Q4 2026 Earnings Call Transcript

Please standby, your meeting is about to begin. Good afternoon, everyone. Welcome to the Deckers Brands Fourth Quarter Fiscal 26 Earnings 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 your questions. If anyone has any difficulties hearing today's conference call, please press And I would like to remind everyone that this conference call is being recorded. I would now like to turn the call over to Ms. Erinn Kohler, Vice President, Investor Relations and Corporate Planning.

Please go ahead, ma'am.

Hello, and thank you, everyone, for joining us today. On the call is Stefano Caroti, President and Chief Executive Officer and Steven J. 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 2000. All statements made on this call today, other than statements of historical fact, are forward looking statements and include statements regarding our ability to drive long term value respond to the dynamic macroeconomic environment and the impacts on our business and operating results, including as a result of changes to global trade policy, tariffs, pricing actions and mitigation strategies and fluctuations in foreign currency exchange rates, geopolitical conflicts including the ongoing Middle East conflict and related supply chain logistics and cost impacts 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 acquire new consumers and gain share our ability to achieve our financial outlook and multiyear framework 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 potential share repurchases. 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 such as foreign exchange rate fluctuation, and changes to trade policies, that may cause our actual results to differ materially from any results predicted assumed or implied by the forward looking statements. Company has explained some of these risks and uncertainties in its SEC filings, including in the Risk Factors 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 as well as free cash flow. 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 useful supplemental indicators of its operating performance because they exclude items that are unrelated to, may not be indicative of its core operating results. Additionally, free cash flow is defined as net cash provided by operating activities for a particular period, less capital expenditures made during that same period. The company believes free cash flow is a useful supplemental measure of liquidity as it reflects the cash generated from its operations after investments required to support the strategic growth of the business.

Please review our earnings release published today for additional information regarding our non GAAP financial measures. With that, I will now turn it over to Stefano.

Thank you, Erinn. Good afternoon and thank you all for joining today's call. We are closing fiscal 26 with exceptional results strong momentum and deep conviction in the durability of our model and the demand for our consumer loved products. Over the past year, our teams executed with discipline, by innovating our product pipelines, building brand heat, and evolving the marketplace.

Collectively, these actions once again translated into outstanding financial results in a dynamic environment. We have influential globally relevant brands led by UGG and HOKA. Each with distinctive product propositions. Deep consumer connections, meaningful runways for growth and expansion across head to toe categories channels and regions.

Built on disruptive category defining innovation, HOKA has a unique opportunity to attract an even broader global consumer base through cutting edge performance technologies while extending into a growing lifestyle audience. Creating a compelling pathway for continued growth. UGG has inspired generations of consumers through the evolution of iconic designs that transcend silhouettes and seasons. Positioning the brand for meaningful long term growth.

Our growth strategy remains clear and consistent. Build and sustain category leadership for UGG and Hoka excite consumers and captivate a growing global audience prioritize high quality full price sell through and scale market share over the long term. In addition, we have proven our ability to create shareholder value driven by authentic innovative product that fuels the continued growth of our brands and is further supported by industry leading profitability that enables us to keep investing in the opportunities ahead. With that, I will start with highlights from the quarter and full fiscal year, recap brand performance,, provide further perspective around our longer term growth vision.

In the fourth quarter, HOKA delivered its largest quarter ever. Driven by new products, in road and trail, and robust global DTC growth. Including continued healthy gains in the U.S. complemented by ongoing wholesale momentum worldwide. The UGG brand strong performance was fueled by seasonal extensions across both iconic and emerging franchises primarily driven by strength in global DTC.

Both brands contributed to expanded gross margins. Despite tariff headwinds as high levels of full price sell through underscored our continued focus on quality sales. This outstanding fourth quarter performance contributed to another record year for Deckers. Across both revenue and earnings.

For the full fiscal year, total Deckers revenue increased 10% versus last year to nearly $5.5 billion HOKA and UGG together added more than $5 billion of revenue over the prior year record highs. Increasing 16% and 8% respectively. We maintain high gross margins and investment discipline, delivering best in class operating margins above 23%. And we drove record earnings per share to $7.02, reflecting an 11% increase versus last year.

These results further demonstrate the momentum of our brands and the continued effectiveness of our marketplace execution. Fiscal 2026 strengthened our organization and fortified our foundation for future growth. Now let's dive into brand highlights. Starting with HOKA, our fastest growing brand.

Global revenue in the full fiscal year 2026 increased 16% over last year to nearly $2.6 billion. Hoka growth was fueled by greater consumer adoption of its leading performance products. With more people choosing the brand for various wearing occasions. HOKA continues to attract a wider audience through advancing product offerings that enhance the on foot experience.

Offering unparalleled combination of performance and comfort. Building awareness across the globe by investing in high impact brand marketing fostering consumer loyalty by developing direct to consumer membership programs and exclusive experiences that build the HOKA community and expanding in store visibility through collaboration with strategic wholesale partners. In addition, the HOKA brand fiscal 26 product upgrade significantly boosted our global reach and appeal. For the year, growth primarily came from consumer loved upgrades to our most popular road running franchises, Bondi and Clifton.

Newly developed H frame technology and updated design aesthetic in our key stability models, Arahi and Gavyota, advancements in foam midsole geometry and meta rocker technology in our fastest shoes, Cielo, ROCCAT and MAC. And expanded dimensions in the Mafate franchise across performance, and lifestyle. Our franchises function as scalable platforms representing families of products rather than single styles. Allowing us to extend across performance, lifestyle tiers to deepen consumer engagement.

There is significant equity in our most popular franchises which is why we have placed greater emphasis on developing product families that can include multiple styles tiered across categories. The Mafate and Bondi franchises are 2 great examples of the successful strategy. The Mafate franchise saw a great response to the launch of its peak performance version, Mafate X. Which drove a halo of demand to both the trail workhorse, Mafate V and the more lifestyle focused Mafate Speed 2. The Bondi franchise also demonstrated notable success.

With the Bondi 9 excelling in performance channels, while the Bondi 7 reintroduced this February and positioned in key prominent lifestyle destinations has achieved robust sell through following its release. The ongoing development of franchise families supports the HOKA brand's premium positioning and creates additional opportunities for segmentation and differentiation throughout the global marketplace. By the end of fiscal 26, 6 HOKA franchise families had generated over $100 million of annual revenue and 3 more are close to reaching that milestone. Since January 2025, all 9 of these top franchises have now been updated.

We also have launched new complementary products. In the seasons ahead, we intend to build on this momentum. Enhancing and elevating how we communicate HOKA product innovation to consumers through refined design principles, standardized technology branding and sharper franchise positioning that leverages brand equity across category, experiences. With this polished approach to product creation, we believe HOKA is well positioned to accelerate the pace of performance to establish new standards capture the imagination and loyalty of the next generation of athletes and maintain deep meaningful connections with our consumers, ensuring their needs and aspirations remain at the heart of everything we create across footwear, apparel and accessories.

You will see this evolution begin to take shape this fall. When we augment the franchise through the introductions of 11, which introduces a premium engineered mesh upper with a streamlined aesthetic crafted to extend the reach of our most beloved franchise, and the all new Clifton Pro, our pinnacle offering in the franchise with enhanced technology, adding resilience and efficiency to the signature Clifton ride. This represents the first of several HOKA launches in the product pipeline. Each designed to segment the most beloved franchises by capitalizing on existing franchise equity.

HOKA performs best with consumers who understand its differentiated value proposition. Which is why we continue to invest in brand marketing. These efforts are making an impact as HOKA brand recognition experienced notable growth over the past year. According to our proprietary brand awareness survey, in the United States, HOKA awareness is now approximately 60%.

Reflecting an increase from 50% during the same period last year. In international markets, HOKA brand awareness now average approximately 40%, up from roughly 30% in the previous year. This increased awareness represents important progress in growing the HOKA brand's audience. Which we expect to continue acquiring through our focus to build great product and expand the brand's in store presence.

The HOKA brand's channel performance in fiscal 26 reflected our strategic evolution of the global marketplace. With wholesale increasing 18% driven by strong full price sell through and healthy reorders, DTC growing 12% reflecting second half acceleration. International regions delivered robust DTC growth across the fiscal year. While improved second half performance of the U.S.

DTC business was driven by increased consumer awareness and adoption of key franchise updates. Momentum for our enhanced HOKA membership program, including new benefits such as early exclusive product access, driving strong sign ups since the August 2025 update, strong product storytelling around Gaviota, Speer and Mach, highlighting full price newness and lower marketplace inventory related to better management of outgoing models. Some regional highlights from the year include maintaining top brand share in U. S.

Performance Road and Trail Footwear above $140 and becoming a top 3 performance running brand in France Italy and The UK, both according to Circana. Furthermore, we also grew our premium brand presence in China, with strong full price performance across existing and new retail and partner locations contributing to market share gains. These highlights reflect the power of our brand and the strong partnerships HOKA has established throughout the global marketplace. We remain committed to the strategic positioning of the HOKA brand with our trusted wholesale and distribution partners.

Regardless of whether we are expanding or maintaining doors with individual retailers, sustaining HOKA performance and fostering mutually beneficial partnerships are essential to our ongoing collective success. Based on the growing global demand we are seeing for HOKA, we plan to continue selectively expanding wholesale distribution in both The U. S. International regions.

In fiscal 27, including a few thoughtfully chosen tests with new partners this fall. Door increases for HOKA will be primarily focused on high quality sporting goods and athletic specialty retailers. As the brand's presence remains relatively underpenetrated in these segments. As always, our planned door growth will be controlled with a focus on maintaining a pooled model of demand to build market share through healthy full price sell through.

As part of our effort to achieve a balanced channel mix over time, we will also continue selectively expanding the HOKA brand retail store presence with a focus on key cities that traditionally amplify the brand's DTC performance online as well. I want to congratulate the entire HOKA team on delivering another great year. Together, we are well poised to further elevate the HOKA brand and shape its bright future as a leading performance brand. Moving to UGG, which once again drove growth above expectations delivering another record breaking year.

Global UGG revenue in fiscal year 26 increased 8% versus last year to $2.7 billion. UGG's performance was primarily driven by more diversified product mix and broader consumer engagement with continued global market share gains. As our iconic franchise families anchored the brand's leadership in quality and craftsmanship. 65 strategy continued to gain traction with year end products. Consumers increasingly engage in new models that resonate with authentic brand codes and the brand continues to attract new consumer cohorts including higher engagement from a male audience.

Cementing the UGG brand expanded relevance and versatility, starts with the right product. Our iconic UGG franchise families continue to deliver foundational growth for the brand through incremental diversification, our product teams have done a fantastic job to continue to evolve the brand's category appeal through new collections deeply rooted in the brand codes. The Tasman remains our most popular franchise boosted by complementary styles like the Tazelle and seasonal newness such as the Love Pack. Our iconic classic boot franchise was refreshed through the addition of the new Classic Micro In Heritage Slippers, we made best sellers as UGG remains the go to brand in this category.

We are experiencing deeper consumer engagement with core franchise families like these. Including with our top selling apparel item, the Tasman Hoodie. As well as with our newer footwear styles, proving the demand of UGG as a multi category and multi seasonal brand. This is increasingly evident with our sneakers and sandals offering.

Success with sneakers and sandals has come primarily through the development of the Lowmel franchise and the Golden collection, which accounted for more than half of the brand's growth in fiscal year 26. We continue to augment these collections through seasonal newness. Most recently, with the Minimal and Golden Gaze styles. These fresh silhouettes added new dimensions to each franchise and both have resonated well across the global marketplace since launching during the fourth quarter. In addition to modernized styles within multi year collections, aggregates driven demand with all new silhouettes that leverage the brand's distinctive product DNA.

Earlier this year, we highlighted the success of ballet inspired newness with Zora and Quill. Most recently, the Otzo Clog showcased our momentum in both innovation and in strengthening the brand's appeal to men. Supported by focused product storytelling, a locally relevant influencer seating, the Otzo, a sleek all gender clog crafted with premium materials debuted in February and delivered strong sell throughs across global regions, particularly among new male consumers. The UGG brand is gaining meaningful traction with male consumers.

Men's styles accounted for more than 20% of the brand's global growth in fiscal 26. With progress across all regions. As North America's exclusive collaboration with menswear brand Hidden sold out very rapidly, attracting a predominantly new and younger consumer base to the brand. With over half of the buyers new to the brand between the ages of 18 and 34. EMEA delivered the highest incremental revenue growth in men's products, reflecting exciting momentum and significant opportunity given its relatively lower men's penetration. And China showed broad adoption across various categories through full price sales of new products like weather hybrids, Otzo Clog and the Minimel sneaker.

From a channel perspective, UGG revenue growth versus the prior year primarily driven by wholesale, which increased 13% for the full fiscal year. The brand benefited from strong early demand in the year that led to higher wholesale channel replenishment, increased allocations of key styles, and compelling new product driving higher holiday demand. For fiscal 26, DTC grew 4% over last year with growth weighted towards the second half of the year. The channel experienced temporary pressure early on in the year from improved wholesale in stock positions, reflecting our strategic increase of product allocations.

Overall, growth was much more balanced in the second half. Looking ahead to fiscal 27, we expect UGG to maintain a balanced business across channels, enhance its presence across the global marketplace and continue making progress to develop the 65 and men's opportunities. A big congratulations to the Global UGG team on another outstanding year. Maintaining leadership in the premium lifestyle space and increasing relevance across various product categories.

As I reflect on the past couple of years, we have made significant progress to strengthen our teams, our brands, and our platform for future growth. Our brands are generating increasing levels of consumer interest through distinct and innovative products and operating in growing segments of the global marketplace with expanding category and distribution opportunities. Looking ahead, our long term strategy provides a clear vision for years. While Steve will provide specific guidance for fiscal year 27 later in the call, I would like to provide further insight into Deckers' multiyear growth framework.

Highlighting our continued strategic focus and belief in our distinctive brands. Including our vision to further elevate the HOKA brand's positioning as a leading performance brand through disruptive innovation and enhanced lifestyle appeal, and drive UGG momentum forward as we evolve iconic franchises to expand category adoption while cementing the brand's position as a leading premium lifestyle brand. Given the significant opportunity ahead across categories, channels and geographies, all supported by our strong marketplace execution, we remain highly confident in our brand portfolio's ability to grow mid single digits annually.

Over this period of time, we anticipate the composition of our revenue growth to be consistent with what we have been communicating with DTC growing faster than the wholesale channel and international growing faster than the U.S. region. To support our longer term growth outlook, we will focus our investments on category defining product innovation, brand marketing including greater localized regional content,, DTC capabilities that drive lifetime value. In technology advancements including the responsible use of AI designed to support gains and productivity efficiency and consumer acquisition and connectivity.

Taken altogether, these investments are designed to further build brand heat deepen consumer engagement and enhance our industry leading operations, positioning Deckers to deliver operating expense leverage beyond this fiscal year. As such, our fiscal 28 to 30 framework incorporates maintaining strong operating margins through industry leading full price selling, disciplined marketplace execution and realizes the benefits of our multi year investments. And with today's announcements of our Board's approval of an additional share repurchase authorization, This demonstrates the Board's confidence in a multiyear framework.

Deckers disciplined operational execution, paired with this increased authorization for sustained shareholder capital returns through share repurchases, reinforced by superior balance sheet and robust expected free cash flow generation is expected to drive low double digit annual earnings per share growth for fiscal year 2028 to 2020. Building on our proven track record, this framework embodies our durable multi year, multi brand growth algorithm. Positioning Deckers to deliver sustained long term value for shareholders. With that, I will hand over to Steven to provide further details on our fourth quarter and full fiscal year 26 results as well as our outlook for fiscal year 27.

Thanks, Stefano. Good afternoon, everyone. Deckers fiscal year 26 performance was exceptional. HOKA and UGG delivered another year of sequential revenue growth underscoring growing global demand across both of these amazing brands and their premium products.

Our focused execution in the global market yielded high levels of full price selling to deliver strong gross margins. Which combined with our investment discipline and commitment to share repurchase resulted in best in class operating margins and another record earnings per share. HOKA continues to build upon its strong foundation by growing global awareness and continuing to gain market share with performance runners while also expanding demand with consumers who are looking for a more technical and comfortable footwear for a variety of use cases. UGG continues to build share across genders generations and geographies through the expansion of iconic franchises, product newness infused with unique brand codes and our 65 strategy, which all combine to drive high levels of demand and consumer adoption across a variety of distinctive product franchises.

Now let's get into the details of our fourth quarter and full fiscal year 26 results, and then I will provide our initial outlook on fiscal year 27. For the fourth quarter, revenue came in at $1.12 billion, representing an increase of 10% versus the prior year. Growth in the quarter was driven by HOKA and UGG, which increased 15, 9%, respectively. HOKA delivered revenue of $671 million, representing the largest quarter in the brand's history. DTC was the fastest growing channel in the quarter, increasing 18% versus last year, with wholesale increasing 13%.

Across both channels, revenue growth reflected continued strong momentum from international regions and positive contributions in the U.S. UGG delivered revenue of $409 million which was above our expectation as the brand benefited from extended selling of fall products primarily in the DTC channel. Gross margin in the fourth quarter was 57.6%, up 90 basis points versus the prior year period primarily due to higher levels of full price selling across UGG and HOKA, favorable foreign currency exchange rates, reduced freight costs and a slight benefit from favorable product and channel mix with partial offsets from a net headwind of tariffss.

Gross margin was well above our implied fourth quarter expectations primarily due to higher full price selling greater freight savings, and a slightly larger benefit from product mix favorability. SG and A for the quarter was $488 million representing 43.6% of revenue, aligned with our expectation and taking advantage of our stronger FY 2026 performance. This included shifting certain expenses earlier to provide a stronger setup as we begin fiscal year 27. This earlier and higher spend primarily related to accelerating top of the funnel marketing to build brand awareness, advanced technology and also reflected unfavorable impacts from foreign currency exchange rate remeasurement.

These results drove diluted earnings per share of $0.96, which compares to $1 in the prior year period. Our fourth quarter performance marked a strong close to the year. For the full fiscal year 2026, we delivered record revenue of $5.47 billion, which increased 10% versus last year. As compared to last year revenue growth was driven by HOKA adding an incremental $354 million, totaling $2.59 billion in annual revenue with double digit percentage gains across both DTC and wholesale.

And UGG increasing $207 million, totaling $2.74 billion of annual revenue led by the global strength of wholesale as well as an increase in DTC. Gross margin for the year was 57.7%, down 20 basis points versus last year. The net headwind of tariffs in the fiscal year accounted for approximately 80 basis points of decline year over year. With underlying margin expansion offsetting approximately 60 basis points largely related to favorable product mix and lower freight costs.

Product mix favorability continues to be driven by successful scaling of our highest margin products across UGG and HOKA. SG and A dollar spend for the year was $1.89 billion, up 11% versus the prior year's $1.71 billion. SG&A represented 34.6% of revenue, which is slightly above last year's rate of 34.2%. Key areas of increased investment in fiscal year 26 included higher marketing spend across HOKA and UGG, to fuel brand initiatives, increased rent primarily from international Hoka store openings hiring additional talent primarily to fuel future HOKA growth opportunities, and strategic technology investments.

We held our unallocated enterprise and shared brand expenses. Roughly flat versus the prior year, which created leverage to allow for strategic investments that support the long term growth of our brands. Our exceptional levels of profitability reflect Deckers' unique ability to play offense and invest behind our brands while remaining disciplined across other areas of the organization. Our full fiscal year 26 operating margin was 23.1%, inclusive of our targeted investments to support long term growth opportunities across our brands.

This result came in above our expectation primarily due to gross margin favorability in the fourth quarter as our brands delivered high levels of full price selling. For the full year, our effective tax rate was 22.8%, which compares to last year's rate of 22.3%. During the fourth quarter, we repurchased approximately $262 million worth of shares at a weighted average price per share of $105.61. For the entire fiscal year 2026, we repurchased $1.075 billion worth of shares at a weighted average price per share of $102.04. Our record performance coupled with a lower share count that resulted from our highest ever annual share repurchase culminated in a record diluted earnings per share of $7.02 representing an 11% increase over last year's $6.33. Turning to our balance sheet.

At 03/31/2026, we ended the year with $1.9 billion of cash and equivalents inclusive of repurchasing nearly $1.1 billion worth of shares in the year, driven by 3 consecutive years of delivering a free cash flow above $900 million. Inventory, inclusive of tariffs paid on inventory received this year, was $487 million, down 2% versus the same point in time last year and during the period we had no outstanding filings. For the third consecutive year, our results returned invested capital above 35%. Now moving to our outlook.

For the full fiscal year 2027, we expect revenue in the range of $5.86 billion to $5.91 billion, reflecting high single digit growth versus the prior year, with HOKA increasing low double digits versus the prior year reflecting a higher DTC growth rate relative to wholesale And UGG increasing mid single digits with balanced growth across channels. Gross margin is expected to be approximately 56.5%. Which is down versus last year primarily due to higher freight costs from rising transportation costs and shipping disruption related to the ongoing Middle East conflict and increased input costs related to material upgrades and inflationary pressures.

Our guidance assumes the current tariff rate of 10% remaining in effect for the duration of the fiscal year. With inventory expected to be sold in the first half at higher IEFA tariff rates already paid And while we are pursuing government refunds, our guidance does not include an assumed refund amount. SG and A is expected to be approximately 35% of revenue as we reinforce our foundation and support key growth initiatives. Increased investments are primarily focused on marketing to fuel the long term success of our leading brands, people as we anniversary new hires supporting critical long term growth opportunities technology to facilitate effective and efficient data utilization, and DTC including the strategic expansion of the HOKA brand's global retail presence.

We believe these investments will position Deckers to begin delivering operating expense leverage in fiscal year 28 and beyond. As reflected in the framework Stefano provided earlier in the call. We expect an operating margin of approximately 21.5% reflecting our commitment to deliver top tier levels of profitability while continuing to invest in the long term growth of our brands. We are projecting an effective tax rate of approximately 23%.

This all results in an expected diluted earnings per share in the range of $7.30 to $7.45 which includes an expectation to repurchase an amount equivalent to at least 80% of our free cash flow. Capital expenditures are expected to be in the range of $145 million to $155 million, which is above last year primarily due to bolstering our technology infrastructure adding select global focus stores and refreshing some UGG stores. Our outlook reflects a deliberate strategy to prioritize long term growth and brand strength. We have a high degree of confidence in our outlook, but we also recognize challenges in the current macroeconomic environment.

While difficult to determine what these impacts may be, we remain focused on executing our objectives. Including the full year guidance I just walked through and the newly introduced multi year framework, that Stefano outlined earlier in the call. And while we want to maintain focus on our long term opportunities, and given we are halfway through our first quarter, there are a few certain unique timing dynamics to consider for the current quarter. Our anticipated performance for the quarter ending June 30 includes consolidated revenue up approximately 5% to deliver our first ever $1 billion quarter ending June 30, With HOKA up high single digits, primarily from DTC growth.

Wholesale timing dynamics to consider include last year's earlier shipments related to the EMEA warehouse transition delayed distributor shipments in APAC moving out of this quarter and preparation of the marketplace for the Clifton launch in July. As we reduce shipments of the outgoing model leading up to the release. UGG is expected to grow mid single digits. Aligned with our full year guide.

Gross margin is expected to be down versus last year. Primarily due to the wraparound net impact of higher tariffs on U. S. Goods, with slight positive offsets from favorable channel mix and currency.

SG and A is expected to grow about double the rate of revenue in the quarter reflecting marketing investments to support brand initiatives, lapping favorable timing elements in the prior year, including FX remeasurement and annualization of new hires in the prior year. With EPS expected to be in the range of $0.82 to $0.87 With this first quarter context in mind, we want to reiterate that growth may not be linear across quarters. But our conviction in the broader outlook reflects our belief in our long term strategy powerful portfolio and operating model and proven ability to deliver results over many years.

Specific to the last 3 fiscal years, Deckers has grown revenue at a compound annual rate of 15%. And earnings per share has more than doubled. With the framework Stefano shared, anticipate earnings per share growing low double digits on a compounded annual basis for our fiscal years 2027 to 2030. Above the expected high single digit revenue CAGR over the same time period. This multi year growth framework is among the best in our industry and it is on top of 9 consecutive fiscal years of revenue and earnings growth.

Deckers has a very bright future ahead, and we look forward to executing on our plans to deliver outstanding results for years to come. We will continue to prioritize the long term health of our amazing brands execute a pull model of demand and high full price sell through, maintain investment discipline without sacrificing the long term opportunities for our brands, and preserve the strength and optionality of our pristine balance sheet. With that, I will hand the call back to Stefano for his closing remarks. Thanks, everyone.

Thank you, Steven. Fiscal year 26 marked another record setting performance for Deckers. Importantly, we achieved this primarily through full price business disciplined inventory management. Looking ahead to fiscal 27, our outlook remains strong.

With steady and profitable revenue growth anticipated as we continue to invest in and strengthen our brands. In addition, we have outlined a multi year framework through our fiscal year 2030, which includes annual total company revenue growth in the high single digit range. With Hawker expected to achieve low double digit growth and now targeting mid single digit increases. We will continue to operate the global marketplace with full price execution and invest with discipline to maintain top tier levels of operating margins.

And with continued capital returns through our increased share repurchase authorization, earnings per share are expected to grow low double digits annually in fiscal 28 fiscal 30. We have established a very solid foundation for continued growth. Our long term strategy is clear and well defined. And a highly skilled team is already executing on our priorities. I want to express my gratitude to all Deckers employees for their dedication and hard work in building our company into what it is today.

I look forward to collaborating with all of you as we shape the future together. You all for joining today's call and thank you to all of our stakeholders for your continued support. I will now turn the call over to the operator for your questions.

Thank you, Mr. Caroti. Ladies and gentlemen, at this time, if you do have any questions, please press 1 on your telephone keypad. The interest of time and to get to as many questions as possible, we ask that you please limit yourself to 1 question and 1 follow-up. Go first this afternoon to Laurent Vasilescu at BNP Paribas.

Analyst (Laurent Vasilescu): Good afternoon. Thank you very much for taking my question. I want to ask first a near term question and then a longer term question about the multiyear framework. But near term, Steven, Stefano, you usually do not comment about the quarter out. I appreciate you giving us some color around HOKA up high single digits. It sounds like there were earlier timing shipments moves around the launches. Maybe can you help us for the audience, the confidence around low double digit growth for HOKA? For the full year. How do we think about that 1H versus 2H? In terms of that framework?

Yes. Sure, Laurent. I will take that, the first 1. So clearly, we are confident on the year with high single digits total company, low double digits HOKA. And as I said kind of in our commentary on Q1, there are dynamics in Q1 this year.

That we also have to look at what happened last year. And so that is not indicative of a normal kind of business. that is just some of the dynamics that happened last year. Compared to what we are having this year with differences in timing of launches, differences in closeout of products. So it is not an of a change in business.

We are as confident as ever in terms of the growth that we can achieve. And then recall last year, we did have a timing difference related to moving more inventory in Q1 with our 3PL conversion in Europe. So we were shipping more in Europe in that first quarter to accommodate a transition with our 3PL move. So short answer to your question, extremely confident.

Good trends. We are seeing positive trends across the globe and confident in delivering the year.

Yes, let me add something to that. Laurent. Our wholesale shipment timing in Q1 also reflects setting up the clear marketplace for the launch of Clifton. Clifton Pro in July.

Analyst (Laurent Vasilescu): Super helpful. And then nice to see that the multiyear framework provided today. As we think about long term HOKA growth of low double digits, maybe can you help us frame it in terms of U. S. International? Should we assume mid single digits for U.S. and mid-teens international. And then maybe can you just provide a little bit more color around how you think about gross margins versus SG and A margins overall? For the full multiyear and then sorry, Steven, I got to ask you this question. You tend to have a you tend to set conservative guidance Does that apply to this multiyear framework? Thank you so much.

Laurent, let me kind of go through some of the questions. So in terms of you are thinking about the breakout between domestic and international in terms of growth, think you are in line with how we are looking at it. As we have said, international will continue to grow at a faster pace than The U. S.

The U. S. Will continue to grow. Just international will continue to grow at a faster pace.

The second question was gross margin. So where we are seeing some of the pressure yes, some of the pressure on the gross margin in the year, really has to do with inflation and higher material costs. So other than that, we are not assuming a significant change in the movement of the gross margin on the year. Just some pressures that we are seeing currently with input costs going higher as well as us using upgraded material costs.

And so that is contributing to a little bit of a hit on the gross margins. And then the last bit on multiyear. So yes, I think to your point, we have been viewed as conservative guiders As we are looking out over the next few years, we are leaning into it, right? This I would not call this a conservative guide as we look out to FY 2030. But given the strength and the confidence that we have seen and the performance of our brands over the 2 years, it is giving us confidence in our ability to do this.

Our brands are in an incredible position. But to your point, we are leaning in more than we have in the past. Wonderful. Thank you very much and best of luck.

Sure. Thanks, Laurent.

We will go next now to Paul Lejuez with Citi.

Analyst (Paul Lejuez): Hey, Vince. Just if you could talk about your HOKA order books. And your visibility for the brand to grow significantly in wholesale? This year? And also specifically how you think about U. S. Versus international within that HOKA wholesale business. And if you could, you would just touch on performance of lifestyle, that offering, what you have got planned in terms of the lifestyle initiatives, this year? And how important is that to achieving not only this year's plan, but your multiyear goals for that HOKA business to grow low double digits?

Yes. So on the framework as Steven said, we anticipate mid single digit growth. In The U. S.

For HOKA and double digit growth internationally. In terms of order book, we have a strong healthy order book. Our innovation stories across road and trail have been very well received by retail partners. We now have a very clear design distinction between our max silo glide and our speed silo fly.

And this pro concept that we are introducing with CliftonPro is going to expand our reach, and attract new audiences. And all this on the back of strong spring sell throughs, across new models, Gaviota's Mach Speedgoat 7, are all performing well in the marketplace. Regarding lifestyle, we are starting to see green shoots in our business with Mafate SP 2, Bondi 7 leading the charge. And this is this is very encouraging for us given the potential we see in this category.

And then I think, Paul, just a little bit back on to the order book. Strong performance always drives strong order book. And coming off of a few years now where we have had success, our wholesale partners have had success it really does help form the order book, and we see strong earlier signals. So again, some of our signals around the confidence that we are seeing around the business with the success that we are having with our wholesale partners and the success that they are seeing with the sell through of our product at full price selling.

Those are all things that give us confidence and help us drive that order book.

Analyst (Paul Lejuez): Is there any way to quantify the order book that you are seeing and or maybe sell throughs at retail that might be an indication of future orders?

Yes. We do not break that out in terms of numbers. Other than what we have it clearly. We just we are not providing it in terms of numbers.

What I can say is that clearly, the gross margin that you have seen us deliver, it is an indication of the strong sell through of our product. So our product is selling through very well. Our wholesale partners are having success with it. And the other indicator of how strong that is, is inventory levels.

Even with the growth in the business, we are delivering lower inventory levels on our balance sheet as well as what our wholesale partners have in their storerooms. So those are really strong indicators of the health of our brand the strong sell through that we are seeing and again then another strong set up for order book.

Analyst (Paul Lejuez): Thank you. Good luck. Alright.

Thank you. Go next now to Jay Sole with UBS.

Analyst (Jay Sole): Super. Thank you so much. Stefano, 2 questions for me. 1 on UGG, if we think about the multiyear framework you just gave, how much of the growth do you think will come from, say, winter business, the classic business versus some of the newer stuff, spring, summer, fall, as you have made the brand more of a 12 month brand. How do you see the mix of business evolving in those 2 segments? that is the first part of the question. Then the other part the multiyear framework relative to HOKA, given that you are talking about 6 franchises now with over $100 million in revenue and 3 that are close to $100 million. Lifestyle starting to see some green shoots, maybe some innovation coming next year. Do you see opportunity to open more HOKA stores? Is that part of the plan as you look out through 2030? What kind of growth driver could more HOKA stores be given the expanding assortment looking out over a multiyear period?

Those are the 2 questions. Let me start with that 1, then I will tackle on it. Yes, we plan to expand our HOKA retail footprint. In proportion with the growth of the brand.

We are focusing on major cities, recently opened stores in Berlin, Milan, Chamonix, the birthplace of the brand. We continue to build and open stores in Asia, especially in China. We anticipate 25 store openings per annum, which is what we have been doing over the past couple of years. Regarding Ogg, yes.

Ogg, to your point, has become a year round premium lifestyle brand, and it is now competing across multiple categories, right, not just boots. We expect the growth to continue to we intend to grow faster in springsummer than in fallwinter. Our sneakers are performing super well. Our number 3 product in the marketplace was the Lowmel sneaker this past year, a sandal that performed super well.

Clogs, slippers, our apparel and accessories also give us a reason to hope that we will continue to drive growth in textiles. The team is done an incredible job in keeping this brand relevant. They have seasonalized the business, and really increasing wear occasions. So newness has been working.

The AutoClog, the Minimal sneaker, the Zora, Ballet Flat, the Quill sneakerina,, all performing well across the global marketplace. So this gives us reason to hope that we will be able to continue to grow our 365 approach and continue to grow springsummer at a faster pace than fallwinter. Got it. Okay.

Thank you so much.

We will go next now to Blake Anderson with Jefferies.

I wanted to first ask about the medium term financial frameworks appreciate all the color there. Steven, on the operating margin in the low 20s, it seemed like if we take the midpoint of that, it is kind of flat versus what you expect this year at 21.5. Maybe I missed it earlier, but would be curious kind of any commentary on how you are thinking about gross margin there versus SG and A? Especially given the commentary previously on strong your levels of full price selling are that you have seen and then some of the freight impacts you are seeing this year. So kind of curious how you see the up versus down arrows for gross margin versus SG and A over the next few years?

Yes. Thanks, Blake. Good question. In terms of how we are looking at the very similar to your point to how we are seeing the setup of this year.

So continued driving along those lines. I did comment in the prepared remarks about an opportunity to achieve some level of operating expense leverage And we have the ability to do that. At the same time, we will continue to look at how we are investing in brands. The operating margin will be then a bit of a function around our gross margin, but we expect to maintain strong gross margin.

So the way we look at gross margins is kind of really how we price our product based on the value that we are delivering. And we are delivering great products with high value. So we will continue to maintain that. Forward, and then we will continue to look at it.

But I think in terms of how you are you have set up the question and the framework, that is how we are looking at the multiyear view. Great. And then if I could ask 1 more. You mentioned freight shipping, I think some input costs due to upgraded materials as well. there is a lot going on with higher oil prices in the supply chain.

Would love any more color you can provide on how much impact you are seeing from oil prices versus free? And then are you raising pricing along with some of those upgraded materials as well? I would say still early in that sense. We have to see how things play out and where pricing begins to normalize.

Clearly, we are seeing some pressure in terms of your point freight and fuel costs and some of the input costs raising. Again, largely a lot of the products that we have is bought for FY 2027. As we move into next calendar year and to that, we will be very careful about what we are seeing in terms of those input costs. Again, with strong brands, we have pricing power. So those are things that we can always take a look at.

Great. Thanks so much.

Go next now to Samuel Poser with Williams Trading.

Analyst (Samuel Poser): Thank you for taking my questions. Over the last 2 years, the UGG business has flowed from a I guess, from a DTC or from a consumer demand perspective. it is flowed 2 different ways. In 2024, it looks like it started really early. And then this year, it started this past year, it started much later. How are you looking at the flow of the business this year And in the gross margin, you did not mention it, but are you once again guiding to a more normalized promotional environment than normalized does not seem to happen that often?

Yes, I will start. Maybe and then Stefano, if you want to kind of jump in. In terms of the other business, Sam, we have talked about this a little bit on prior calls in terms of how we are seeing consumer respond in the market. So when you look at that dynamic, we are seeing trends where purchasing is more event driven currently than it has been in years past.

I think that is created some of the volatility we have talked about peaks and valleys before in terms of seeing that. I think what we have seen in the last 2 years is that the consumer is still showing up for our brand. I think our Q3 and our Q4 performance is a further indication of that. And so while consumer purchasing patterns are changing and if they are shifting to event driven purchasing, they are showing up and buying our brands.

And that is really what our performance has been driven by. In terms of the context of how you have answered the question, as Stefano said earlier, we are also driving a bigger springsummer business. So we are seeing increases in the springsummer seasons. Because we are bringing more relevant product to the consumer who is looking for that product in that timeframe.

So we are seeing kind of multiple dynamics that are impacting sales patterns. But in both cases, we are capturing the consumer an increased purchases. But there is definitely a buy now, wear now mindset. Yeah.

Analyst (Samuel Poser): Thank you. And then the second question kind of on the gross margin. In terms of how we have laid out this year, we are assuming a more promotional environment.

Not in this current guide. So in terms of what the previous questions that I received in terms of how we are thinking about the gross margin, pressure that we are seeing in FY 2027. It really more is about inflation and higher input costs and material upgrades. Thank you. And then secondly, you mentioned the tariffs, how they are not in your numbers.

How much was-- how much did you pay in tariffs under IEPA?

Analyst (Samuel Poser): And how do you intend I assume you filed for the refunds. How do you intend to account for it once you get it?

Yes. So as we have said earlier, the gross amount that we paid was around $120 million. And we will look once we have received the money back Clearly, we have partners who were cost sharing in that. So we want to make sure that we are taking care of them in terms of any return amounts that is still to be determined.

And then for the accounting of it, we will address that kind of when we see it come back into the bank account.

Analyst (Samuel Poser): Okay. Thank you very much. Thanks, Adam.

We will go next now to Adrienne Yih-Tennant with Barclays. Great.

Analyst (Adrienne Yih-Tennant): Thank you very much and congratulations. Great to see the early momentum. Stefano, I wanted to talk about HOKA and sort of the wholesale channel. I guess wholesale and international. In the past, you have talked about kind of not really penetrating all of the places that you can be. You are kind of in the top spaces and the premium doors. So can you talk about over this kind of the structural 3-year horizon, how you think about potentially penetrating doors that are kind of in maybe that second tier? If so, what would be the trigger for that? And when might we see that happen? And then on the international side of things, can you talk a little bit more about the international strategy both in Europe and in Asia and when we might see that accelerate? Thank you very much.

Starting with international, International has been accelerating. And as we said before, we applied The U. S. Playbook to our international business.

International for HOKA is between 2 and 4 years behind based on awareness We are at 40% awareness in Europe, 60% in the U.S., we are at 30% in China. But our approach is still very, very consistent. We are monitoring signals in the marketplace consumer demand, turns, margins, door productivity. And determine when the right time to expand is.

And as our offer, expands and this gives us more differentiation and segmentation opportunities. And we are slowly and thoughtfully expanding where it makes sense. As I mentioned on the last call, sporting goods in The U. S.

Is still only 50% penetrated. Athletic specialty only 25% penetrated. In EMEA, it is 40% for sporting goods and less than 20% for athletic specialty. So plenty of upside for us, within the framework that I shared.

To, enter some of these destinations. We are doing some tests with some new upcoming retailers in the fall, both in The US and Europe. And if those tests go well, we will slowly and thoughtfully and systematically expand. So the approach that we have taken until now does not really change.

Now we have a broader product offer that allows us to systematically differentiate the marketplace and offer consumers a differentiated proposition where they shop. And allowing us to segment the market marketplace more thoughtfully, including DTC.

Analyst (Adrienne Yih-Tennant): Great. And then, Steven, my follow-up is on the inventory. So the dollars are down, I guess, single digits. Means the units are probably down more so than that. As we kind of go into the back half of the as we go into sort of the back half of the year, are you and you typically do not restock people, right? So when whatever is out there is out there. You are not really chasing inventory. So how do you think about the positioning of that inventory? And then what macro backdrop are you assuming for the rest of FY 2027? Thank you very much.

Yes. it is a good question. So clearly, having lower inventory helps. To your point, we have historically we run out of product, we are out of product. That helps drive full price selling and also helps drive increased orders for the future.

And again, that is what you are seeing play out in the playbook, and that works very well for us. I think as we look at the environment, consumers, even with everything going on, are still operating from a healthy position. I think what we have seen, especially in what played out in Q3 and Q4, was the consumers showed up for the brands that they want and they purchased the brands that they want. And that is our outlook for the rest of this year is that we see the demand for our brands, we see the growing awareness.

We see the interest in the new products that we have been bringing to market. And so that is what is giving us confidence. So I think from a macroeconomic standpoint, I think I made a comment. We will see how things evolve and develop, but we are confident with how our brand and how the brands are resonating with consumers and consumers' interest to purchase our product.

Analyst (Adrienne Yih-Tennant): Fantastic. Best of luck. Thank you. All right. Thank you.

And thank you. We will go next now to Rick Patel with Raymond James.

Analyst (Rakesh Patel): Thank you. Good afternoon. I was hoping you can unpack your domestic performance in Q4. I believe it was flattish What were the puts and takes by brand? And what are your expectations the domestic market as we think about fiscal 27?

Yes, sure, Rick. So I think you are still there. I do not know if we got cut off. But just to answer your question, in terms of performance in The U.

S. Was positive as we made in the remarks. What you are seeing from a top line perspective is being impacted from some of our discontinued brands. Those brands this year versus last year. that is muted.

But when we look at both UGG and HOKA, both have grown in The U. S and across the globe. So positive trends in that respect. We made the comment that we are seeing kind of positive trends.

So I think still looking forward, we continue to see those positive trends continuing.

Analyst (Rakesh Patel): Got it. And then for HOKA, just zooming out to your plan to grow low double digits between fiscal 28 and 2030, What needs to occur to drive that growth that you are not doing today You touched on testing out some new wholesale accounts, but does it also embed entering new sports that HOKA does not participate in today or new categories like apparel? Some color on the building blocks would be great.

Yeah. Plenty of upside for us in the category we are competing in. The categories, the channels and the geographies. The categories we are competing are $100 billion, and so plenty of upside for us, a crossroad trail, fitness, recovery, lifestyle and apparel.

So it does not we continue to explore new categories, but the framework does not incorporate any categories at this point. Great. Thanks very much. Hey, Derek.

Thank you. And ladies and gentlemen, that is all the time we have for questions on today's call. So this will conclude today's Deckers Brands Fourth Quarter fiscal 26 earnings conference call. Please disconnect your line at this time and have a wonderful day. Goodbye.