Q4 2021 Deckers Outdoor Corp Earnings Call
[music].
Good afternoon, and thank you for standing by.
Welcome to the Deckers brands fourth quarter fiscal 2021 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 and instructions will be provided at that time for you to queue up for questions.
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I would like to remind everyone that this conference call is being recorded on.
Now I'll turn the call over to Aaron cooler VP Investor Relations and corporate planning.
Hello, and thank you everyone for joining us today on the call is Dave powers, President and Chief Executive Officer, 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.
These laws, which are subject to considerable risks and uncertainties. These forward looking statements are intended to qualify for the safe Harbor from liability established by the private Securities Litigation Reform Act of 1995.
All statements made on this call today other than statements of historical fact are forward looking statements and include statements regarding changes in consumer behavior strength of our brands and demand for our products changes to our product allocation segmentation and distribution strategies changes to our marketing plans and strategies changes to our capital allocation.
Cash and strategies the impact of the COVID-19 pandemic on our business our anticipated revenues brand performance product mix gross margins expenses and liquidity position and our 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 were 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 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.
With that I'll now turn it over to Dave.
Thanks, Aaron Good afternoon, everyone and thank you for joining us today.
Before diving into the business I'd like to express my gratitude for the progress towards ending the pandemic toll in the United States. However countries around the world are still struggling with dangerous outbreaks.
Any of our employees have friends and family members that are currently being impacted by the devastating COVID-19 surge within India, Nepal, and other South Asian countries. Our Hearts go out to everyone who has been affected by this pandemic over the past year and a half.
On behalf of Deckers I wish for everyone's health and safety moving forward.
As I reflect on this past year I'm continually impressed by the tenacity and resiliency of the Deckers organization and the dedication demonstrated by our teams as they continue to deliver exceptional results.
421 results were driven by the exceptional brand in marketplace management of our leaders, but also by the global operations retail and supply chain teams have allowed us to fulfill the demand for our brands.
By continuing to be aggressive with OCA globally, and capturing the opportunity in <unk>, we were able to exceed expectations in a challenging environment and have accelerated the pace of growth for our brands.
Today I'm excited to share the results of our record breaking year for Deckers we.
We saw a strong finish to fiscal 2021 with full year revenue, increasing 19% versus last year to over $2.5 billion.
And earnings per share, increasing 40% to $13.47.
FY 'twenty, 1 performance was driven by expanded awareness and adoption of HOKA around the world as more consumers experience the benefits of the brands innovative products consumers actively speaking hug for its unique combination of fashion appeal on the unmistakable feeling of the brand.
Best in class e-commerce capabilities that enabled consumer acquisition in a disrupted physical retail environment.
Strategic prioritization of brand strength and demand creation through disciplined marketplace management and the grit of our employees, who overcame significant macro challenges and operational pressures to deliver exceptional results.
Many of these items that drove performance during the year were the result of our long term strategies that remain top of mind as we transition into fiscal 2022 and beyond as a reminder, these include accelerating consumer adoption of the HOKA brand globally building gets a year round global lifestyle brands through a diverse.
Offering <unk>.
Executing our digital first approach by growing direct to consumer acquisition and retention online with a specific focus on gaining closet space with 18 to 34 year old consumers.
And distribution strategies unique to each of our brands in order to properly balance brand health in conjunction with sustainable growth, which includes the recent reset activities for the UGG brand internationally and focusing spend behind these key initiatives to drive optimal returns on investment, while maintaining top tier levels of profitability.
While we believe that remaining committed to our long term strategies was the primary enabler of our success. This year Deckers also uniquely benefited from certain circumstances, resulting from the pandemic.
Fiscal 2021 revenue exceeded our pre pandemic expectations as we saw an acceleration of certain growth opportunities with.
With brands scaling faster than previously anticipated, we now need to accelerate critical investments to scale, our supply chain and logistics infrastructure as well as bolster our teams with additional talent to prepare for emerging opportunities.
<unk> fiscal 2022 will be another positive step in the evolution of Deckers brands as we strategically invest behind core infrastructure needs and seed opportunities that will enable sustainable long term revenue and earnings growth.
Over the long term, we are investing in major drivers of our business, including building HOKA to a $1 billion plus global performance brand that represents a significant portion of total company revenue.
Driving our direct to consumer business towards 50% of our global revenues scaling international markets across brands.
And seating opportunities beyond footwear.
Steve will provide more details on these investments as well as our forward looking revenue and margin expectations later in the call.
In the meantime, I will share some details around fiscal 2021 performance at the branded channel levels as well as provide some context around fiscal 'twenty 2 building blocks.
Starting with the brand highlights.
Global <unk> fiscal 2021 revenue increased 13% versus last year to $1.71.7 billion.
The brand success in FY 'twenty, 1 was primarily due to U S consumers actively seeking AG products all year long with search interest increasing 27% over fiscal 2020, according to Google trends.
Which led to accelerated consumer acquisition online as a brand out at over $2.5 million new consumers towards global ecommerce database.
And captured the critical 18 to 34 year, aged consumer in the U S, which increased 83% to the elevated fashion appeal to brands.
And lastly, more consumers purchased multiple AG products than ever before as the brands saw an 85% increase in consumers purchasing 2 or more products during the year.
We believe much of the brand heat that create a momentum for AG in the U S resulted from the brands strategically managed distribution network authentic PR activations fashion collaborations targeted digital marketing and a compelling product offering but has expanded the fashion relevance of UGG brand DNA across new categories.
As evidence of the UGG brand success with a diversified assortment fiscal 2021 product performance was driven by the expansion of the fluff franchise as the brand drove demand to both the original fluff as well as complementary styles with similar slipper sandal hybrid attributes.
<unk> adoption of the new male franchise among men women and kids the.
The introduction of the ultra mini and classic clear boots, which were particularly popular with younger consumers.
Development of the Tasman into a fashion slipper sneaker as ujiji featured the style and a number of recent collaborations helping to raise the hybrid styles profile.
The brands first ever ready to wear apparel collection, which featured fashionable sportswear and outerwear pieces.
Inherited slippers, having greater year round relevancy as many people were working from home and seeking the comfort of what we've referred to as the feeling of book.
These styles that drove our growth this year made up the majority of both the brands top 10 styles purchased by acquired consumers as well as the top 10 styles purchased by consumers 18 to 34 years old.
While women remain the primary purchases of other products.
The brands mix of gender continues to shift towards men's and kids products part of this shift is due to many consumers purchasing for the whole family in the U S as compared to last year hug experienced an 88% increase in DTC revenue from orders containing both men's and women's product and a 117% increase in orders containing both.
Kids and women's product.
With more purchasing for the whole family, both men's and kid's footwear increased as a percentage of total UGG brand business.
While the U S has been driving on category diversification over the past few years.
We have been encouraged by the adoption of new categories within international regions over the last year as well.
Such as the ultra mini which was a top 5 style in its introductory season. The classic clear, which was ranked second new style in terms of dollar volume.
Fluff franchise volume was 2.5 times larger than last year and sneakers were standout in our Asia Pacific region.
Improvements in new category adoption are largely attributable to localized marketing activations meant to build brand heat internationally and attract younger consumers to the brands are.
Our targeted digital marketing efforts are paying off as the UGG experienced a significant increase in e-commerce traffic from visitors aged 18 to 34 in both the UK and China during FY 'twenty 1.
These early indicators of success on our plan to further invest behind localized marketing tactics give us confidence that will rebound and returned to growth in the brands international markets during fiscal 2022.
<unk> has a difficult task ahead, and lapping a record year, where we benefited from the pandemic driving greater attention to the brand. However, with our planned investments in demand creation, we have confidence the brand can drive topline revenue growth in fiscal 2022 by fulfilling wholesale demand as we reset the marketplace with filling product and.
As far as some of the missed opportunities in fiscal 2021 due to inventory shortages may.
On maintaining momentum with younger consumers around the world and driving repeat purchases from consumers new to the brand in FY 'twenty 1.
Recovering lost volume in EMEA with the goal of lapping fiscal 2020 revenues and maximizing demand capture through DTC.
Increasing local investments in China to elevate the brand and accelerate revenue growth all while working to lap growth on heritage slipper products that benefited from the pandemic.
Shifting attention to Hooker global revenue in fiscal 2021 increased 62% versus last year to $571 million the growth of polka over the past year was a testament to the brands methodical approach to managing a consistent brand message and introducing innovative products that resonate across the global.
Distribution landscape.
<unk> continues to exhibit balanced growth across its ecosystem of access points with every region and channel of distribution and increasing volume above last year.
The increasing scale of HOKA is undeniably impressive, but even more importantly, the brand is growing in the right way and making meaningful progress towards strategic initiatives.
On a year of uncertainty HOKA initially doubled down on key franchises with the goal of amplifying hero styles to bring new consumers to the brand as.
As these styles drove consumer acquisition Hooker was successful in driving more repeat purchases and alternate products. This is the result of the HOKA team's development of innovative products build per speed such as the carbon X 2 and mark for the outdoors with the <unk> and challenger for trail running and the Carhop for hiking and recovery featuring.
The aura flip flops and slides.
In addition to providing great product for all athletes HOKA has also created meaningful partnerships to build the lifestyle relevance of its performance products.
1 such partnership includes the brands recent launch with free people, which helps exposed hooker products to consumers, who may not otherwise discover their brand.
This is not meant to signal a shift towards fashion for the HOKA brand, but rather the brand embracing the fashion will attributes of its performance products and gaining an audience of younger consumers.
In addition to targeting youth wholesale distribution the hooker DDC team prioritize digital spend on platforms, where younger consumers are spending time and discovering brands online.
The brand has also been working to create a seamless replenishment experience for consumers, who may have discovered HOKA elsewhere through these efforts HOKA was able to increase 18 to 34 year old consumer acquisition online by 156% as compared to last year. We believe the hooker brands commitment to building a more diverse outdoor community by including Us.
<unk> represented groups and 60% of marketing content is resonating well with younger consumers.
Hooker is winning with the combination of disruptive product innovation emotionally connected inclusive marketing and a consistent consumer experience based on the quality of the brands products and ecosystem of access points.
From a regional standpoint, both domestic and international posted impressive gains in fiscal 2021, but to your international revenue growth rate was able to outpace domestic off a lower base.
As we've spoken about on prior earnings calls the mix of International unit to the global total continues to move towards a 50.50 split.
But revenue was more favored towards domestic because of the use of distributors internationally.
In FY 'twenty, 1 distributors drove the largest proportion of international <unk> revenue growth greater than both wholesale and direct to consumer channels. We see this as both a positive reflection of hope as distributors ability to scale the brand as well as an opportunity for global growth as we continued to strategically evolve our distribution of the brand around the world.
Looking ahead to fiscal 2022, we anticipate HOKA growth will continue at a rapid pace.
Driven by acquiring new consumers by building brand awareness retaining existing consumers with product and category innovation gaining market share with wholesale partners.
<unk> global brand presence through our return of in person events sponsorship.
Focusing on key markets in Europe, such as Germany, and the U K and increasing the frequency of product drops to maintain excitement with consumers.
In addition, as we invest for the longer term, we are earmarking investment in China for the Hooker brands to build a meaningful presence in that region.
This includes building a team local to the market and creating a retail presence for the HOKA brand.
Turning to Teva, despite relatively flat revenue of $139 million, Kevin made productive strides towards the future as the brand invested behind the universal franchise, which experienced strong growth versus last year increased the penetration of DTC to the total brand by 10 percentage points.
Nearly doubled direct to consumer acquisition year over year strength in partnerships with strategic wholesale accounts contributed incremental profitability to deckers bottomline and made further enhancement towards sustainability goals.
Looking ahead Teva is focused on being a leader in sustainability building year round innovative product from the modern outdoor consumer taking market share in a closed toe space with the brands Amber franchise.
Building on DTC consumer acquisition, and maintaining a high proportion of 18 to 34 year old consumers.
Moving to cooler Bora global revenue in fiscal 2021 increased 9% versus last year to $76 million.
Performance. This year was influenced by conservative ordering at the onset of the pandemic as we chose to reduce inventory purchases and strategic areas of the brand portfolio.
Based on high levels of consumer demand <unk> experienced both topline revenue growth and record profitability, despite scares product availability and disruptions in the wholesale family value channel.
For the year ahead, we expect <unk> to continue building market share with existing wholesale partners through door count expansion build on the direct to consumer momentum experienced in fiscal 2021 as the brand more than doubled consumer acquisition compared to the prior year further diversified the assortment through the growth of men's product in women's non boot categories.
Which experienced outsized growth this year and expand the brands lifestyle appeal through license opportunities with new product Adjacencies.
Finally, the Nook revenue in fiscal 2021 declined to $42 million over the.
Last year, the <unk> team made great progress to right size the brands distribution focusing on wholesale channel leaders and owned direct to consumer through this process to brand implemented a product segmentation and exclusive strategy tailoring the consumer experience per each unique access point.
With an optimized marketplace. We believe <unk> has the opportunity to build on its loyal consumer base through innovation and comfort and sustainability and continue as a positive contributor to our total company bottom line.
With respect to channel performance in fiscal 2021, the strength of E. Commerce drove DTC to increased 45% over the prior year, helping improve our mix of DTC revenue to 42% up from 35% last year ever.
Every brand in our portfolio experienced growth through the direct to consumer channel across both domestic and international regions Global consumer acquisition on line, which increased 88% over last year was the primary driver of DTC performance in fiscal 2021.
This was partially offset by a decline in retail traffic the resulted from macro pandemic pressures.
Despite the reduction in consumer traffic to stores people were shopping with the intent to purchase as we saw a 30% increase in conversion.
We believe this higher rate of purchase conversion can be attributed to improved omnichannel capabilities, including buy online pick up in store mobile Pos systems, and curbside pickup, which helped provide a more seamless experience at our stores.
A huge thank you towards store employees, who make consumer safety and a positive experience a top priority amidst difficult circumstances.
Global wholesale revenue in fiscal year, 2021 increased 6% as compared to last year wholesale growth was driven by the global expansion of Hooker with offsets from international hub as well as global reductions in Teva and <unk>.
Doug experienced strength in domestic wholesale that was more than offset by an international decline, which was due to a combination of marketplace reset initiatives and macro pressures from the pandemic.
We see a path for international wholesale to return to growth in fiscal 2022, helping to drive strength in global wholesale moving forward.
Before I hand off the call to Steve I wanted to take a moment to highlight some of our brands recent activities on the sustainability front, which we believe is having a positive impact on consumers' passion for our brands here.
Here at Deckers, we believe doing good is core to doing well and we intend to continue leading in this space.
Over the past few months, <unk> announced Earth day commitments, which highlighted the brands commitment to regenerative its farming <unk>.
<unk> introduced its first ever plant power collection, which features carbon neutral plant based materials.
Teva launched its Teva Forever program, where consumers are now able to recycle old sandals.
Reborn into new things, such as playgrounds or running tracks.
<unk> introduced a limited edition collaboration with the Surfrider Foundation, using environmentally friendly materials with proceeds benefiting <unk> mission to protect clean water mains helped maintain healthy beaches and we held our second art of kindness event, which is a weeklong global giving initiative that encourages our employees across the globe to.
Volunteer time towards causes helping others.
This second art of kindness event included over 3800 volunteer hours and we were able to double employee participation from last year's event a huge thank you to our employees, who participated and help to make a positive impact around the world.
Our brands and our company are committed to giving back and doing business in the right way and we look forward to pushing further progress on sustainability and service over the next year and beyond.
With that I'll hand, the call over to Steve to provide further details on our fiscal 2021 financial results as well as our initial outlook on fiscal 2022.
Dave.
Thanks, Dave and good afternoon, everyone as Dave just covered fiscal year 2021 was an outstanding year for the Deckers organization.
On a number of new milestones as we saw accelerated demand for our brands.
The performance of our brands over the last year was enabled by the key long term strategies, we've been investing behind that have helped transform deckers into a digitally led organization with a portfolio of brands that are in demand and have further opportunity to grow.
Well our strategy has provided a solid foundation for the organization to perform well we acknowledged that this past year has been full of unique circumstances that have helped put a spotlight on our brands.
In particular with the UGG brand, which was able to drive growth well beyond our pre pandemic expectations on the other hand hooker was able to overcome supply chain challenges in a disrupted wholesale marketplace to maintain the accelerated growth trajectory. The brands has been experiencing prior to the pandemic.
With total company top line growth accelerating faster than our ability to keep pace with investment. We acknowledged there is work ahead of us to realign infrastructure needs from our revolving organization on.
I'll provide more detail on these planned investments later on the call, but first let's get to our fourth quarter and fiscal year 2021 results.
Revenue for the fourth quarter with $561 million up 50% versus the prior year with the primary drivers of growth in HOKA.
More specifically growth in <unk> was driven by strength in classic boots winter boots, and spring fluff product, while also benefiting from lapping last year's disruption on wholesale shipments as well as retail store closures and the final 2 weeks of March.
<unk> continued exceptional performance with HOKA helped the brand deliver a quarterly revenue record increasing 74% versus the prior year to $178 million as we continued to see strong brand momentum and incredible consumer adoption.
Gross margin for the quarter was 53, 2%, a 170 basis point improvement driven by improved full price selling a higher proportion of DTC business and favorable foreign currency exchange rates.
We offset by increased freight and transportation costs.
SG&A for the quarter was $244 million or <unk> 43, 5 percentage of sales versus last year's $176 million were up 47% of sales.
The increase in spend was primarily driven by variable spend related to the increased revenue as well as additional marketing performance related compensation and other items.
These results demonstrate another exceptional quarter as we continued to see consumers seeking out our diverse offering of compelling products across our portfolio of brands.
With the strength of the fourth quarter, our full fiscal year 2021 revenue came in at $2.5 or $6 billion representing.
Representing an increase of 19% versus the prior year.
Performance as compared to the prior year was again driven by growth in the HOKA and <unk> brands as Hooker increased 62% over the prior year to $571 million with strength across all global regions and channels of distribution and other increased 13% over the prior year to $1.7.
$1.7 billion with growth of the U S offsetting international declines.
Across our entire portfolio of brands DTC was the primary driver of growth increasing 45% over last year due to the strength of our online business, which overcame declines on the retail channel related to the pandemic.
Gross margins for the year were up 220 basis points over last year to 54%. The increase in gross margin rate was related to 90 basis points from favorable channel mix 80 basis points from lower promotional activity, including a reduction of Closeouts.
Favorable brand mix as hope it increased as a percentage of the total company and favorable foreign currency exchange rates with offsets coming from higher freight expense.
SG&A dollar spend for the year was $870 million up 14% from last year's $766 million.
Higher spend was primarily driven by increased marketing to capitalize on momentum in our brands and begin to see localized marketing for international on.
Increased warehouse and logistics costs related to the compensation as well as safety measures in place to protect our employees increased spend on our e-commerce infrastructure to support the growth of that channel with offsets from lower retail store expense and travel savings that resulted from the pandemic.
For the year, our tax rate was 23, 7%, which compares to 19% last year taxes were higher this year as a result of a higher proportion of domestic revenue as well as certain discrete items recognized in Q4.
This all resulted in a record diluted earnings per share of $13.47 per the year, which compares to $9.62, and the fiscal year 2020.
More than $3 increase as compared to last year was driven by revenue growth in the hooker and on brands SG&A leverage as revenue growth exceeded expense growth.
Later mix of DTC revenue.
On a higher percentage of full price sales across our portfolio of brands.
Favorable foreign currency exchange rates, which was slightly offset by a higher tax rate.
Turning to our balance sheet at March 31, 2021, we ended fiscal year 2021, with 1 point <unk> $8.9 billion of cash and equivalents inventory was $278 million down 11% from $312 million at the same time last year.
And due to the repayment in full of our corporate headquarter mortgage we had no outstanding borrowings.
For the year. These results returned invested capital above 30%.
During the fourth quarter, we repurchased approximately $99 million worth of shares at an average price of $322.87.
I would note that for the majority of the year, we had paused share repurchase activity as we shifted focus to preserving the strength of our balance sheet based on uncertainty related to the pandemic.
Typically at this point in the year, we would provide an update to our global backlog over the last few years, we have continued to signal that less and less emphasis should be placed on backlog as an indicator of future performance due to the evolution of our portfolio brands and distribution strategies as such we will no longer.
<unk> be providing backlog.
Moving to our outlook for fiscal year 2022, as Dave and I have touched on fiscal 2021 was a year full of unique circumstances, some of which directly benefited our brands with sight set on the long term evolution of Deckers fiscal 2022 was thoughtfully planned.
To bolster the strong foundation already in place and set the table for sustained revenue and earnings power.
For the full fiscal year 2022, we expect a year over year top line growth rate of mid to high teens, leading to revenue in the range of $2.95 billion to $3 billion with HOKA growing in the 40% range, reaching an $800 million milestone.
Growing in the high single digits to low double digit range driven by domestic wholesale strength in international returning to growth.
<unk> growing in the low double digit range.
Growing in the mid single digit range and <unk> approximately flat to last year.
Gross margin is expected to be approximately 53, 3%, which is 70 basis points lower than in FY 'twenty, 1 due to increased shipping costs for ocean containers and air usage on.
Unfavorable product mix shifting towards lower price items.
Potential channel mix headwinds related to the wholesale filling for the agg and distributor growth in HOKA.
And inflationary pressures.
SG&A is expected to be approximately 35, 5% of revenue as we made key investments to drive long term growth and fuel near term opportunities with variable spend.
Strategic spending to drive the evolution of Deckers includes investment in our supply chain and logistics infrastructure to increase capacity with an additional distribution center in the U S larger facilities internationally and improved planning tools to drive efficiencies.
<unk> to further our digital transformation through added e-commerce capabilities to increase personalization and added analytical tools to optimize data insights and returns on marketing investments.
Investment in China to seed the hooker opportunity and reignite out brand heat in the region and investment to bolster our talent across the organization as we scale larger and enable emerging opportunities with added capabilities.
Variable spending to fuel near term opportunities include digital content creation to drive DTC conversion.
Targeted digital marketing to acquire new consumers investments to drive growth in ready to wear and build awareness of HOKA apparel.
Our expense and gross margin guidance represents an expected operating margin in the range of 17, 5% to 18%, which aligns with our commitment to remain top tier among our peers. This targeted operating margin for FY 'twenty 2 represents meaningful expansion when compared to pre pandemic years.
Where we had consistently achieved an operating margin of approximately 16% in FY 19 in FY 'twenty.
This demonstrates that we are flowing through a portion of recent margin expansion achieved in FY 'twenty, 1 that we intend to preserve as we step into FY 'twenty 2.
These include 90 basis points of channel mix with a larger proportion of DTC business.
50 basis points of brand mix as our mix of HOKA increases and expecting our rate of full price selling to be similar to that experienced in FY 'twenty 1 we.
We are also projecting a tax rate of approximately 23%.
All resulting in an expected diluted earnings per share in the range of $14 <unk>.
<unk> to $14.65.
Capital expenditure are expected to be in the range of $65 million to $70 million, representing a step up on recent years as we support the build out of our new distribution center in the U S and further reinforce our digital transformation through added infrastructure.
Our fiscal 2022 guidance excludes any charges that may be considered onetime in nature and does not contemplate any impact for additional share repurchase.
We will not be providing formal quarterly guidance as the environment remains highly uncertain with regional differences in the pace on scope of economic recovery from the pandemic as well as continued disruption across the entire supply chain as a result of the pandemic.
In addition, with significantly lower inventory in the channel the normal order and delivery pattern has shifted this year with a greater increase expected in the first half further complicating expected timing of delivery.
Therefore, it is important to note that our focus on our full year guidance best represents a holistic view of how we are driving full year long term targets.
For further context on how we are looking at the first half of the year, we expect strong global wholesale growth from both on and HOKA as both brands lap disruption in the channel from last year and other benefits from earlier wholesale orders to fill in depleted inventories.
Continued expansion of global Hawk or direct to consumer as the brand acquires new consumers online through increased awareness and more consumers migrate online for replenishment.
Higher marketing costs to keep on top of mind with consumers is less people are working from home as well as a step up in our investments in localized content for international regions.
Higher marketing costs for OCA as the brand increases its presence at events with the world opening up as well as increased spend to begin building awareness in China.
Increased spend on people as we build our workforce and lap some savings experienced last year due to our hiring and merit freeze.
Elevated warehouse and logistics costs to support the increased scale of business, both domestically and internationally with continued safety measures in place.
And higher freight costs continuing to be a drag on gross margins.
Overall, we anticipate first half revenue will represent a larger percentage of the full year revenue than in prior years.
And finally on capital allocation with the build of our cash balance over the last year, we completed a thorough review of our strategy.
Based on our goal to drive shareholder value. The board of directors has approved an increase of $750 million to the company's share repurchase authorization.
This increased authorization in conjunction with higher capital expenditure investments supporting our key initiatives highlights the board's confidence in managements ability to achieve our strategic plan and drive shareholder value, while maintaining strength and liquidity.
Deckers will maintain our competitive position versus peers based on growing multiple brands in our portfolio, including 1 of the fastest growing footwear brands in HOKA evolving our channel distribution with the long term goal of reaching a 50% mix of DTC.
<unk> top tier levels of profitability and leadership in ESG space as we seek to do business in the right way on making positive contributions to our communities and the world at large.
To close I'd.
Like to thank our employees for their dedication to managing through tough circumstances to deliver record results in an unprecedented year.
I'm excited for the years ahead, as we invest behind the evolution of Deckers and capitalize on our strong portfolio of brands.
Thanks, everyone and I will now hand, the call back to Dave for his final remarks.
Thanks, Steve.
2021 was an exceptional year for Deckers as our company was able to build awareness and globally expand the hooker brands as well as capitalize on the unique tailwind for UGG brand.
Our long term strategy has enabled our brands to accelerate consumer acquisition online, which helped them company achieved the milestone of delivering a record operating profit of half a billion dollars.
With strong momentum in our brands, we're going to maintain an aggressive approach to taking market share of wholesale while also strengthening our digital capabilities to acquire consumers through our direct channels.
We believe each of our brands is a compelling product offering for their respective target consumers.
The health of our brands and the excitement for our products provide a strong setup for the year ahead. Our guidance includes mid to high teen revenue growth with multiple brands expected to grow double digits, implying over $800 million of revenue added over a 2 year period that.
Deckers will remain top tier among peers, while making important investments for the long term evolution of the organization.
We are confident in our long term vision to drive more business through our direct to consumer channels build the hooker brands beyond $1 billion in revenue and increase our mix of business from international markets.
To achieve these objectives and enable new opportunities with our portfolio of strong brands. We are focused on fostering existing talent within the organization as well as acquiring new talent for added capabilities I am proud to be leading this organization and greatly appreciate all the work of our employees over the past year and recognize the energy already being put forth.
Just to make fiscal 2022, just as great. Thank you to all of our stakeholders for your continued support with that I'll turn the call over to the operator for Q&A operator.
Thank you we will now begin the question and answer session.
You ask a question you May press Star then 1 on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing on key.
John Your question from the queue. Please press Star then 2.
As a reminder, please limit yourself to 1 question and 1 follow up.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Camilo Lyon with <unk>. Please go ahead.
Thank you good afternoon, everyone and congrats on a strong finish to the year.
Hi, I wanted to follow up Steve on the company and they are just at the end of your remarks regarding.
In filling some of the wholesale.
On the wholesale partners of yours with inventories sooner.
Clearly I think there is any of this in anticipation there too.
<unk> and other supply chain disruptions that many other Saturday this past year I'm curious.
How are you thinking about inventory build in anticipation of any chase opportunities given that youll, probably having to.
Hold on to the net inventory a little bit longer to the season, given that earlier shipments that you've spoken about.
Yes, let me thanks Niccolo.
Good question.
And I will take a step back just kind of explain what's going on.
I think with inventories low our own inventory again down 11%.
And lower inventories as you mentioned kind of lower on the channel we do want to bring in more inventory in the first couple of quarters, and we do want to get it out to our wholesale customers. So that they have it in stock on on shelf during the prime selling season. So that is a shift from what we normally see.
It may limit I would say that chase opportunity. That's why we're seeing kind of a more robust first half, but I think thats why it was important to talk about kind of that first half context, because we're going to see a significant portion of that growth as we expect to fulfill those wholesale orders really in the first half as we bring inventory in.
So we are replenishing, our depleted inventory and we're getting out to our wholesale accounts.
Account sooner so that they have in stock so we will see again.
1 of the challenges that we're dealing with.
As you know there is significant disruption in the whole supply chain channel.
Another reason to try to get this inventory in earlier, so that we can avoid some of that disruption.
And just add on to that we did submit orders earlier than usual. This year. So we are a little bit ahead of the game as far as production goes but getting product into the country through the logistics domestically and on to our key account is a pretty.
Meaningful challenge, we think we can overcome it but the demand for inventory right. Now is still very strong. So our accounts are looking for inventory to keep the momentum going but also start building reserves and stocks heading into the fall and holiday timeframe as well for all of our brands.
Got it.
Yes.
Just a quick follow ups on within that context, Dave and Steve you had mentioned some inflationary pressures impacting gross margin.
Is there any.
Price, taking that you are embedding them, Okay, and then just from a longer term perspective.
You talked about the investments that youre, making in the business and they are the right investments to be making in terms of infrastructure.
Distribution centers digital investments to further the growth in long term opportunities that you have I'm trying to do.
How do you think about.
What that looks like is that what that looks like in the context of longer term EBIT margin opportunities as you start to leverage these investments this year in years, 2.3 and force from now.
Yeah.
Yes, I can start and price increases.
Collectively, but not broad based and so we're looking at opportunities by categories, where we can flex as an example of that but.
But generally speaking we're not passing on price increases across the board. This more selective styles going into this back of this year I think we have more flexibility on our DTC channels to maybe do things here and there, but the season sold in the inventories on its way in the wholesale accounts are.
Expecting the prices that we've already established.
But we have we have healthy margins and we're expecting healthy high full price sell through is again, alright and are confident on that from.
From an investment perspective, yes, with this rate of growth.
And the way that we pulled back on spend last year, we have some investments we need to make.
We think that our brands the demand for our brands is certainly stronger than it's ever been our brands matter to our consumers. They are really meaningful both on AR.
Product, but also an emotional level.
And we see.
The path for growth, but we need to invest in the infrastructure to not only.
Allow that but then to sustain it and build even further so we think the 17% to 18% range is about right to be able to continue to double digit growth at the topline.
But we also have to spend to fuel that.
Over the out years, there may be a little upside to that and we can think about the low net through in and we'll see how this year goes but right now we feel like the right balance from a healthy brand building a sustainable business is in the 17 to 18 range.
Yeah, and I think just to add onto that.
It's more than just a 1 year investment.
As Dave said, we've kind of targeted a range.
We think is appropriate that kind of balance is the investment as well as what it can drive sustainable growth both from a revenue on an earnings perspective.
And yes, there are some things that we'll be able to look at once these investments are in place to see what we can then leverage but I think as Dave said, we need to make these investments now let's see how they go and then we'll be in a better position down the road is to kind of figure out how we could benefit from some of these investments and as we've been talking about it last few years.
Much higher percentage of our Opex is variable. So we have a lot more flexibility in the year to either flow through or invest faster to drive topline growth. So we feel pretty confident that.
These are sustainable level and as I said, there might be opportunity per increase as we get into the next couple of years.
Excellent color congrats on the momentum.
Thanks Kelly.
Our next question comes from Jonathan Komp with Baird. Please go ahead.
Yes, hi, Thank you maybe Dave just first a follow up I think you just mentioned double digit topline growth. So I just wanted to.
Maybe a follow up the context on your thoughts beyond the next year or if you think thats sustainable growth rate and maybe any thoughts on the pieces.
And maybe maybe Relatedly Steve.
I think you mentioned some efficiencies from some of the infrastructure and analytics investments any.
The breakout some of the benefits you expect to see from some of the investments this year.
Yes, So I'll answer your first question Jonathan.
Yes, we see that path from certainly this year is a little bit of a higher than normalized growth rate because of the fill in component on particularly the UGG business and refilling the inventories for.
For our wholesale accounts, so 19% is the highest we've ever guided and we're confident in it but.
But we're mindful that a portion of that is failing and so youll states youll see the growth rates, probably start to normalize growth closer to.
On a low double digits over the next year or 2.
But at this point, we feel like we have a clear line of sight to be able to continue to grow our brands globally, especially with a return to growth that we're starting to see on international and <unk> really taken hold and.
On the investments that we're making.
Yes on that John just on the.
Kind of the leverage that we've talked about kind of from.
2 year stack. So clearly what we're passing through is some benefit that we've seen in 'twenty, 1 so as Dave mentioned.
We benefited by an acceleration of revenue and didn't necessarily spend against that revenue acceleration in FY 'twenty 1.
So 22, there will be a bit of that catch up to.
To spend against really a 2 year stack of high teen.
Revenue growth that we believe sets the foundation for our growth.
And referenced in my prepared remarks, where I talked about how we've progressed from where we were at say 2 years ago. We're taking some of that leverage that we achieved in 'twenty 1 and.
And really passing it through in 'twenty 2 as we've seen some of those efficiencies. So some of the full price selling there is going to be some on talent from where we were say 2 years ago.
So that's where we start to settle down from a.
Proportion of SG&A spend to revenue in that call. It roughly kind of 30 $35.35.5 range. So.
Again to the earlier question also let's see how things go this is a year, where we're coming off the heels of strong revenue growth.
We constrained some of that spending 22, we think we think it's important that we get back to.
Making those investments that are setting us up for continuing this growth that we're seeing.
Okay, Great and then just 1 more on any commentary on how some of that newer distribution and wholesale is fairing, Tom either domestically or globally and then.
It looks like a lot on new products coming up the next few months. So just any more comments on the pipeline in APA.
Approach too.
New product drops.
Yeah, I would say generally speaking.
Across the board in new and existing accounts sell through continues to be very strong and as you know we've been very methodical. The teams have done a great job of controlling strategic distribution not going to too many doors too fast, but just the case of dicks et cetera that philosophy is applied globally and.
We're focused on healthy full price sell through and creating.
Demand and that is paying off and thats working the areas. There were expanding into is obviously bolstering outdoor so trailing hike.
Youre going to start to see a little more product and focus on marketing around lifestyle opportunity. So still performance product, but adapted for a lifestyle consumer.
And then we're going to continue to.
Drive that growth across the board globally, each market is a little bit different as to which category, we push first and how we get there.
But thats the intent and the pipeline from my perspective is very strong we have some great launches coming up this year, we've eclipsed it 8 launching in the next quarter, which we have a lot of demand were already pre selling it on our website and the demand is there so.
So we feel great about the pipeline and where we can get the product to the supply chain of course.
And then expanding into other categories over the next 12 to 18 months.
We're very excited about it.
Excellent. Thank you guys sorry flipped in <unk> in June.
Yes, Thats right. Okay. Thank you okay.
Our next question comes from Jay sole with UBS. Please go ahead.
Great. Thank you so much Dave I was just wondering if you could elaborate on the last answer a little bit if you could maybe just take a step back and tell us where you see.
The maturity curve of this brand as it grows to a much bigger brands.
You see where.
Where the brand is right now what's baked in the guidance, maybe take us through geographically, where you see the biggest opportunities and where you hope to end the year by.
Where you see going on from there and then maybe that would be a great place to start thank you.
Sure.
So as we said in the in the script, we think that <unk> can get to $800 million. This year. Obviously, that's continued very aggressive growth opportunities.
You also talked about the fact that the international growth is really kicking in from a units perspective.
Which is great to see near the balance of that business globally and the balance across distribution.
The 1 area that we talked about investing in and we're starting to invest in infrastructure building. This year as China, It's still a relatively small business in China.
It's a very exciting market for us to get into we have been leveraging really the hug the UGG team on the ground there for.
DTC for HOKA, but it's time to start putting dedicated full time heads on the <unk> team in China to get after that so $800 million. This year, obviously, we're on the path to $1 billion earlier than we expected.
And the momentum seems to be.
Just building as people become more aware of the brand and we bring more consumers, particularly younger consumers.
Into our ecosystem.
Really focusing on repeat purchases and expanding into new styles beyond just core running.
We think the Formula there is right I think the control distribution the product assortment the FAA.
That we are resonating in multiple categories and multiple markets globally gives us a lot of confidence that.
In some ways, we are still on the early innings for those brands.
And I think Jay just to add on to that what we're seeing and we had the question on the wholesale distribution. So as Dave said, we're seeing tremendous.
Progress within our wholesale distribution.
As Dave also said, what we're seeing is an acceleration of unit now you don't necessarily see that in the same proportion on revenue because much of our international is through distributors.
When we think about <unk> and as Dave said approaching 800 faster than than we previously thought clearly a $1 billion in our sites.
A lot of opportunity 1 as we bring more customers through our direct channels.
We're seeing higher adoption through direct to consumer channel.
On the international front, the investments that we're making will drive greater acceleration of growth on the international front and then we have a channel opportunity that we can think about kind of down the road. So.
Clearly very excited about the potential of OCA and where it can go and we're sitting in a very great place.
Got it that's super helpful. Thanks, so much.
Thanks Jay.
Our next question comes from Sam Poser with Williams trading. Please go ahead.
Good afternoon, Thanks for taking my questions.
Alright.
Sure.
SG&A going to follow the same the flow of the business.
Year or I mean.
So should we think about that.
Net 35.
We see it more front end loaded on the investment or is it growth spread out a little more.
It's going to be spread out some of it needs to ramp right. So.
You will see it a little bit in disproportionate to the revenue growth. So we're going to see more revenue growth upfront as we're filling in the wholesale channels, we're going to be ramping investments really throughout the year. So more revenue growth on the front half a ramping of investments really over the year.
Okay, and then on liquor.
2 more 1 do you expect the wholesale absolute revenue from.
To be higher.
In Q3.
3 or in Q2 or Q3 in absolute dollars.
Or is Q3 is still going to be the biggest it just going to be.
Less growth.
In some ways, it's hard to call that right now Sam because of the supply chain challenges and so that's 1 of the reasons that quarterly guidance.
It is challenging because it's hard to say exactly when product is going to arrive on where we can get it out based on the quarter and so that's 1 of the things we're kind of dealing with us.
Putting in more confidence into 1 product can arrive and call on the ball on that.
Certainly you're going to see an increase in the first half bigger than we have in the past.
But exactly how that relates to Q3 versus Q2 sales still little early to make that call and I think the other challenge. Sam is we had such a strong Q3 Q4 that when you look at the comparison 'twenty 2 to 'twenty, 1 right, we're going to be comparing against some very strong quarters.
In the back half so when you think about percentage growth, it's really front half.
Loaded in that in those terms, especially as we're trying to fill that wholesale channel earlier this year.
Got you.
What percentage of the marketing of that increase.
SG&A as being put towards digital marketing.
Yes, I mean I'd have to get the exact number on that I mean, it's significant.
We're continuing to invest in marketing across the board for HOKA.
And then also but in key categories incremental marketing spend for us so as a percentage of sales marketing is going up across the board.
And if we have the exact number of that we can get maybe get into Q&A later.
But that's how we're thinking about it so a big part of the.
Growth is relying on the fact that we are increasing marketing spend broadly and in new areas.
Which is apparel and other for example in mens and kids.
But the rest is really on head count and resources on the ground on China and infrastructure building.
Thanks, and then 1 last thing M&A with with are you looking at on anybody.
You talked about building out.
HOKA apparel and you said you might hire it might buy.
So you did.
I know you're not going to go now I'm not going to get an answer but I'll ask anyway. I saw you did a collab with Covid epoxy.
Interesting.
On the shoe did as well as the.
Apparel, a lot of the outdoor apparel on itself.
And yes, just like that.
Sure.
Yeah, No just good business practice, we're always having conversations and we're open and but very selective we have the biggest challenge for US is we have so much opportunity on our organic business today, it's hard to contemplate really doing something significant on top of that from a resource and just management's time perspective.
Our focus has served us well over the last 4 or 5 years and were going to continued on that approach.
But that being said we are.
Ed.
Part of my job is just knowing what's happening out in the environment talking to different brands and companies early stages late stages.
But right now we're intently focused on on the core.
Organic growth that we have in front of us.
And then as it relates to apparel actually we believe more so now than ever that we don't necessarily need on acquisition to allow us to grow that business right.
Right now we're focused on building internal talent and capabilities.
Because of the strength of the brand. We think we can do that on top of our strong DTC channel our supply chain and our omnichannel capabilities.
Thanks, very much continued success.
Thanks, Dave.
Our next question comes from Jim Duffy with Stifel. Please go ahead.
Thanks, Hello, everyone.
Good morning, gentlemen.
I Hope you guys are doing well.
On the start on the UGG business.
Increasing.
Frequency of purchase very encouraging as youre thinking about growth for this year I recognize a component of it is fill in but can you provide some dimension to the domestic growth.
By discussing it across product categories.
Are there any categories that are outsized drivers.
Yes, I think 1 thing that is really exciting and as you mentioned that is the 2 things on what the younger consumers that have begun to embrace the brand, which is something we've been working on for a while and I think the brand has done an exceptional job of being relevant for that consumer both from a communication and product perspective, and we are finding that there.
Purchasing more often.
Cycle of repurchase 4 argues to be in the 18 to 24 months range now were seeing multiple purposes in the same quarter as the product becomes more relevant year round. So we're going to continue to build on that obviously, the the fluff franchise net slipper hybrid indoor outdoor a slip indoor outdoor slipper category.
We're going to continue to be important for us although slipper as a total category is not as big as you see in sneakers are boots or are other areas, but for us it's very meaningful.
To continue to build on that.
Classics across the board the ultra many is in the early days for us of excitement and growth. The classic clear is the style that we launched last year that sold out and there is big orders against that coming again this fall.
We have a really compelling and exciting rain proposition in the UGG brand and then you get into the heritage evolutions of things like the Tasman.
And how we're evolving that product into different materials and different use occasions for both men and women and the new mill. So it's a combination of multiple categories inclusive of apparel.
What was exciting about FY 'twenty 1 is the growth in <unk> came from non core product.
And then increased growth in men's and kids. So this is the most broad based.
Through the Adam I've ever seen for the brand gender and category perspective, it's much more balance than we used to be which is by design in which is very exciting for us and I think it gives us a lot more opportunity to segment product by channel of distribution and consumer to.
To make sure that we're having high sell through and high rates of adoption across the board globally. So.
It's tough to put it we're not reliant on the classics like we used to be anymore, and theres, a lot more exciting product and innovation going on across all the categories.
That's great to hear can you comment on a little more detail on what youre seeing with the ready to wear apparel business. It feels like that's gaining some momentum maybe give us a sense for where that stands as is.
Percentage of the mix and if you expect to see outsized growth from that in coming years.
Yes, the answer there is yes.
Youre not going to see outsized growth this year, but what we learned last year with our ready to wear launch is that we have struck a nerve with a consumer that is.
Great combination of fun fashionable brand DNA and comfortable that I think is perfect for us and I think there is white space in the market for us to be able to have a significant share.
Market growth globally.
Relying on retailers rely on on getting our ecommerce capabilities for apparel improved so that we can fully showcase head to toe looks.
And drive the business through those channels and selective wholesale distribution globally. So.
The team has done a phenomenal job positioning ourselves last year was really proof of concept for us and.
It proved to be very successful, we're super bullish about the opportunity over the next 3 to 5 years and Thats 1 of the areas youre going to see more investment in both on infrastructure, but also on marketing and reaching global consumers.
Great and disappointed clarification I understand some of the strong growth this year as bill and Dave did I interpret your comments on Jonathan's question that UC August of double digit growth business over the intermediate term looking beyond fiscal 'twenty 3.
I'm, sorry fiscal that was more related to the total company.
Okay.
Yes.
Thank you.
Alright, thank you.
Alright. Your next question comes from Paul <unk> with.
Citi. Please go ahead.
Hey, Thanks, guys, just shifting back to coke or you're talking about $800 million this year $1 billion plus.
Being inside that that's obviously revenue to you guys from kind of curious how you're thinking about the size of that brand at retail 5 years down the road.
<unk>.
Of that on whatever number you might be thinking about and on in terms of how large it can be how much of that are you going to really kind of on that revenue versus.
Continue to use the distributor model.
And I guess related to that.
Talk about that double digit growth.
Over the next couple of years.
Do you incorporate an assumption of bringing some of the distributor business back in house.
Alright.
Yes.
Yes.
So I understand the question those are all questions that we're noodling on a constant basis with our LTM board on.
All of those are opportunities.
I think that the.
The 800 on the $1 billion number does not require the take backs of distributors at this point I think thats further out opportunity for us that requires the right level of investment in infrastructure.
For us to be able to do that correctly, but.
It is not necessary for us to hit these short term targets.
Our longer term targets that along with outsized growth from where we are today in China down the road and our expanded categories.
Apparel potential and you can see this as a multibillion dollar brand on their on at some point.
Got you.
Great I just wanted to understand.
Talking about the supply chain on.
On any pressures you might be seeing can you just kind of just.
On I understand and which brands, which channels is that on.
Affecting most right now and how do you see that.
Fixing itself over over the next several quarters.
Yes. The first thing I would say is I want to give our operation on our supply chain teams a lot of credit for the way they handled last year. This success and our ability to chase demand in this environment and then to ramp up for the growth that we're seeing in.
Standing up a new DC in the Midwest getting the inventory of the orders in as fast as we can there are kind of the unsung heroes of the story right now and they're doing a tremendous job.
What that means going forward.
The.
The risks and the up and the opportunities exists broadly speaking across the board, but the biggest challenge for US is really domestic U S getting the inventory and over the next couple of months on getting it through our Dcs and out to the wholesale accounts. So it's hard to say precisely which brand, which channel et cetera, I would just say, it's more broad based and we're pre.
We have a list of how we're prioritizing brands and channels within that to give us the best opportunity to be successful this year, yes on par.
What I would say on the whole supply chain channel disruption, that's not unique to us that.
This is something.
<unk> right and the new everyone's experiencing I think what we're in a better position than many of our peers because last year, we didn't cut back our orders.
As dramatically as many of our peers did and as a result of that we're in a better position with our factories. So.
As we're ramping up inventory into the year, we feel we're in better position still going to confront constraints.
And disruption, but but we think we're better positioned than most.
Given how as Dave said, we navigated last year.
But still very mindful of what we're dealing with and I think that confidence is reflected in our guidance.
Got it. Thank you guys. Good luck.
Thanks.
Our next question comes from Dana Telsey with Telsey Advisory Group. Please go ahead.
Good afternoon, and congratulations on the progress.
As you think about the current environment and going into next year.
Going into this next fiscal year, how do you impact the unpack the investment spend between the first half from the second half of the year do any of the Covid costs do they do they roll off how do you see it in buckets, whether it's freight whether it's rate wages on COVID-19 costs.
Yes, good question.
And as we think about FY 'twenty 2 and.
And we think about the ramping of investments clearly, we're coming as I said earlier.
In a position where revenue was coming in faster than we could spend against it to build infrastructure. So.
I think to Sam's question earlier, we do see investments ramping in the air so, bringing new talent and it's going to take time.
Putting up some of the infrastructure, we will take a little bit of time, but there are some upfront costs that we're incurring in the year. So as we think about.
Those aspects again, youll see a build in the year related to that.
In marketing, we are doing more marketing upfront.
This year, because we want to continue to fuel that demand that's in the marketplace. So youll see some of the marketing.
Increased investments in the first half of the year. So it's a bit of a mixed bag as you look at the whole year.
So, but generally speaking it takes some time to build that investments are generally speaking you will see a bit of a ramp but there are components that we're going to spend more aggressively in the first half and I think that those are really related to as you said infrastructure building and marketing ahead of the curve in places like China, and but the 1 variable.
Dana that is the most challenging to call is hiring because it's a competitive marketplace out there we're selective in looking for top talent around the globe, we're pretty much on a hiring freeze all of last year. So we have a lot of catching up to do.
And in this environment people start working from home, it's hard to call. The ball on how fast we can ramp up key hires but know that we're aggressive about it is the number 1 priority for our new <unk> that came on 3 months ago.
And the team and as I've said, we have an opportunity with the momentum in our brands and the strength of our business to really fine top talent globally and Thats. The priority I don't want to rush it but we are we on.
Urgent about bringing on people pretty quick.
And on the people you bring in is it marketing is it merchants for apparel, what's your key priorities from that you bring in.
China marketing creative for E Commerce and digital capabilities.
And then price increases will we see any price increases this year and does it differ at all by brands.
You won't see broad based price increases this year, there might be some selective bonds based on category and styles fluff as an opportunity for us.
From a pricing perspective.
Generally speaking we feel good about our prices, we think the proposition for the consumer is very compelling from a value proposition.
Some other brands I think are talking about raising prices here and there.
At this point, it's not a broad based strategy of ours, we're continuing to.
Focus on making sure that we have a very compelling offer for our consumer.
Just 1 last thing anything on new wholesale customers you are expanding with dicks any any others that we should be thinking about.
Not of that size selected 1 think about the HOKA lifestyle opportunity in key accounts like free people that we are just launching with this year, but more more generally we're reducing accounts for us still.
And focused on the top key strategic accounts that we have so.
Wholesale expansion other than opportunities, where we're trying to get a younger consumer.
<unk> or get into new category opportunities in OCA, but generally speaking wholesale door expansion is not a major strategy of ours.
Thank you.
You bet.
Okay.
Our final question comes from Nomura.
Exane BNP Paribas. Please go ahead.
Oh, good afternoon, and thank you for squeezing me in Steve I think you mentioned in your prepared remarks that you anticipate first half revenues to be represent a larger percentage of our overall full year guide I understand youre, not giving quarterly guidance, but can you just kind of give us kind of benchmarks on the consortium <unk> <unk> been pretty consistent that <unk> revenues are about 37.
Percent of your overall revenue.
Any framework on on that just crossed to understand what would be very helpful.
Yes, I think the again, not giving guidance, but when you think about the percentage growth for the year again as I said earlier on the Q&A, where we will be lapping very strong Q3 and Q4 the.
The majority of our large majority of our percentage revenue growth will be occurring as we expect if things go according to plan.
In that first half, but again as Dave said, there's a lot of moving pieces.
There is a lot of.
It's still as we're rebuilding inventory trying to get that inventory in time.
And then turned around at our DC. It's also working with wholesalers to have them take product earlier I think we're in we're in a relatively good place where they're re.
Rebuilding their inventory levels as well so if things play out as we see it right that will create much stronger growth on a percentage terms.
In the first half now some of that can drift.
Ken why choose why we don't want to give guidance yet because we have a lot of.
Shipping that goes out in those final 2 weeks of quarters.
Just kind of the way it lands so things can move relatively easy between quarters.
Very helpful and then as a follow up question in terms of hook a growth of 40% growth.
You alluded to in your prepared remarks in terms of the number of pairs roughly half is done overseas.
Maybe can you just kind of give us some context for the full year fiscal year 'twenty, 1 word where did your international revenues fall in terms of dollars.
And then does the 40% growth does it anticipate any taken.
Taken taking any of your distribution.
In house in Europe.
Yes, I'll take the last 1 first no.
Do not not.
This stage or this year or are we looking at it this way.
And then in terms of domestic versus international we don't really break that out other than to say.
Yes.
To give a little bit of color on that on the.
The half year I'll say.
A little bit more growth on <unk> in the front half again, as we lap bigger quarters in the back half.
Again on percentage terms.
Thank you very much.
Okay.
Okay.
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