has seen significant volume gains on this model versus last year, performing well ahead of plan for the first two weeks of July. While still early, we're very pleased with initial results. The consumer is showing a strong affinity for the updates to the Hoka brand's three largest franchises. We continue to believe there is more work to be done to build the same heat in other franchises across our compelling product assortment. We believe the Hoka brand's point of differentiation to the consumer is its relentless focus on innovation that delivers transformational experiences. To continue delivering the level of innovation consumers have come to expect from HOKA, we've bolstered capabilities across design, innovation, color, and lifestyle, allowing for greater dedicated resources to enhance a broader range of styles. As a result, we're seeing tangible improvements to the product pipeline, which is reflected in the positive retailer response to our Spring-Summer 26 offering. We also expect to significantly enhance our ability to segment the marketplace with greater product ammunition, allowing us to fuel DTC acquisition through differentiation and expand wholesale doors in a controlled manner as we continue to build awareness and broaden demand for the HOKA brand. To that end, you may have seen that just a few weeks ago, HOKA launched its 2025 global brand campaign titled Together We Fly Higher. The campaign is centered around the power of community and the idea that individual progress is fueled by the collective. This is a principle HOKA has always embraced, as we believe the HOKA community has truly been the driving force behind building this transformational brand. Together We Fly Higher celebrates the unifying power of running highlighted in a new Anthem film and an inspiring series of short films that spotlight real stories of runners. We'll amplify this campaign across retail stores, connected TV, out of home, digital, and paid social across HOKA-affiliated social media platforms. Personally, I'm super excited about this campaign. I feel the brand has found its voice, and this is the strongest HOKA campaign to date. Overall, fiscal 26 is off to a very good start for HOKA. Our three largest franchises are performing strongly with consumers, and we're expanding the brand's global reach, introducing HOKA footwear to a broader customer base. Shifting to UGG, global revenue in the first quarter increased 19% versus last year to $265 billion. From a channel perspective, UGG outperformed wholesale as wholesale increased 30% versus last year with consistent growth across the U.S. and international regions. And DTC decreased 1% with similar regional dynamics relative to HOCA where we're seeing pressure in the U.S. related to consumer sentiment and in-store shopping preferences offset by continuous strong international growth momentum. The main drivers of our growth this quarter came from our focus areas. International drove the bulk of growth for UGG this quarter, with EMEA and China contributing the largest year-over-year gains. Men's footwear grew at nearly twice the overall brand rate, and sandal and sneaker styles drove most of the growth, reflecting the success of UGG's 365 initiative. Although Q1 is primarily a selling quarter for the brand, we're encouraged by the robust start in wholesale, a positive early indicator of consumer interest as partners look to accelerate shipments. Our products continue to gain relevance during transitional periods, reflecting the brand's ongoing success in developing collections that align with consumer preferences. Furthermore, we're particularly optimistic about the consistency of what has been working in key regions around the world. VIAG team has effectively implemented a brand-led global marketplace strategy, delivering elevated experiences through distinctive products around the world. VIAG's brand focus on telling fewer, more targeted stories to amplify launches is demonstrating measurable success. The consumer response to the peak mod style is a perfect example of the team's efforts in driving positive results. The Peak Mod is a completely new men's specific clog that takes design cues from popular UGG styles. It initially self-launched in March on the heels of our first ever men's focus spring marketing campaign. It was then featured as part of our seasonal icons we imagine marketing campaign. This versatile style quickly became a male consumer favorite across the U.S., EMEA, and China, even earning placement in major fashion publications as a go-to style for more and more of their attire. There are four key reasons for the success infusing brand codes into a versatile design, leveraging consumer insights early and frequently continue to edit the assortment to allow for more focused seasonal stories and pursuing a long term strategy to acquire more male consumers with respect to our three sixty five initiative. UGG achieved strong global growth within the sandal and sneaker segments through the following. The Golden Collection, which generated significant consumer interest, particularly in the new Golden Star Glide and Villa styles that commanded high retail prices compared to existing silhouettes. And the Lomel franchise, which effectively blends the distinctive UGG aesthetic and comfort with adaptable wearability. As we move into late summer and early fall, despite ongoing concerns affecting the U.S. consumer sentiment, Ziag brand is strategically positioned within the global marketplace to achieve growth in the second half of calendar year 25. To provide more context, we've operated with lean marketplace inventory for the Tasman franchise, maintaining scarcity ahead of its core selling season. In addition, UGG will be launching its iconic design campaign to build heat and generate buzz for versatile footwear in advance for UGG season, with activation planned in key cities around the world. UGG begins this transitional period with three key product stories leveraging its iconic mustard seed colorway on key styles, including the Lomel sneaker, Ike Brake Clog, and all-new Classic Micro. Early feedback on all three styles is very positive, and we anticipate more exciting ag launches this fall. The Viette team executed the first quarter very well, reinforcing our confidence in achieving another strong year for this powerful brand. With that, I'll now hand it over to Steve to provide further details on our first quarter results as well as our updated thoughts around fiscal year 2026.