Q4 2024 Deckers Outdoor Corp Earnings Call

Operator: Good afternoon, and thank you for standing by. Welcome to the Deckers Brands 4th Quarter Fiscal 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference call, please press star zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded. I'll now turn the call over to Erinn Kohler, VP, Investor Relations and Corporate Planning.

Good afternoon, and thank you for standing by welcome to the Deckers brands fourth quarter fiscal 'twenty 'twenty four earnings conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: Following the presentation, we will conduct a question and answer session instead.

Speaker Change: Instructions will be provided at that time for you to queue up for questions.

Speaker Change: If anyone has any difficulties hearing the conference call. Please press star zero for operator assistance at any time.

Speaker Change: I'd like to remind everyone that this conference call is being recorded.

Speaker Change: I'll now turn the call over to Erinn, Kohler, VP Investor Relations and corporate planning.

Erinn Kohler: Hello, and thank you everyone for joining us today. On the call is Dave Powers, President and Chief Executive Officer, Steve Fasching, Chief Financial Officer, and Stefano Caroti, Chief Commercial Officer. Before we begin, I would like to remind everyone of the company's safe harbor policy. Please note that certain statements made on this call are forward-looking statements within the meaning of the federal securities laws, which are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the Safe Harbor from Liability established by the Private Securities Litigation Reform Act of 1995.

Speaker Change: Hello, and thank you everyone for joining us today on the call is Dave powers, President and Chief Executive Officer, Steve Fasching, Chief Financial Officer, and Stefano Karate Chief Commercial officer before we begin I would like to remind everyone of the Companys Safe Harbor policy.

Erinn Kohler: All statements made on this call today, other than statements of historical fact, are forward-looking statements and include statements regarding our current and long-term strategic objectives, anticipated impacts from our brand and marketplace management strategies, changes in consumer behavior, the strength of our brands, demand for our products, product and channel distribution strategies, including direct-to-consumer, marketing plans and strategies, disruptions to our supply chain and logistics, our anticipated revenues, brand performance, product mix, margins 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.

Erinn Kohler: 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 statement. The company has discussed some of these risks and uncertainties in its SEC filings, including in the risk factor section of its annual report on Form 10-K and quarterly reports on Form 10-Q. Except as required by law or the listing rules of the New York Stock Exchange, the company expressly disclaims any intent or obligation to update any forward-looking statement.

Speaker Change: Please note that certain statements made on this call are forward looking statements within the meaning of the federal securities laws, which are subject to considerable risks and uncertainties. These forward looking statements are intended to qualify for the safe Harbor from liability established by the private Securities Litigation Reform Act of 1995.

Erinn Kohler: On this call, management may refer to financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including constant currency. In addition, the company reports comparable direct-to-consumer sales on a constant currency basis for operations that were opened throughout the current and prior reporting periods. The company believes that these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to, and may not be indicative of, its core operating results.

Speaker Change: All statements made on this call today other than statements of historical fact are forward looking statements and include statements regarding our current and long term strategic objectives anticipated impact from our Brandon marketplace management strategies changes in consumer behavior strength of our brands demand for our products product and channel distribution strategies, including direct.

Speaker Change: To consumer marketing plans and strategies disruptions to our supply chain and logistics are anticipated revenues brand performance product mix margins expenses inventory levels and promotional activity the impact of the macroeconomic environment on our operations and performance, including fluctuations in foreign currency exchange rates.

And our ability to achieve our financial outlook.

Erinn Kohler: With that, I'll now turn it over to Dave.

Speaker Change: 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.

Speaker Change: We're 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.

Speaker Change: Form 10-Q.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: In addition, the company reports comparable direct to consumer sales on a constant currency basis for operations that were opened throughout the current and prior reporting periods. The company believes that these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to and may not be indicative of its core operating results.

Speaker Change: Else.

With that I'll now turn it over to Dave.

David Powers: Thanks, Erin. Good afternoon, everyone, and thank you for joining us today. I am thrilled to be here sharing and celebrating Decker's incredible achievements in fiscal year 2024. For the full year, we delivered revenue growth of 18% versus last year, nearly reaching $4.3 billion of annual revenue, gross margin of 55.6%, a 530 basis point increase over last year, operating margin of 21.6%, and earnings per share of $29.16, representing a 51% and nearly $10 increase over last year.

David Powers: Thanks, Darren good afternoon, everyone and thank you for joining us today I'm thrilled to be here sharing and celebrating deckers incredible achievements in fiscal year 2024 for.

David Powers: For the full year, we delivered revenue growth of 18% versus last year, nearly reaching $4 $3 billion of annual revenue.

David Powers: Gross margin of 55, 6%, a 530 basis point increase over last year.

David Powers: Operating margin of 21, 6% and earnings per share of $29 16, representing.

David Powers: Representing a 51% and nearly $10 increase over last year.

David Powers: These extraordinary results are a testament to the success of our long-term strategies and the execution of our hard-working employees. Over the past four years, Decker's revenue has grown at a compound annual growth rate of 19%, adding over $2 billion of incremental revenue. We have also substantially expanded profitability as earnings per share have grown at a CAGR of 32%.

David Powers: These extraordinary results are a testament to the success of our long term strategies and the execution of our hard working employees.

David Powers: Over the past four years Deckers revenue has grown at a compound annual growth rate of 19%, adding over $2 billion of incremental revenue.

David Powers: We also substantially expanded profitability as earnings per share has grown at a CAGR of 32%.

David Powers: With the scale of our organization's growth, we are continuing to bolster our foundation through investments that support the long-term success of our leading brand. Hoka and Ugg have become two of the strongest and most in-demand brands in the footwear space. They are continuing to win with consumers by infusing performance and fashion into products that embrace their respective brand codes. Building on the outstanding progress we have made over the last few years, our teams are laser focused on the significant opportunities that lie ahead as we seek to build HOKA into a multi-billion dollar global player in the performance athletic space, grow UGG with premium products and elevated experiences that enhance consumer connections, expand DTC through engagement, acquisition, and retention gains, and advance our international markets through targeted investment.

David Powers: With the scale of our organization's growth we are continuing to bolster our foundation through investments that support the long term success of our leading brands.

David Powers: Okay and have become two of the strongest and most in demand brands in the footwear space. They are continuing to win with consumers by infusing performance and fashion into products that embrace their respective brand codes.

David Powers: Building on the outstanding progress we have made over the last few years. Our teams are laser focused on the significant opportunities that lie ahead as we seek to build <unk> into a multibillion dollar global player in the performance athletic space.

David Powers: With premium products and elevated experiences than enhanced consumer connections.

David Powers: Span DTC through engagement acquisition and retention gains and advance our international markets through targeted investments.

David Powers: Our robust and innovative product pipeline, comprised of relevant and distinct products, is amplified by our marketplace management strategies and gives us the confidence to continue progressing on these initiatives as we create the future of Deckers. Steve will provide further specifics about our fiscal year 2025 expectations, as well as our fiscal year 2024 financial performance, but first, I would like to share some of the brand and channel highlights. Starting with the brand highlights.

David Powers: Our robust and innovative product pipeline comprised of relevant and distinct products is amplified by our marketplace management strategies and gives us the confidence to continue progressing on these initiatives as we create the future of Deckers.

David Powers: Global HOKA revenue in fiscal year 2024 was $1.8 billion, representing an increase of 28% versus the prior year. For the year, HOKA growth was driven by increased brand awareness, with the U.S. rising to approximately 40 percent and international regions on average reaching just over 20 percent. Global DTC, which increased 40% versus last year, market share gains with key global wholesale partners, and most importantly, success with new performance innovations across the road, trail, and lifestyle product categories.

Speaker Change: Steve will provide further specifics about our fiscal year 2025 expectations as well as our fiscal year 2020 for financial performance, but first I would like to share some of the brand and channel highlights.

Speaker Change: Starting with the brand highlights.

Steven J. Fasching: Global <unk> revenue in fiscal year, 2024 was $1 8 billion representing.

Steven J. Fasching: Representing an increase of 28% versus the prior year for.

Steven J. Fasching: For the year <unk> growth was driven by increased brand awareness with the U S rising to approximately 40% and international regions on average, reaching just over 20%.

Steven J. Fasching: Global DTC, which increased 40% versus last year.

Steven J. Fasching: Market share gains with key global wholesale partners and most importantly success with new performance innovations across the road trail and lifestyle product categories.

David Powers: From a brand awareness standpoint, these are significant strides for HOKA. Across the board, HOKA is experiencing significant gains on both a season-over-season and a year-over-year basis. Aligned with our strategy to solidify HOKA as a global player, international regions are driving particularly strong gains in awareness, increasing more than 80 percent versus the prior year. Global consumers who identify as runners remain our highest awareness group and continue to see strong increases, but we are also seeing really powerful growth among consumers who are more general fitness-oriented. While HOGA is increasing its awareness across all age groups, growth is strongest among 18 to 34-year-olds globally, with brand awareness among this influential age group nearly doubling year over year.

Steven J. Fasching: From a brand awareness standpoint, these are significant strides for HOKA and.

Steven J. Fasching: Across the board is experiencing significant gains on both the season over season in a year over year standpoint allow.

Steven J. Fasching: Aligned with our strategy to solidify <unk> as a global player international regions are driving particularly strong gains in awareness, increasing more than 80% versus the prior year.

Global consumers, who identify as runners remain our highest awareness group and continued to see strong increases, but we're also seeing really powerful growth among consumers who are more general fitness oriented.

Steven J. Fasching: While <unk> is increasing its awareness across all age groups growth is strongest among 18 to 34 year olds globally with brand awareness. Among this influential age group nearly doubling year over year.

David Powers: We believe the continued progress introducing HOKA to new consumers around the world has resulted from our increased investments in brand marketing through the expansion of the Fly Human Fly campaign, including greater out-of-home digital and physical assets. Dedicated and enhanced sponsorship of both globally recognized and local running events, such as UTMB with HOKA becoming the new title sponsor, enriched engagement with social media across various platforms, and a greater retail footprint that allows for community building activities like our Hoka Run Club.

Steven J. Fasching: We believe the continued progress introducing hooker to new consumers around the world has resulted from our increased investments in brand marketing through the expansion of the fly human flight campaign, including greater out of home digital and physical assets.

Steven J. Fasching: Dedicated and enhanced sponsorship of both globally recognized and local running events, such as <unk> with HOKA, becoming the new title sponsor.

Steven J. Fasching: Enriched engagement with social media across various platforms and a greater retail footprint that allows for community building activities like our Hooker run club.

David Powers: We are pleased to see these investments paying off, not only through increased awareness across markets but also by growing brand consideration and purchase intent, some of which is happening in real time. We are proud of the great progress our teams are making, but also recognize that Hoka still has plenty of room to grow.

Steven J. Fasching: We are pleased to see these investments paying off not only through increased awareness across markets, but also by growing brand consideration and purchase intent some of which is happening in real time.

Steven J. Fasching: We are proud of the great progress our teams are making but also recognize that <unk> still has plenty of room to grow awareness consideration and ultimately market share across all global regions.

David Powers: HOKA has an amazing opportunity ahead as the brand continues to win with consumers around the world, and we look forward to facing this challenge head-on through a relentless focus on product innovation and authentic consumer engagement. From a channel perspective, HOKA continues to excel across its ecosystem of global access points. Recall, at the outset of fiscal year 2024, we noted the brand's focus on building full-price market share with existing points of wholesale distribution through a pull model and increasing the mix of DDC through consumer acquisition and retention gains.

Steven J. Fasching: Hooker has an amazing opportunity ahead as the brand continues to win with consumers around the world and we look forward to facing this challenge head on through a relentless focus on product innovation and authentic consumer engagement.

Steven J. Fasching: From a channel perspective, <unk> continues to excel across its ecosystem of global access points recall at the outset of fiscal year 2024, We noted the brand's focus on building full price market share with existing points of wholesale distribution through a pull model.

Steven J. Fasching: And increasing the mix of DTC through consumer acquisition and retention gains.

David Powers: The result of our disciplined marketplace management strategy achieved both goals, with Hoka delivering record gross margins as the brand benefited from maintaining exceptionally high levels of full price selling, despite operating in a more promotional marketplace and shifting mix to DDC, which increased to 38%, up from 34% in the prior year. I would also note that the Hoka brand's strong growth through full price selling in the wholesale channel was accomplished primarily through market share gains with existing distribution and greater efficiency with recently opened doors relative to locations that were eliminated.

Steven J. Fasching: The result of our disciplined marketplace management strategy achieved both goals with hooker delivering record gross margins as the brand benefited from maintaining exceptionally high levels of full price selling despite operating in a more promotional marketplace.

Steven J. Fasching: Shifting mix to DTC, which increased to 38% up from 34% in the prior year.

Steven J. Fasching: I would also note that the HOKA brand strong growth through full price selling in the wholesale channel was accomplished primarily through market share gains with existing distribution and greater efficiency with recently opened doors relative to locations that were eliminated.

David Powers: Regarding HOKA DTC, revenue growth was driven by global increases in acquired and retained consumers, which expanded 32% and 44%, respectively. We remain encouraged by the growth across markets, with the U.S. continuing to deliver strong increases in alignment with the global averages and international regions increasing more than 50% in both acquisition and retention.

Steven J. Fasching: Regarding hooker DTC revenue growth was driven by global increases in acquired and retained consumers, which expanded 32% and 44% respectively.

Steven J. Fasching: We remain encouraged by the growth across markets with the U S. Continuing to deliver strong increases in alignment with the global averages and international regions, increasing more than 50% in both acquisition and retention.

David Powers: These consumer growth figures are leading indicators of HOKA brand adoption, highlighting the brand's ability to both expand the scope of HOKA consumers and retain existing consumers through consistent product innovations that deliver an unmatched wearing experience. As we continue to introduce HOKA to new consumers around the world, We view branded retail stores in key cities as an important consumer engagement vehicle. Just a few weeks ago, HOKA opened its second European retail store in Paris, France.

These consumer growth figures are leading indicators of HOKA brand adoption, highlighting the brand's ability to both expand the scope of OCA consumers and retain existing consumers through consistent product innovations that deliver an unmatched wearing experience.

Steven J. Fasching: As we continue to introduce hooker to new consumers around the world, We view branded retail stores in key cities as an important consumer engagement vehicles.

Steven J. Fasching: Just a few weeks ago Hooker opened its second European retail store in Paris, France. The only opened for a short time, we have been very encouraged by the consumer feedback conversion and broad product adoption.

David Powers: Though only open for a short time, we have been very encouraged by the consumer feedback, conversion, and broad product adoption. We are excited for HOKA to have a footing in this important market, particularly as the location is expected to see high traffic during the upcoming Summer Olympics. On the product front, HOKA is driving growth and consumer acquisition through innovative updates and new introductions across a diverse assortment of footwear. The Hoka brand's fiscal year 2024 performance was primarily driven by road running favorites like the Clifton and Bondi franchises.

Steven J. Fasching: We are excited for <unk> to have a footing in this important market, particularly as the location and expect to see high traffic during the upcoming Summer Olympics.

Steven J. Fasching: On the product front <unk> is driving growth in consumer acquisition through innovative updates and new introductions across a diverse assortment of footwear the.

Speaker Change: The Hooker brands fiscal year 2024 performance was primarily driven by road running favorites like the Clifton and Bondi franchises.

David Powers: Stability staples like the Arahi and Gaviota, both of which received updates during the year, Trail Conquerors like the Speed Goat, Challenger, and Stinson franchises, and everyday performance lifestyle shoes like the Transport, Solimar, and Kiwano. We expect these styles will continue to contribute to the growth of HOKA moving forward, but are also really excited about the brand's ongoing efforts to constantly inf Back in February, we highlighted the launch of the all-new Cielo X1, which represents the pinnacle of the Hoka brand's race-winning heritage.

Speaker Change: Stability staples like the <unk> and <unk>, both of which received updates during the year.

Speaker Change: Trail cargo orders like the speed go challenger in Stinson franchises and everyday performance lifestyle shoes like the transport, so Lamar and the Kalana.

Speaker Change: We expect these styles will continue to contribute to the growth in polka moving forward, but are also really excited about the brand's ongoing efforts to constantly infused new innovations into the product assortment.

Speaker Change: Back in February we highlighted the launch of the all new CLO X, one which represents the pinnacle of the HOKA brand's Reis offering we have been in all of the consumer response to this incredible shoe, which sold out almost immediately in the initial launch color way.

David Powers: We have been in awe of the consumer response to this incredible shoe, which sold out almost immediately in the initial launch colorway. While we don't expect to drive significant volumes of this very specific ultra-performance shoe, we're excited and encouraged by the consumer demand validating Hoka in this category. Our progress in this more niche category is designed to emphasize the brand's performance roots even as we expand the consumer aperture to more commercial styles.

Speaker Change: While we don't expect to drive significant volumes on this very specific ultra performance shoe, we're excited and encouraged by the consumer demand validating hygge in this category.

Speaker Change: Our progress in this more niche category is designed to emphasize the brand's performance routes, even as we expand the consumer aperture to more commercial styles.

David Powers: With respect to these broader, more commercially focused products, we have been impressed by the consumer response to our latest update to the Mach franchise, the Mach 6. This completely redesigned silhouette was upgraded with a supercritical foam midsole and strategic rubber coverage on the outsole for greater durability, while remaining our lightest MOC to date. Sales through of this versatile and responsive style at our wholesale partners and in our DDC channel have been exceptional, with the Mach 6 becoming a top five style across all of Deckers since its launch.

Speaker Change: With respect to these broader more commercially focused products, we have been impressed by the consumer response to our latest update of the <unk> franchise. The <unk> six with completely redesigned silhouette was upgraded with a supercritical foam midsole and strategic rubber coverage on the outsole for greater durability, while remaining our lightest mark to date.

Speaker Change: Sell through of this versatile and responsive style at our wholesale partners and in our DTC channel has been exceptional with the moc six becoming a top five style across all of decades since its launch.

David Powers: Innovation is the HOKA brand's top priority, continuing to develop groundbreaking products that energize consumers around the world. We are fortunate to have a phenomenal roster of HOKA athletes who we will continue partnering with to drive greater athlete-enhanced innovations into our most pinnacle products, while also further developing the assortment to segment and differentiate HOKA distribution as we continue to scale. The recently launched SkywardX is a perfect example of new product innovation that benefits our segmentation efforts.

Speaker Change: Innovation is the hooker brands top priority continuing to develop groundbreaking products that energize consumers around the world.

Speaker Change: We are fortunate to have a phenomenal roster of HOKA athletes, who we will continue partnering with to drive greater athlete enhanced innovations into our most pinnacle products. While also further developing the assortment to segment and differentiate hooker distribution as we continue to scale.

Speaker Change: The recently launched Skyward X is the perfect example of new product innovation that benefits our segmentation efforts. This all new style was developed as our first carbon plated shoe that is designed for everyday runs with maximum cushion. This.

David Powers: This all new style was developed as our first carbon-plated shoe that is designed for everyday runs with maximum cushioning. The Skyward-X has a revolutionary suspension system to pair with its convex carbon plate that gives the runner cushion for impact with a natural spring forward.

Speaker Change: <unk> is a revolutionary suspension system to pair with its <unk> carbon plate that gives the runner cushion for impact with a natural spring forward.

David Powers: This style helps elevate the Hoka assortment, sitting above other max cushion styles from both a price point and performance perspective. This allows HOKA to widen distribution on other styles while the Skyward Axe is targeted for specific accounts like run specialty, top strategic performance stores, and our DDC channel. As we methodically open new access points for HOKA over the next year, we continue to fine-tune differentiated assortments across geographic markets and channels of distribution. I could not be prouder of the HOKA team's incredible results over the last year.

Speaker Change: This style helps elevate the hygge assortment sitting above other macs cushion styles from both a price point and performance perspective.

Speaker Change: This allows <unk> to widen distribution on other styles, while the skyward access targeted for specific accounts like run specialty top strategic performance doors in our DTC channel.

Speaker Change: As we methodically opened new access points for <unk> over the next year, we continue to fine tune differentiated assortments across geographic markets and channels of distribution.

Speaker Change: I could not be prouder of the HOKA team's incredible results over the last year.

David Powers: We are pleased to now have a proven industry leader like Robin Green, who joined us in February, leading the team, and we are looking forward to the positive impact we believe she can have to drive HOKA into its next phase of growth. Moving on to UGG, global revenue in fiscal year 2024 was $2.2 billion, representing an increase of 16% versus the prior year.

Speaker Change: We are pleased to now have a proven industry leader like Robin Green, who joined US in February leading the team and are looking forward to the positive impact. We believe she can have to drive <unk> into its next phase of growth.

Speaker Change: Moving on to <unk> global revenue in fiscal year, 2024 was $2 2 billion, representing an increase of 16% versus the prior year.

David Powers: For the year, UGG growth derived from the key initiatives set forth at the outset of FY24 as aligned product, marketing, and commercial execution drove global increases in DDC acquisition and retention and expansion in international markets. These results are a testament to our powerful product engine and disciplined product management strategy. The UGG brand continues to maintain important relationships with valued wholesale partners while delivering strong results through the segmentation and differentiation of global marketplaces.

Speaker Change: For the year, our growth derived from the key initiatives set forth at the outset of FY 'twenty four.

Speaker Change: As aligned product marketing and commercial execution drove global increases in DDC acquisition and retention and expansion in international markets.

Speaker Change: These results are a testament of our powerful product engine and disciplined product management strategy.

Speaker Change: AG brand continues to maintain important relationships with valued wholesale partners, while delivering strong results through the segmentation and differentiation of global marketplaces.

David Powers: With the allocation of core products driving high levels of full-price sell-through and lean inventories in the marketplace, UGG has become a leading brand in wholesale while funneling upside demand to the DDC channel. For the year, this contributed to global gains in both DDC acquisition and retention, which increased 18% and 17%, respectively, contributing to the UGG brand's 22% increase in global DDC revenue. This is a truly impressive result for our DDC channel and speaks to the work our brand, marketing, and PR teams have been doing to maintain high levels of brand heat year-round, from seeding products with global and regional influencers, creating compelling product collaborations with prominent brands, and showing up on the runway at Fashion Weeks around the world to deepening consumer connections through elevated brand experiences like the Feel House or a recent Formula One activation.

Speaker Change: With the allocation of core products driving high levels of full price sell through and lean inventories in the marketplace.

Speaker Change: Has become a leading brand in wholesale while funneling upside demand to the DTC channel.

Speaker Change: For the year. This contributed to global gains in both DDC acquisition, and retention, which increased 18% and 17% respectively contributing to the UGG brand's 22% increase in global DTC revenue.

Speaker Change: This is a truly impressive result for our DTC channel and speaks to the work our brand marketing and PR teams have been doing to maintain high levels of brand heat year round from seeding products with global and regional influencers, creating compelling product collaborations with prominent brands.

Speaker Change: And showing up on the runway at fashion weeks around the world to deepening consumer connections through elevated brand experiences like the field house or a recent formula one activation.

David Powers: The UGG team has consistently developed interesting and on-brand content to stay top of mind with consumers. We believe the continued focus of our teams on working with local individuals across global markets has helped UGG connect and resonate more effectively with international consumers. Whether it be partnering with Hany from K-POP Group, New Jeans, or the collaboration with Gallery Department, expanding access to influential retailers in Europe, these efforts have helped establish UGG in its healthiest position to date across influential international markets, contributing to UGG delivering an international growth rate of more than two times that of the double-digit revenue growth from the U.S. market.

Speaker Change: The UGG team has consistently developed interesting and on brand content to stay top of mind with consumers.

Speaker Change: We believe the continued focus of our teams are working with local individuals across global markets has helped our connect and resonate more effectively with international consumers.

Speaker Change: Whether it be partnering with honey from K group, New genes, where the collaboration with Gallery department expanding access to influential retailers in Europe. These efforts have helped establish a hug and its healthiest position to date across influential international markets.

Speaker Change: This contributed to us delivering an international growth rate of more than two times that of the double digit revenue growth from the U S market.

David Powers: The success of these initiatives drove significant shifts in the composition of UGG revenue aligned with our long-term strategy, with DDC increasing to a record 50% of mix and international increasing to 37% of mix, up from approximately 30% three years ago. Both of these shifts were margin accretive and, when combined with exceptionally high levels of full price selling and benefits from select price increases, resulted in a record high gross margin for the UGG brand in fiscal year 2024.

Speaker Change: The success of these initiatives drove significant shifts in the composition of our UGG revenue aligned with our long term strategy with DTC, increasing to a record 50% of mix and international increasing to 37% of mix up from approximately 30% three years ago.

Speaker Change: Both of these shifts were margin accretive and when combined with exceptionally high levels of full price selling and benefits from select price increases resulted in record high gross margin for the UGG brand in fiscal year 2024.

David Powers: Of course, this is all underpinned by the UGG brand's ongoing creation of compelling products that are responding around the world. What impresses me most about the UGG brand's performance in fiscal year 2024 is that the brand drove a 16% increase in revenue through single-digit unit growth with significantly fewer SKUs than the prior year. Doug was able to achieve this because of the increased global alignment on the brand product assortment, creating efficiencies on marketing stories, and inventory purchase.

Speaker Change: Of course this is all underpinned by the UGG brand's ongoing creation of compelling products that are resonating around the world.

Speaker Change: What impresses me most about the UGG brand's performance in fiscal year 2024 is that the brand drove a 16% increase in revenue through single digit unit growth with significantly fewer skus in the prior year.

Speaker Change: Doug was able to achieve this because of the increased global alignment on the brand product assortment, creating efficiencies on marketing stories and inventory purchasing.

David Powers: Last year, we spoke about the UG team's focus on reimagining iconic styles, and that is exactly what we saw play out during FY24 and what we continue to see consumers excited about in the upcoming fiscal year. The UGG product team continues to delight consumers by creating threads that connect new styles to existing icons. Over the last couple of years, we've seen this take shape with the Ultra Mini inspired by the Classic Mini, Platform Classics inspired by the Original Classics, and the TAS, inspired by the TASMAC.

Speaker Change: Last year, we spoke about the <unk> team's focus to reimagine iconic styles and that is exactly what we saw play out during FY 'twenty four.

Speaker Change: And what we continue to see consumers excited about in the upcoming fiscal year.

Speaker Change: The UGG product team continues to delight consumers by creating threads that connect new styles to existing icons over.

Speaker Change: Over the last couple of years, we've seen this takes shape with the ultra many inspired by the classic mini.

Speaker Change: Platform classics inspired by the original classics and the Taz inspired about the Tasman.

David Powers: These are just a few examples of product evolutions that have helped UGG build the shoulder seasons outside of fall and winter, attracting new consumers while remaining rooted in the brand's heritage. Keeping an eye on the future, UGG continues to build upon franchises that are a reimagining of existing icons in new categories. The Golden Collection is one we continue to be very excited about. I first introduced the Golden Star Sandal a couple of years ago, which is a strappy sandal inspired by the original classic boot.

Speaker Change: These are just a few examples of product evolutions that have helped us build the shoulder seasons outside of fall and winter, attracting new consumers, while remaining rooted in the brand's heritage.

Speaker Change: Keeping an eye on the future of continues to build upon franchises that are re imagining of existing icons and new categories.

Speaker Change: The Golden collection is one we continue to be very excited about our first.

Speaker Change: First introduced the Golden Star Sandal, a couple of years ago, which is a strappy sandal inspired by the original classic boot with style has continued to blossom on its own and we're also seeing great enthusiasm for new adjacent styles in the collection, including the Golden Glow Sandal waterfront colorful version of the original Golden Star.

David Powers: This style has continued to blossom on its own, and we're also seeing great enthusiasm for new adjacent styles in the collection, including the Golden Glow Sandal, a water-friendly, colorful version of the original Golden Star, which has become an instant hit, and the Golden Star Clog, which was spotted on basketball superstar Caitlin Clark shortly after she was drafted first overall to the WNBA.

Speaker Change: Which has become an instant hit.

Speaker Change: And the Golden Star Clog, which was spotted on basketball superstar Caitlin Clarke. Shortly after she was drafted first overall to the WNBA.

David Powers: Outside of the Golden Collection, UGG is developing compelling new products in the slip-on shoe and sneaker category, which include the Low Mel, a sneaker silhouette inspired by the original New Mel boot that continues to sell out quickly as new inventory comes into the marketplace, and Venture Days, a rugged outdoor take on the original Tasman, which sold out quickly in China and was recently worn by Formula One star Pierre Gasly at the Miami Grand Prix. These emerging franchises, along with complementary styles, give us confidence that UGG will continue to capitalize on high levels of brand heat and demand to deliver strong performance for years to come.

Speaker Change: Outside of the Golden collection August developing compelling new products in the slip ons shoe and sneaker category.

Speaker Change: Which includes the low milk, a sneaker silhouette inspired by the original new male boot continues to sell quickly as new inventory comes into the marketplace and.

Speaker Change: And venture days, a rugged outdoor take on the original Tasman, which sold out quickly in China and was recently warned by Formula One star peer Gastly at the Miami Grand Prix.

Speaker Change: These emerging franchises along with complementary styles give us confidence that <unk> will continue to capitalize on high levels of brand heat and demand to deliver strong performance for years to come congratulations to the UGG team on another excellent year.

David Powers: Congratulations to the UG team on another excellent year. Moving on to our discussion of consolidated channel performance. Decker's fiscal year 2024 results reflected the success of our omni-channel marketplace management strategies that continue to preserve our brand's premium positioning around the world. By tightly managing marketplace inventory, we were able to drive strong full-price sell-through, increase market share, and capture upside demand in our direct-to-consumer channel. This led to outstanding DDC growth, which for fiscal year 2024 increased revenue 27% versus last year by adding nearly $400 million of incremental business.

Speaker Change: Moving to our discussion of consolidated channel performance sector as fiscal year 2024 results reflected the success of our Omnichannel marketplace management strategies that continue to preserve our brand's premium positioning around the world right.

Speaker Change: By tightly managing marketplace inventory, we were able to drive strong full price sell through increased market share and capture upside demand in our direct to consumer channel.

Speaker Change: This led to outstanding DTC growth, which for fiscal year 2024 increased revenue, 27% versus last year by adding nearly $400 million of incremental business.

David Powers: DDC represented 43% of total company revenue, which is up from 40% in the prior fiscal year. DDC gains resulted from strengths across brands, with HOKA and UGG DDC increasing 40% and 22% respectively. Regions with International and Domestic DDC increasing 37% and 22% respectively, and Consumers with Acquired and Retained increasing 21% and 24% respectively across all brands. On a DDC-compatable basis, revenue increased 25% versus last year, reflecting positive engagement and conversion of demand for the great products that our brands are bringing to market across both online and in-store direct consumer touch.

Speaker Change: DTC represented 43% of total company revenue, which is up from 40% in the prior fiscal year.

Speaker Change: DTC gains resulted from strength across brands with Hogan, DDC, increasing 40% and 22% respectively.

Speaker Change: Regions with international and domestic DTC, increasing 37% and 22% respectively and.

Speaker Change: And consumers with acquired and retained increasing 21% and 24% respectively across all brands.

Speaker Change: On a DTC comparable basis revenue increased 25% versus last year, reflecting positive engagement and conversion of demand for the great products that our brands are bringing to market across both online and in store direct to consumer touch points.

David Powers: From a wholesale perspective, fiscal year 2024 revenue increased 13% versus last year. Growth was primarily driven by high levels of full-price global demand for the Ugg and Hoka brands, which resulted in healthy sell-throughs at our valued partners as we maintained lean inventories in the wholesale market. We are entering fiscal year 2025 in a position of strength because of the successful execution of our omni-channel brand and marketplace management strategy. As our brand teams continue to delight consumers with unique and innovative products, our commercial teams will continue to execute on this strategy, working with our fantastic partners to maintain our brands' premium positioning in their respective markets. With that, I'll hand it over to Steve to provide further details on our fourth quarter and full fiscal year 2024 results, as well as our initial outlook for fiscal year 2025. Peace.

Speaker Change: From a wholesale perspective fiscal year 2024 revenue increased 13% versus last year growth was primarily driven by high levels of full price global demand for the UGG and HOKA brands, which resulted in healthy sell throughs at our valued partners as we maintained lean inventories in the wholesale marketplace.

Speaker Change: We are entering fiscal year, 2025, and a position of strength because of the successful execution of our Omnichannel brand and marketplace management strategy.

Speaker Change: As our brand teams continues to delight consumers with unique and innovative products. Our commercial teams will continue to execute on this strategy working with our fantastic partners to maintain our brand's premium positioning in their respective marketplaces.

With that I'll hand, it over to Steve to provide further details on our fourth quarter and full fiscal year 2024 results as well as our initial outlook on fiscal year 2025.

Speaker Change: Steve.

Steven J. Fasching: Thanks, Dave, and good afternoon, everyone. As you've just heard, Deckers' performance in fiscal year 2024 was exceptional, as we drove our fourth consecutive year of double-digit top-line growth and delivered top-tier levels of profitability. Deckers has added over $1.1 billion of incremental revenue in two years, driven by the strength of the Hoka and Ugg brands, as innovative and consumer-obsessed product creation continues to resonate globally. Our flexible operating model and disciplined approach to marketplace management has allowed us to capitalize on these high levels of brand heat while maintaining exceptional levels of full-price selling, leading to our record earnings in fiscal year 2024. Our dedication to our long-term strategic initiatives continues to be the foundation for our success as we remain committed to driving profitable growth over the long term.

Steven J. Fasching: Thanks, Dave and good afternoon, everyone as you've just heard Deckers performance in fiscal year 2024 was exceptional as we drove our fourth consecutive year of double digit top line growth and delivered top tier levels of profitability.

<unk> has added over $1 1 billion of incremental revenue in two years, driven by the strength of the HOKA and <unk> brands as innovative and consumer obsessed product creation continues to resonate globally.

Steven J. Fasching: Our flexible operating model and disciplined approach to marketplace management has allowed us to capitalize on these high levels of brand heat, while maintaining exceptional levels of full price selling leading to our record earnings in fiscal year 2024.

Steven J. Fasching: Our dedication to our long term strategic initiatives continues to be the foundation for our success as we remain committed to driving profitable growth over the long term.

Steven J. Fasching: With that, let's get into a recap of our fourth quarter and full fiscal year 2024 results. For the fourth quarter, revenue came in at $960 million, representing an increase of 21% versus the prior year. Performance in the quarter was driven by HOCA and UGG, which saw increases of 34% and 15%, respectively. For HOKA, the brand delivered its first ever half billion dollar quarter as DTC maintained momentum with volume continuing to grow quarter over quarter, and wholesale re-accelerated from both a percentage and volume perspective as the brand benefited from key product launches and wholesale fill-in activities.

Steven J. Fasching: With that let's get into a recap of our fourth quarter and full fiscal year 2024 results.

Steven J. Fasching: For the fourth quarter revenue came in at $960 million, representing an increase of 21% versus the prior year performance.

Steven J. Fasching: In the quarter was driven by HOKA, and UGG, which saw increases of 34% and 15% respectively.

Steven J. Fasching: <unk> the brand delivered its first ever half billion dollar quarter as DTC maintained momentum with volume continuing to grow quarter over quarter and wholesale re accelerated from both a percentage and volume perspective as the brand benefited from key product launches in the wholesale filling activity.

Steven J. Fasching: For UGG, the brand delivered an exceptional quarter, as DTC was able to maintain momentum from Q3, delivering another strong increase, despite some inventory shortages on certain key products. Wholesale drove growth versus last year, despite selling significantly fewer units, as the brand was able to replace the majority of last year's closeout volume with full-price shipments into a depleted marketplace, and international strength was maintained.

Steven J. Fasching: Four of the brand delivered an exceptional quarter as DTC was able to maintain momentum from Q3, delivering another strong increase despite some inventory shortages on certain key products and.

Steven J. Fasching: And wholesale drove growth versus last year, despite selling significantly fewer units as the brand was able to replace the majority of last year's closeout volume with full priced shipments into a depleted marketplace.

And the international strength was maintained.

Steven J. Fasching: Gross margin in the fourth quarter was 56.2 percent, a 620 basis point increase from the prior year. The improved gross margin primarily relates to extraordinary benefits from higher mix, Select Price Increases as well as Favorable Brand and Product Mix and Freight Savings. SG&A for the fourth quarter was $395 million, representing 41.2% of revenue, which compares to last year's $290 million and 36.7% of revenue. SG&A as a percentage of revenue was up 450 basis points year-over-year, primarily as we accelerated top-of-funnel marketing spend to build longer-term awareness, and our strong fiscal 2024 results drove higher performance-related compensation.

Steven J. Fasching: Gross margin in the fourth quarter was 56, 2% a 620 basis point increase from the prior year. The improved gross margin primarily relates to extraordinary benefits from higher mix of full price selling including lower closeouts.

Steven J. Fasching: Select price increases as well as favorable brand and product mix and freight savings.

Steven J. Fasching: SG&A for the fourth quarter was $395 million, representing 41, 2% of revenue, which compares to last year's $290 million and a 36, 7% of revenue.

Steven J. Fasching: SG&A as a percentage of revenue was up 450 basis points year over year, primarily as we accelerated top of funnel marketing spend to build longer term awareness and our strong fiscal 2024 results drove higher performance related compensation.

Steven J. Fasching: These results, coupled with higher interest income and a lower share count from our Share Repurchase Program, drove diluted earnings per share of $4.95, which compares to $3.46 in the prior year period, representing a 43% increase. On the strength of its fourth quarter, Deckers delivered exceptional full year fiscal 2024 results, including revenues increasing 18% versus last year to a record $4.288 billion.

Steven J. Fasching: These results coupled with higher interest income and a lower share count from our share repurchase program drove diluted earnings per share of $4 95.

Steven J. Fasching: Which compares to $3 46 in the prior year period, representing a 43% increase.

Steven J. Fasching: With the strength of our fourth quarter Deckers delivered exceptional full year fiscal 2024 results, which includes revenues increasing 18% versus last year to a record $4 to $8 8 billion as compared to last year revenue growth was driven by robust HOKA growth.

Steven J. Fasching: As compared to last year, revenue growth was driven by robust HOKA growth across regions and channels, led by strong DTC growth of 40% as the brand continues to gain awareness across its well-managed ecosystem of access points, and broad-based UGG growth as the brand grew 16% and eclipsed $2.2 billion of revenue, primarily through DTC and international strength. Gross margins for the year were 55.6%, up 530 basis points versus last year The increase in gross margin was primarily related to favorable UGG full-price selling, freight savings, select pricing benefits, as well as favorable brand and product mix, and favorable channel mix with DTC growth outpacing wholesale.

Steven J. Fasching: Across regions and channels led by strong DTC growth of 40% as the brand continues to gain awareness across its well managed ecosystem of access points and broad based growth as the brand grew 16% and eclipsed $2 2 billion of revenue primarily through DTC and international.

Steven J. Fasching: <unk> strength.

Steven J. Fasching: Gross margins for the year were 55, 6% up 530 basis points versus last year. The increase in gross margin was primarily related to favorable full price selling freight savings.

Steven J. Fasching: <unk> pricing benefits as well as favorable brand and product mix and favorable channel mix with DTC growth outpacing wholesale.

Steven J. Fasching: SG&A dollar spend for the year was $1.46 billion, up 24% versus the prior year's $1.17 billion. SG&A represented 34% of revenue, which is 170 basis points above last year's rate. The SG&A increase, as compared to last year, was driven primarily by investment in talent to support key functions within our growing organization and higher performance compensation.

Steven J. Fasching: SG&A dollar spend for the year was $1 $46 billion.

Steven J. Fasching: Up 24% versus the prior year's one $1 7 billion.

Steven J. Fasching: SG&A represented 34% of revenue, which is a 170 basis points above last year's rate the.

The SG&A increase as compared to last year was driven primarily by investment in talent to support key functions within our growing organization and higher performance compensation.

Steven J. Fasching: Higher marketing spend, including strategic spend, to amplify HOKA awareness in leading international markets and infrastructure investments and related depreciation to support the continued growth of our organization. This all resulted in a full fiscal year 2024 operating margin of 21.6%, which is 360 basis points above last year, reflecting the improvement in gross margin experienced partially offset by the normalization of our rate of SG&A spend. As illustrated by our results, we continue to deliver top-tier levels of profitability.

Steven J. Fasching: Higher marketing spend including strategic spend to amplify HOKA awareness in leading international markets and infrastructure investments and related depreciation to support the continued growth of our organization.

Steven J. Fasching: This all resulted in a full fiscal year 2024 operating margin of 21, 6%, which is 360 basis points above last year, reflecting the improvement in gross margin experienced partially offset by the normalization of our rate of SG&A spend.

Steven J. Fasching: As illustrated by our results, we continued delivering top tier levels of profitability and while we are pleased with these results. We remain mindful that the outsized margin expansion experienced particularly from historically low levels of promotion and discounting may not repeat to the same degree in future periods.

Steven J. Fasching: And while we are pleased with these results, we remain mindful that the outsized margin expansion experienced, particularly from historically low levels of promotion and discounting, may not repeat to the same degree in future periods. For the year, our effective tax rate was 22.4%, which is flat to last year.

For the year, our effective tax rate was 22, 4%, which is flat to last year.

Steven J. Fasching: Our strong performance, along with higher interest income and a lower share count from share repurchase activity, culminated in a record diluted earnings per share of $29.16, which represents a 51% increase over last year's $19.37. Turning to our balance sheet, at March 31st, 2024, we ended the year with $1.5 billion of cash and equivalents. Inventory was $474 million, down 11% versus the same point in time last year, and during the period, we had no outstanding borrowing.

Our strong performance along with higher interest income and a lower share count from share repurchase activity culminated in a record diluted earnings per share of $29 16, which.

Steven J. Fasching: Which represents a 51% increase over last years $19 37.

Steven J. Fasching: Turning to our balance sheet at March 31, 2024, we ended the year with $1 5 billion of cash and equivalents.

Steven J. Fasching: Inventory was $474 million down 11% versus the same point in time last year and during the period, we had no outstanding borrowings.

Steven J. Fasching: During the fourth quarter, we repurchased approximately $104 million worth of shares at an average price of $875.01 per share. For the entire fiscal year 2024, we repurchased over 700,000 shares for approximately $415 million at an average per share price of $580.44. As of March 31, 2024, the company still had approximately $942 million remaining under its stock repurchase authorization.

Steven J. Fasching: During the fourth quarter, we repurchased approximately $104 million worth of shares at an average price of $875 and <unk> per share for the entire fiscal year 2024, we repurchased over 700000 shares for approximately 415 million.

Steven J. Fasching: At an average per share price of $580 44.

Steven J. Fasching: At March 31, 2024, the company still had approximately $942 million remaining under its stock repurchase authorization.

Steven J. Fasching: Now, moving to our outlook for the full fiscal year 2025, we expect top-line revenue growth of approximately 10% versus the prior year to $4.7 billion, with HOCA as the main driver of growth, increasing approximately 20% versus the prior year through consumer acquisition and retention gains in our DTC channel, expanding strategically through key partners while maintaining disciplined marketplace management and maintaining a dedicated focus on growing awareness and market share internationally. UGG's revenue increased by mid-single digits, driven primarily by international expansion and managing a healthy U.S. marketplace, which includes prioritizing our DTC channel as we focus on maintaining the brand's pull model.

Steven J. Fasching: Now moving to our outlook for the full fiscal year 2025, we expect topline revenue growth of approximately 10% versus the prior year to $4 7 billion.

Steven J. Fasching: With HOKA is the main driver of growth, increasing approximately 20% versus the prior year through consumer acquisition and retention gains in our DTC channel expanding strategically through key partners, while maintaining disciplined marketplace management and maintaining a dedicated focus on growing awareness and <unk>.

<unk> share internationally.

Steven J. Fasching: Ugh, increasing mid single digits, driven primarily by international expansion and managing a healthy U S marketplace, which includes prioritizing our DTC channel as we focus on maintaining the brand's pull model.

Steven J. Fasching: Gross margins are expected to be approximately 53.5%, which is down 210 basis points versus last year, as we are anticipating a more normalized promotional environment with lower full price selling than the exceptional levels achieved in fiscal year 2024 and higher freight costs. SG&A is expected to be approximately 34% of revenue as we continue reinforcing our foundation and supporting key growth initiatives, which includes increased levels of marketing spend, primarily related to our continued focus on expanding global HOKA awareness.

Steven J. Fasching: Gross margins are expected to be approximately 53, 5%, which is down 210 basis points versus last year. As we are anticipating a more normalized promotional environment with lower full price selling than the exceptional levels achieved in fiscal year 2024, and higher freight costs.

Steven J. Fasching: SG&A is expected to be approximately 34% of revenue as we continue reinforcing our foundation and supporting key growth initiatives, which includes increased levels of marketing spend primarily related to our continued focus to expand global HOKA awareness.

Steven J. Fasching: Investment in Talent to Bolster Integral Teams Supporting the Growth of Our Organization, and IT and Warehouse Investment. We expect an operating margin of approximately 19.5%, reflecting our commitment to deliver top-tier levels of profitability while continuing to invest for the long-term growth of our brand. We are projecting an effective tax rate in the range of 22 to 23 percent, with this all resulting in an expected diluted earnings per share in the range of $29.50 to $30.

Steven J. Fasching: Investment in talent to bolster integral team supporting the growth of our organization and.

Steven J. Fasching: And warehouse investments.

Steven J. Fasching: We expect an operating margin of approximately 19, 5%, reflecting our commitment to deliver top tier levels of profitability, while continuing to invest for the long term growth of our brands.

Steven J. Fasching: We are projecting an effective tax rate in the range of 22% to 23% with this all resulting in an expected diluted earnings per share in the range of $29 52.

Steven J. Fasching: To $30.

Steven J. Fasching: Capital expenditures are expected to be in the range of $115 to $125 million, which is above last year as we invest in supply chain and warehouse capabilities, capital IT projects, retail refreshment, including opening select new strategic locations, and updates to office facilities. Please note this guidance excludes any charges that may be considered one-time in nature and does not contemplate any impact from additional share repurchases. Additionally, our guidance assumes no meaningful deterioration of current risks and uncertainties, which include but are not limited to changes in consumer confidence and recessionary pressures, inflationary pressures, geopolitical tensions, supply chain disruptions, and fluctuations in foreign currency exchange rates. Looking ahead, we remain focused on executing against our strategic initiatives and delivering on the full fiscal year. As a normal course, we will not be providing formal quarterly guidance.

Steven J. Fasching: Capital expenditures are expected to be in the range of $115 million to $125 million, which is above last year as we invest in supply chain and warehouse capabilities capital projects retail refreshments, including opening select new strategic locations and updates.

Two office facilities.

Steven J. Fasching: Please note this guidance excludes any charges that may be considered onetime in nature and does not contemplate any impact from additional share repurchases. Additionally, our guidance assumes no meaningful deterioration of current risks and uncertainties, which include but are not limited to changes in <unk>.

Steven J. Fasching: Tumor confidence and recessionary pressures inflationary pressures geopolitical tensions supply chain disruptions and fluctuations in foreign currency exchange rates.

Steven J. Fasching: Looking ahead, we remain focused on executing against our strategic initiatives and delivering towards the full fiscal year per normal course, we will not be providing formal quarterly guidance. However, given we are more than halfway through the first quarter. We wanted to provide some context around our expectations for.

Steven J. Fasching: However, given we are more than halfway through the first quarter, we wanted to provide some context around our expectations for the quarter ending June 30th. These include revenue growth in the high teens as we continue to replenish depleted channel inventory that is pulling forward demand this year, and HOCA has maintained strong momentum in the DTC channel. Gross margins slightly above the full fiscal year guided rate as we benefit from reduced UGG promotion activity relative to last year in this quarter, select price increases on popular UGG styles that we begin to lap in the second quarter, and the largest proportion of HOKA revenue contribution.

Steven J. Fasching: For the quarter ending June 30th.

Steven J. Fasching: These include revenue growth in the high teens as we continue to rebuild depleted channel inventory that is pulling forward demand. This year and hooker has maintained strong momentum in the DTC channel.

Steven J. Fasching: Gross margin slightly above the full fiscal year guided rate as we benefit from reduced promotional activity relative to last year and this quarter select price increases on popular style that we begin to lap in the second quarter and the largest proportion of HOKA revenue contribution.

Steven J. Fasching: I would additionally note that beyond the first quarter, our gross margin will be up against exceptional levels of full-price selling for the UGG brand, and thus, we do not expect the favorable relative to last year to continue beyond Q1. Regarding SG&A, our dollar growth rate in the first quarter is planned to be significantly higher as we front load investments to support our growing organization. The higher earlier plan spending is driven by investments in marketing to launch brand campaigns that are further supporting some of the demand shifts we are seeing as well as some earlier FX remeasurement headwinds resulting from the recent strengthening of the U.S. Thanks, everyone. And with that, I'll now hand off the call today to his closing remarks.

Steven J. Fasching: I would additionally, note that beyond the first quarter, our gross margin will be up against exceptional levels of full price selling for the UGG brand and thus we do not expect the favorability relative to last year to continue beyond Q1.

Steven J. Fasching: Regarding SG&A, our dollar growth rate in the first quarter as planned significantly higher as we frontload investments to support our growing organization.

Steven J. Fasching: The higher earlier planned spending is driven by investments in marketing to launch brand campaigns that are further supporting some of the demand shifts we are seeing as well as some earlier FX remeasurement headwinds, resulting from the recent strengthening of the U S dollar.

Speaker Change: Thanks, everyone and with that I'll now hand off the call to Dave for his closing remarks.

David Powers: Thanks, Steve. I am so proud of the tenacity that our teams have consistently demonstrated to outperform expectations while continuously evolving in a dynamic consumer environment. As I near the end of my tenure leading the Deckers organization, I could not be prouder of how far we have come over the last eight years. Our company has transformed into a leading portfolio of consumer favorite brands. We've experienced explosive growth thanks to incredible and still increasing brand heat across HOKA and UGG.

David Powers: Thanks, Steve I am so proud of the tenacity that our teams have consistently demonstrated to outperform expectations, while continuously evolving and a dynamic consumer environment.

David Powers: As I near the end of my tenure, leading the decorative the organization I could not be prouder of how far we have come over the last eight years.

David Powers: Our company has transformed into a leading portfolio of consumer favorite brands.

David Powers: We have experienced explosive growth by incredible and still increasing brand heat across HOKA and UGG.

Operator: Our organization has proven to be incredibly resilient, and we have worked with agility to continuously deliver outstanding results. The company's success is largely attributable to our aligned long-term strategies, our highly effective leaders across the organization, and hard-working and caring employees that continue to execute as we transform the business. Deckers is in an excellent position to continue on this path as Stefano steps into the role of CEO in just a few months.

Our organization has proven to be incredibly resilient and we have worked with agility to continuously deliver outstanding results.

David Powers: The Companys success is largely attributable to our aligned long term strategies are highly effective leaders across the organization and hard working and caring employees that continue to execute as we transform the business.

Speaker Change: <unk> is in an excellent position to continue on this path as Stefano steps into the role of CEO in just a few months.

Operator: He has been a key contributor to our successful transformation and knows what it takes to lead Deckers on this continued journey. He and I are continuing to work together to ensure a smooth transition. Together, we are deeply committed to fostering Deckers' collaborative and inspiring culture, inclusive of encouraging authenticity, teamwork, and a common goal to do good and to do great. This has cultivated a strong and growing team of exceptionally talented long-term employees and critical new hires across our global organization, which are the driving force behind our iconic brands and I believe will continue to galvanize the pathway for future success.

Speaker Change: He has been a key contributor to our successful transformation and knows what it takes to lead Deckers on this continued journey.

Speaker Change: <unk> continuing to work together to ensure a smooth transition together, we are deeply committed to fostering deckers collaborative and inspiring culture inclusive of encouraging authenticity teamwork and a common goal to do good and to do great.

This has cultivated a strong and growing team of exceptionally talented longtime employees and critical new hires across our global organization, which are the driving force behind our iconic brands and I believe we'll continue to galvanize the pathway for future success.

Operator: On behalf of our executive leadership team and board of directors, I'd like to once again thank our employees for all their dedication to Deckers' values and delivery of yet another full year of record results. Thank you to all of our stakeholders for the continued support along the way. With that, I'll turn the call over to the operator for Q&A.

Speaker Change: On behalf of our executive leadership team and board of Directors I would like to once again, thank our employees for all their dedication to deckers values and delivery of yet another full year of record results. Thank.

Speaker Change: Thank you to all of our stakeholders for their continued support along the way.

Speaker Change: With that I'll turn the call over to the operator for Q&A.

Speaker Change: Later.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, please press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. In the interest of time, we kindly ask that you limit yourself to one question and one follow-up. Our first question comes from Laurent Vasilescu with BNP Paribas. Please go ahead.

Speaker Change: Thank you we will now begin the question and answer session if.

Speaker Change: If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

Speaker Change: I would like to withdraw your question. Please press star one again.

Speaker Change: If you are called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: In the interest of time, we kindly ask that you limit yourself to one question and one follow up.

Speaker Change: Our first question comes from Lorraine <unk> with BNP Paribas. Please go ahead.

Laurent Andre Vasilescu: Oh, good afternoon. Thank you very much for taking my question. Dave, I wanted to ask about HOKA.

Lorraine: Good afternoon, and thank you very much for taking my question, Dave I wanted to ask about OCA.

Speaker Change: Okay.

Speaker Change: 38% of the mix for the year, which implies <unk> wholesale grew 40%.

Laurent Andre Vasilescu: HOKA CTC was 38% of the mix for the year, which implies 4Q Wholesale grew 40%. So, I think you mentioned wholesale, or maybe Steve, you had mentioned the wholesale fill-in was called out for the quarter. First quarter is also benefiting. What do you see in the wholesale channel? Are retailers reordering across the board, or is it being selective? How should we think about HOKA wholesale growth for the year itself?

Speaker Change: So I think you've mentioned wholesale or maybe Steve you had mentioned the wholesale fill in with called out for the quarter first quarter is also benefiting.

Speaker Change: What are you seeing in the wholesale.

Speaker Change: Channel our retailers reordering.

Speaker Change: Across the board are thinking selective.

Speaker Change: How should we think about hooker wholesale growth for the year itself.

David Powers: Yeah, good question Laurent. You know, we're still seeing healthy demand from our wholesale partners. There was a little bit of pull forward, and sell-throughs are strong, so that, you know, that kind of pull forward mentality is still in place, and it's right in line with our pull forward model. So, you know, we keep our wholesale channels tight, and we try to drive more revenue to DDC, and we're going to continue that playbook, you know, going into 25 and beyond.

Speaker Change: Yes, good question Lorraine.

Speaker Change: <unk> seeing healthy demand from our wholesale partners there was a little bit pull forward and sell throughs are strong so that that kind of pull forward mentality.

Still in place and it's right in line with our pull forward model. So we keep our wholesale channels tighten we try to drive more revenue to DTC.

Speaker Change: And we're going to continue that playbook going into 'twenty five and beyond.

David Powers: You know, remember, last year we maintained net new doors across wholesale, so in the wholesale channel in FY25, we will be opening select doors with select strategic partners more focused on the international marketplace. But we still have, you know, opportunity in international run specialty and U.S. run specialty. We're regularly, generally one or two in market share, so just still optimizing that channel, but we have room to grow in our international, you know, strategic run partners as well.

Speaker Change: Remember last year we.

Speaker Change: Maintain net new doors across wholesale and the wholesale channel.

Speaker Change: FY 'twenty five we'll be opening select doors with select strategic partners more focused on the international marketplace.

Speaker Change: But we still have opportunity in international run specialty in the U S run specialty were regularly generally one or two in market share such as still optimizing that channel, but we have room to grow in our international.

Speaker Change: Strategic run Mark.

Speaker Change: Partners as well so.

David Powers: So, yeah, the marketplace is still strong. The demand is out there from the consumers operating our pull model, and, you know, in addition to that, we have DDC, which we are expecting to grow faster than wholesale as we try to bolster that business and we get more interest in the brand from awareness increasing globally, which will help drive that model as well. Stephanie, do you want to add anything there?

Yes, the marketplace is still strong the demand is out there from the consumer.

Speaker Change: Our pull model.

In addition that would to that way of DTC, which we are expecting to grow faster than wholesale as we try to bolster that business and we get more interest in the brand from awareness, increasing globally, which will help drive that model as well.

Speaker Change: You want to add anything there.

Stefano Caroti: Yeah, Laurent, to build on what Dave just said, shelter has been strong. Our key innovation stories for the season have performed very well. CLX One, not huge volumes there, but has performed super, super well, beyond our expectations. And Mach 6 has performed and is performing very, very well. And it's now a top three style, not just for Hookah, but for Deckers, and Skyward X, which we just launched a couple of weeks ago. The early read is also very, very, very encouraging across the globe.

Speaker Change: Yes.

Speaker Change: To build on what David just said.

Speaker Change: The south has been strong.

Speaker Change: <unk> stories for the season are performed very well.

Speaker Change: <unk> one.

Speaker Change: Not huge volumes that bat has performed super Super well beyond our expectations and Mark six has performed and is performing very very well and is now a top selling style not just for hookup of for a decade.

Speaker Change: And Skyward X, which we just launched.

Speaker Change: A couple of weeks ago early read is also a very very very encouraging.

Speaker Change: The globe.

Laurent Andre Vasilescu: That's great to hear, Stefano. And then on HOKA International, I think you called it out, Dave. Out of the $1.8 billion in sales, is it fair to assume that HOKA International is about 30% of the mix? And if that's the case, where do you think that goes, you know, this year over time? And what region are you most excited about for FY25?

Speaker Change: That's great to hear Stefano.

And then.

Speaker Change: HOKA International I think you called it out Dave.

David Powers: Yes, I was the $1 8 billion in sales is it fair to assume that international is about 30% of the mix.

Speaker Change: And if that's the case, where do you think that goes this year over time.

Speaker Change: And what region are you most excited about for FY 'twenty five.

David Powers: Yeah, you're right. It's roughly around 30%. We do see that creeping up over time. We haven't given hard targets for that, but we are going to be focusing more energy on building awareness, as I said, door expansion, and bolstering our GDC engines in those markets. From a volume perspective, you'll definitely see upside in Europe. China is still a small market for us with tremendous upside and a lot of exciting things going on there. But from a dollar percentage increase, it's still going to be

Speaker Change: Yes, you are right its roughly around 30%, we do see that creeping up over time, we haven't given hard targets on that but we are going to be focusing more energy on building awareness as I said door expansion bolstering up our DTC engines in those markets from a volume perspective, youll definitely see upside in Europe.

Speaker Change: China is still a small market for us with tremendous upside.

Speaker Change: A lot of exciting things going on there, but from a dollar percentage increase it's still going to be led by Europe in the short term.

Laurent Andre Vasilescu: Thank you very much.

Speaker Change: Thank you very much.

David Powers: I was in Asia last week, and I got together with Robyn and Ann and the two leadership teams. There's definitely significant potential for both brands in China and the rest of Asia.

Speaker Change: Yes definitely.

Speaker Change: I was in Asia last week, together with Rob and the two leadership teams.

Speaker Change: Significant potential for both brands.

Speaker Change: In China and.

Speaker Change: The rest of Asia.

Operator: Wonderful. Thank you very much for taking my questions. Thanks a lot. Our next question comes from Jay Sole with UBS. Please go ahead. Great. Thank you.

Wonderful. Thank you very much for taking my questions.

Thanks, a lot.

Operator: Our next question comes from Jay Sole with UBS. Please go ahead.

Our next question comes from Jay sole with UBS. Please go ahead.

Great. Thank you so much I just wanted to ask about guidance.

Jay Daniel Sole: Mid single digit growth for this year on top of obviously, a really big year last year, what gives you the confidence that.

Jay Daniel Sole: Continue to build on the big growth you've seen not just last year over last couple of years as we think about fiscal 'twenty five thank you.

Jay Daniel Sole: Yeah, you know, I've been here now, you know, coming up on 12 years, and this is the healthiest I've seen to UGBrand, you know, the demand from the consumer, the 18 to 24 year old consumer, the broad-based health of all of our channels, retail stores, e-commerce sites, wholesale partners globally. And essentially, what you're seeing is the marketplace pull model that we put in place in North America a few years ago. Now that it's activated in our international region.

Speaker Change: Yes, I've been here now.

Speaker Change: Coming up on 12 years in.

Speaker Change: This is the healthiest vaccine that UGG brand the demand with the consumer the 18 to 24 year old consumer the broad based health of all of our channels retail stores E Commerce sites wholesale partners globally, and essentially what Youre seeing is the marketplace pull model that we've put in place in North America, a few years ago.

No.

Speaker Change: Now that is activated in our international regions, So youre seeing brand heat and consideration among consumers in the international markets.

David Powers: So you're seeing brand heat and consideration among consumers in international markets, increasing and very strong. And our pull model is still working. So you know, we like to keep things a little bit scarce.

Speaker Change: Increasing and very strong.

Speaker Change: And our pull model is still working so we like to keep things a little bit scarce.

Speaker Change: And that led to some of the success. We saw in this past Q4, where people were still looking for some of our re imagined icons like the taz in the ultra many.

Speaker Change: Normally we would see those tail off at the beginning of January and February, but those are still strong and starting to become year round styles.

Steven J. Fasching: And that led to some of the success we saw in this past Q4, where people were still looking for some of our reimagined icons like the TAZ and the ultra mini. Normally, we would see those tail off at the beginning of January and February, but those are still strong and starting to become year-round styles. You know, the other significant thing last year was that we sold, you know, low single digit growth in units but 18% revenue sales on top of that.

Speaker Change: The other significant thing last year, we saw low single digit growth in units, but 18% revenue.

Speaker Change: Sales on top of that so we're seeing a very healthy full price business, there's less markdown theres less assortment in the channel.

Speaker Change: So we have the right styles for the right consumer in the right locations.

Steven J. Fasching: So we're seeing a very healthy full price business; there's less markdown, and there's less assortment in the channel. So we have the right styles for the right consumer in the right locations. And then we're also seeing great success in new franchises like Golden Star and Venture Days. And so, you know, that combined with just the brand heat, the health of the marketplace, the way that the consumer is reacting to our localized marketing activations and our store elevations.

Speaker Change: And then we're also seeing great success in new franchises like the Golden Star and.

Speaker Change: And venture days and so.

Speaker Change: That combined with just the brand heat the health of the marketplace way.

Speaker Change: The way that the consumer is.

Reacting to our localized marketing activations in our store elevation, we see a lot of optimism for the UGG brand going forward, but youre going to see continued growth in DTC and a real focus on upside in international.

Steven J. Fasching: We see a lot of optimism for the brand going forward, but you're going to see continued growth in DDC and a real focus on upside and international. Yeah, Jay, this is Steve. Just to kind of add to that, and I think it's important that Dave touched on it here. But, you know, what we saw in FY24 was

Steven J. Fasching: Yeah, Jay, this is Steve. Just to kind of add on to that, and I think it's important that Dave touched on it here, but, you know, what we saw in FY24 was a fairly significant dollar increase, and not so much on the unit size. So, because we benefited from full price selling, less closeouts, and some of our channel mix, that drove a big proportion of the dollar increase. And while we had some unit increases, what gives us confidence going forward in that mid-single-digit guidance is that we're continuing to see more and more consumers engage with the brand.

David Powers: Yes, Jay this is Dave.

Speaker Change: Kind of add on to that and I think it's important that Dave touched on it here, but what we saw in FY 'twenty four was fairly significant.

Speaker Change: The dollar increase and.

Speaker Change: And not so much on the unit side, so because we benefited from full priced selling less close out some of our channel mix.

Speaker Change: That drove a big proportion of the dollar increase.

Speaker Change: And while we had some unit increases what gives us confidence going forward in that mid single digit guidance is that we're continuing to see more and more consumers engaged in the brand. So demand continues to increase.

Steven J. Fasching: So, demand continues to increase, and so we won't necessarily, you know, in the guidance we gave, we're not expecting that kind of same level of gross margin. But what we do see is with the demand that's out there, right, and some of what we delivered in Q4, the consumer response to the product that Dave mentioned, just be continued to see in the marketplace around the UGG brand, and that's what's giving us confidence going forward. I got it. That makes sense if I can follow.

Speaker Change: And so we won't necessarily in the guidance we gave.

David Powers: <unk> that kind of same level of gross margin, but what we do see is with the demand that's out there right and some of what we delivered in Q4, the consumer response to the product that Dave mentioned just be continued to see in the marketplace around the <unk>.

Grant: Grant and that's what's giving us confidence.

Grant: Going forward, yes.

Speaker Change: Got it that makes sense if I can follow up on that can you just maybe dementia is a little bit and help us understand how August growing by telling us sort of how you think about growth of sort of the classics versus all of the what I would call the relatively new stuff since the last few years or so how do you see the growth rates in those two but.

Speaker Change: How is that driving UGG brand.

David Powers: Yeah, classics, you know, it's funny you ask that because it used to be all of our conversations and, you know, the majority of our business. And we've been able to just maintain that as a steady, healthy, premium, well-positioned part of our business, you know, roughly around 25-30%. Steady sell through, steady margin, good handling on inventory and flow. Where we're seeing the exciting things come from, the excitement comes from all these reimagined classics that we're talking about. So, iterations of the Tasman, iterations of the Lomel, you know, the ultra-minis, the ultra-platform.

Speaker Change: Yes classics.

Speaker Change: Yes, because it used to be all of our conversations in the majority of our business.

Speaker Change: And we've been able to maintain that as a steady healthy premium well positioned part of our business roughly around 25%, 30% steady sell through steady margin good handle on inventory and flow.

Speaker Change: Where we're seeing the exciting things to come.

Speaker Change: Statement come from US all these re imagines classics that we're talking about so iteration of the Tasman iterations of the low mill.

Speaker Change: The ultra many of the ultra platform those styles are broad based they are resonating extremely well with younger consumers.

David Powers: Those styles are broad-based, they are responding extremely well with younger consumers, and they're showing up on influencers in a very powerful way. And then we have, you know, we have a men's business that is starting to show some signs of excitement as well in similar styles. So, that's really where the growth is being driven from, and we have an incredible pipeline of product that evolves these styles over the next 18-24 months that I think is just a phenomenal assortment, some of the most exciting products in the market.

Speaker Change: Showing up on Influencers and a very powerful way and then we have we have a men's business that is starting to.

Speaker Change: Show some signs of excitement as well in similar style. So that's really where the growth is being driven from and we have an incredible pipeline of product that evolve. These styles over the next 18 to 24 months that I think is just the phenomenal assortment.

Speaker Change: Some of the most exciting product in the market and you know and then we're also innovating around hybrid slippers sandal models.

David Powers: And, you know, and then we're also innovating around hybrid, you know, slipper-sandal models with increased comfort underfoot that I think are going to be really well-received. So, you know, I think Anne and the team have done a great job of editing the assortment, getting us out of styles that are me-too, really focusing on our own DNA across any styles that we do, and then a really powerful PR and social media engine to drive it all. And so, you know, this is a brand that's in a great place right now, it's very healthy, and we believe that this brand has room to grow and continue at this pace.

Speaker Change: With increased comfort under foot.

Speaker Change: Youre going to be really well received so.

Speaker Change: I think and and the team have done a great job on editing the assortment getting us out of styles that are me to really focusing on our DNA across any styles that we do and then a really powerful PR and social media engine to drive at all and so.

Speaker Change: This is a brand that's in a great place right now is very healthy and we believe that this brand has room to grow and continue at this pace.

Speaker Change: Got it. Thank you so much thanks.

Speaker Change: Alright.

Operator: Our next question comes from John Kernan with TD Cowen. Please go ahead.

Speaker Change: Our next question comes from John Kernan with TD Cowen. Please go ahead.

John David Kernan: Congratulations on a phenomenal year and thanks for taking my question. Stefano, great to hear your voice. Just curious how you're thinking about... Hug and Hoka, the international opportunity, both from a top line perspective and channel perspective, and then also how the margin profile of the business internationally can evolve. Thank you.

John David Kernan: Congrats on a phenomenal year and thanks for taking my question.

John David Kernan: Thanks, John the final great Great to hear your voice just curious how youre thinking about.

Well again hope the international opportunity.

Speaker Change: From a top line perspective channel perspective, and then also how the margin profile of the business internationally.

Speaker Change: Evolve thank you.

Stefano Caroti: Our business currently is two-thirds U.S. and one-third international, as you know. And of the third of international, 50 percent comes from Europe, roughly 35 percent comes from Asia Pacific, and the balance is Canada and Latin America.

Speaker Change: And of course John are.

Our business currently is two thirds U S and 130 Internationalize, you know and the third of international 50% comes from Europe, roughly 35 comes from Asia Pacific and the balance is Canada and Latin America.

Stefano Caroti: Clearly, we see a lot of opportunity internationally, and while we expect the U.S. to continue to grow, long-term, we would want international growth to be faster. We are, as you heard from Dave, in terms of brand awareness, we are well behind where we are in the U.S. for HOKA and roughly 20 points behind. So we've been investing more, and we've been investing faster internationally to accelerate that growth. And also in terms of distribution, we intend to selectively expand our distribution with key partners while carefully monitoring the productivity of the doors as we expand it. So there's definitely a lot of upside for us internationally, both in terms of the top line as well as margins.

Speaker Change: Clearly, we see a lot of opportunity internationally and.

Speaker Change: While we expect the U S to continue to grow.

Speaker Change: Long term.

Speaker Change: We would want to international to grow faster.

Speaker Change: We are as you heard from Dave.

Speaker Change: Terms of brand awareness.

Speaker Change: Well behind where we are on the USF for hookup.

Speaker Change: And.

Speaker Change: Roughly 20 points behind so we've been investing more we have been investing faster internationally to accelerate that growth.

Speaker Change: And.

Speaker Change: Also in terms of distribution.

Speaker Change: We intend to take.

Speaker Change: Selectively expand our distribution.

Speaker Change: With key partners.

Speaker Change: While carefully monitoring the.

Speaker Change: Productivity.

Speaker Change: The doors and we expanded so there's definitely a lot of upside for US internationally. Both in terms of top line as well as margin.

Steven J. Fasching: Yeah, and then John, this is Steve. On the margin question, you know, we really look at the business, and clearly, what we experienced in FY24 was extraordinary with gross margin expansion. And as you've seen in what we've guided, we don't necessarily expect all of that same benefit in FY25. You know, so on a comparable basis as we look at it, you know, continued performance of strong margins, likely moving back to a more normalized level, as we've indicated in our guidance, but generally, you know, no significant change in margins that we're achieving as we're kind of moving into a more normalized environment.

Steve: And then John just Steve on the margin question, we really.

Speaker Change: When we look at the business and clearly what we experienced in FY 'twenty four was extraordinary with growth gross margin expansion.

Speaker Change: And as you've seen and what we have guided we don't necessarily expect all of that same benefit in FY 'twenty five.

Speaker Change: So on a comparable basis as we look at it continued performance of strong margins.

Speaker Change: Likely moving back to a more normalized level as we've indicated in our guidance, but generally no significant change in margins that we're achieving as we're kind of.

Speaker Change: Moving into a more normalized environment.

John David Kernan: Got it. Extraordinary is a good word here to use. I guess the other extraordinary thing has been the DTC segment contribution margin has skyrocketed over the last several years. I think it's over 900 basis points, higher than wholesale now. What do you think of the profitability of DTC? Is this sustainable at the high 30% level of DTC, and do you expect this continued margin mix shift to continue for the direct-to-consumer channel

Speaker Change: Got it extraordinary.

Speaker Change: Good work here to use I guess, the other extraordinary things.

Speaker Change: The <unk> segment contribution margin has skyrocketed in the last several years.

It's over 900 basis higher than wholesale now.

Speaker Change: Where do you think that.

Speaker Change: The profitability is this sustainable at the high 30% level of DTC and we expect this continued margin mix shift to continue for the direct to consumer channel.

Steven J. Fasching: Yeah, you know, again, we benefited in all channels from what we saw in FY24. And so clearly, with some normalization, a bit of a setback. But again, you know, still delivering exceptional levels of profitability. So the way we're seeing the profile or the framework, not a significant change, again, as we normalize. But as Stefano indicated, and Dave has indicated, we're all always looking at how we can drive a higher proportion of our DTC business, which, you know, overall does have a positive accretive impact on the business. Now, it doesn't happen overnight, right?

Speaker Change: Yes, again, we benefited in all channels with what we saw in FY 'twenty four.

Speaker Change: So clearly with some normalization a bit of a setback, but again, it's still delivering even in a normalized mode exceptional levels of profitability. So the way, we're seeing the profile or the framework.

Speaker Change: Not significant change again as we normalize.

Speaker Change: But as <unk> indicated and Dave has indicated we're always looking at how we can drive a higher proportion of our DTC business.

Steven J. Fasching: And so with some of the wholesale expansion that we are forecasting in FY25, that does take some of the growth. So the other thing that we benefited from was a bit of a step up in our proportion of DTC business in 24 versus 23. And that's because we were running the scarcity model in wholesale. And so we were able to fuel more of that demand into the DTC channel, which fuels some of our gross margin expansion.

Speaker Change: Which overall does have a positive accretive impact on the business now it doesn't happen overnight right and so with some of the wholesale expansion that we are forecasting in FY 'twenty five.

Speaker Change: That does take some of the growth. So the other thing that we benefited from was a bit of a step up in our proportion of DTC business in 24 versus <unk> 23.

Speaker Change: And Thats, because we were running the scarcity model in wholesale and so we were able to to fuel more of that demand over into the DTC channel that fueled some of our gross margin expansion as we open up a little bit more wholesale in FY 'twenty, five again being very strategic and thoughtful about it that will put some pressure on.

Steven J. Fasching: As we open up a little bit more wholesale in FY25, again, being very strategic and thoughtful about it, that'll put some pressure on the DTC growth. But as Dave said, we're still looking to move a higher proportion to DTC, but it won't necessarily be the same step function that you saw in FY24.

Speaker Change: On the DTC growth, but as Dave said, we are still looking to move a higher proportion to DTC, but it won't necessarily be the same step function that you saw in FY 'twenty four.

John David Kernan: Got it. Well, congrats on a phenomenal year, Dave. Best of luck, and we'll turn it over.

Speaker Change: Got it well congrats on a phenomenal year, Dave best of luck.

Speaker Change: I will turn it over.

David Powers: Alright, thank you. I appreciate it.

Speaker Change: Alright. Thank you appreciate it.

Operator: Our next question comes from Sam Poser with Williams Trading. Please go ahead.

Speaker Change: Our next question comes from Sam Poser with Williams trading. Please go ahead.

Samuel Marc Poser: Well, thank you for taking my questions, Erin. Let's do this, and then we can go on to the next one.

Samuel Marc Poser: Well. Thank you for taking my questions and let's do it and then we can go on to the other stuff.

Samuel Marc Poser: Get out of the way. Hi Sam. So what I'll provide for you, I think you're asking about the full year. I'll give you a full year for the quarter. Could you just give us Q4, just so everybody's clear on either wholesale or DTC by brand? We'll go back into the other part of it.

Speaker Change: And out of the way.

Dan: Hi, it's Dan So what I'll provide for you and I think you are asking about the full year I will give you a full year for the quarter could you just give US Q4, just so everybody is clear on either wholesale or DTC by by brand.

Speaker Change: Back into the other quarters.

Unknown Executive: Sure, I can give you the fourth quarter. So, fourth quarter fiscal 24 that we just completed. So this is going to be Global Wholesale and Distributor Combined by Brand. For UGG, it was about $139 million. For HOKA, it was about $350 million. For TEVA, $46 million. Sanok, about $5 million.

Speaker Change: Sure I can give you a fourth quarter, so fourth quarter fiscal 2004 that we just completed.

Speaker Change: So this is going to be global wholesale and distributor combined by brand.

Speaker Change: Right.

Speaker Change: About $139 million for Helga was about $350 million for Teva $46 million.

Speaker Change: About $5 million.

And then you get together.

Samuel Marc Poser: Okay. Thank you. All right. So, Dave, congratulations, first of all, on, as you go to the beach at sunset, leaving lots of sand behind. And so let's talk about that.

Speaker Change: Okay. Thank you.

Speaker Change: Alright.

Speaker Change: Dave Congratulations first of all on.

Speaker Change: <unk>.

Speaker Change: As you go to the beach in the Sunset, leaving lots of standby.

Speaker Change: And.

Speaker Change: So let's talk about.

David Powers: You delivered a lot of product early last year, and it did exceptionally well both in your own DTC and at your wholesale accounts. And then most retailers and yourselves were basically sold out come Thanksgiving, so that leaves a monster upside potentially leaving a lot of demand on the table in December. What do we think about that, especially that month of December when everybody was looking at the numbers going, there's no business being done, but there was no inventory in the market? So, can you tell us how this mid single-digit works when it looks like you have a ton of white space in arguably one of the larger Consumer Direct-to-Consumer Volume Months of the Year?

Speaker Change: Yes.

Speaker Change: You delivered a lot of product early last year. It did exceptionally well both in the store both in your own DTC.

Speaker Change: At your wholesale accounts and then most retailers and yourselves, we're basically sold out.

Speaker Change: Thanksgiving so that leaves a monster upside still potentially leaving a lot of demand on the table.

Speaker Change: In December.

Speaker Change: What how do we think about that.

Speaker Change: That especially that month of December that.

Speaker Change: Everybody was looking at the numbers, there's no business being done, but there was no inventory in the market. So.

Speaker Change: Could you tell us how this mid single digit works when it looks like you have a ton of white space and arguably one of the largest.

Speaker Change: Consumer direct to consumer volume months of the year.

David Powers: Yeah, you know, I think what we're experiencing now when you start in Corth-Forder is a lot of that demand that we missed in December came to us in Q4. And so people, when we got back in stock in some of those styles, people still wanted them. And so they were buying them in January, February, March and, you know, still are.

Yes.

Speaker Change: I think what we're experiencing now and you're starting a court order has a lot of that demand that we missed in December came to us in Q4, and so when we got back in stock in some of those styles people still wanted them and so they were buying them in January February March and still are so.

David Powers: So I wouldn't say that we missed, you know, whatever opportunity we missed in December is all lost. We did fulfill some of that demand over the last three or four months. That being said, yeah, there's opportunity this year. We're excited about the assortment, you know, and as I also mentioned, we think we can maintain high levels of full-price sales. But, you know, it's still going to be a challenging environment out there.

Speaker Change: I wouldn't say that we missed whatever opportunity we met in December.

Speaker Change: Last we did fulfill some of that demand.

Speaker Change: Over the last three to four months.

Speaker Change: That being said, yes, there is opportunity this year.

Speaker Change: We're excited about the assortment.

Speaker Change: Also mentioned, we think we can maintain high levels of full price sales, but.

Speaker Change: It's still going to be a challenging environment out there I think that the way we're pegging the business with the assortment.

Speaker Change: We don't have any necessarily any new price increases this year, and I think maintaining a tight rein on wholesale and driving it to DTC.

David Powers: I think that the way we're pegging the business with the assortment, we don't necessarily have any new price increases this year. And I think, you know, maintaining a tight rein on wholesale and driving it to DDC, I think that's about right, the way we pegged it, the way we're looking at the business going into it now.

Speaker Change: I think thats about right the way, we pegged it and the way we're looking at the business going into it now.

Steven J. Fasching: Yeah, I think also, Sam, and Steve, just on that too, the other consideration is that we did expedite product in Q3, and that sold through DTC, so through e-commerce. This year we're going to be expanding some of the amount that wholesale is ordering. Again, we'll be very careful and strategic about it, but that will put some pressure on DTC growth, right? And so, again, going back to my earlier answer to one of the previous questions, a big piece of the revenue beat for us was this full-price selling, channel mix shift, and so you're not necessarily going to have that same benefit in FY25 that we had in 24.

Steve: Yes, I think also Sam this is Steve just on that to the other consideration is we did expedite product and in Q3 and that sold through on DTC. So through E. Commerce. This year, we're going to be expanding.

Steve: Some of the amount that wholesale is ordering again, we'll be very careful and strategic about it but that will put some of the pressure on the.

Steve: The DTC growth right and so again going back to my earlier answer to one of the previous questions.

Speaker Change: Big piece of the revenue beat on what.

Speaker Change: This full price selling channel mix shift.

Speaker Change: And so you're not necessarily going to have that same benefit in FY 'twenty five that we had in 2004.

Samuel Marc Poser: I'm copying an 18% growth; there's no cakewalk.

Speaker Change: Comping, an 18% growth there is no cakewalk.

Samuel Marc Poser: I appreciate that, but I've seen some of the fall product, and it looks pretty, you know. You've got a few things up your sleeve there that could do a lot more than you anticipated. Let me just ask you this. At the beginning, you beat the high end of initial revenue guidance by eight and a half percent, you beat your initial EPS guidance by 35, you beat your gross margin by 310, and you beat your EBIT margin by 360 basis points based on what your initial guidance was last year.

Speaker Change: I appreciate that but I have seen some of the fall product that looks pretty <unk> got a few things up your sleeve that could do a lot more than what you anticipated. Let me just ask you. This.

At the beginning you be you beat your your Rev. At the high end of our initial revenue guidance by eight 5%.

Scott Your initial EPS guidance by <unk> 30 slides, we'd be a gross margin by 310 and you beat your EBIT margin by 300 basis 260 basis points based on what your initial guidance was last year is there are you guiding this year.

Samuel Marc Poser: Is there, are you guiding this year? In a sort of relatively different way, are you looking at the world the same way? Are you looking at it differently than you did a year ago?

Speaker Change: Sort of relatively differently are you looking at the world. The same way are you looking at it differently than you did a year ago at this time.

Steven J. Fasching: Yeah, Sam, I think, the way we're looking at it is we're not going to get the same benefits in FY 25 that we got in 24. Again, so the difference between the revenue change and the unit change is one that's really important to understand. Because what we benefited from in 24 was full price selling combined with price increases combined with running a scarcity model that drove more traffic into DTC.

Yes, Sam I think the way we're looking at it is we're not going to get the same benefits in FY 'twenty five that we got in 2004 against that.

Speaker Change: Difference between the revenue change in the unit changes one that's really important to understand because what we benefited from in 2004 was full price selling combined with price increases combined with running a scarcity model that drove more traffic into DTC. So we won't have the same level.

Steven J. Fasching: So we won't have the same level of benefit on price increases in FY25 that we had in 24. We'll see what the promotional environment looks like. That's always a hard one to determine, especially in the current environment, with a lot of uncertainty. You're hearing what some other companies are saying. So that's one that we will continue to carefully watch. We're being served well by kind of a controlled marketplace. So we'll continue to look at it. But I don't think the setup, to your point, is the same. I think there were more factors that we knew we could benefit from in 24 than in 25.

Speaker Change: Benefit on price increases in FY 'twenty five that we had in 'twenty four.

Speaker Change: We'll see what the promotional environment looks like.

Speaker Change: That's always a hard one to determine especially in the current environment in light of uncertainty Youre hearing what some other companies are saying so that's one that we will continue to carefully watch were being served well with kind of a controlled marketplace. So.

Speaker Change: So we'll continue to look at it but I don't think the setup to your point is the same I think there were more factors that we knew we could benefit from <unk> 24, then in 'twenty five but again, we'll manage through 'twenty five and we'll see how it turns out.

Samuel Marc Poser: Thank you guys very much, and continued success and good luck as you walk off into the sunset.

Speaker Change: Thank you guys very much and continued success in.

Speaker Change: Good luck in Q.

Speaker Change: Walk off into the Sunset.

David Powers: I'll miss you.

Amit: Thanks, Amit.

Amit: Yes.

Operator: Our next question comes from Janine Stichter with BTIG. Please go ahead.

Speaker Change: Our next question comes from Janine Stichter with BTG. Please go ahead.

Janine Marie Hoffman Stichter: Hi, good afternoon. Congratulations on a really strong year. To start out a question on HOKA, you mentioned seeing awareness from non-runners, everyday athletes, and more casual styles.

Janine Marie Hoffman Stichter: Hi, good afternoon, congrats on the really strong year and to start out a question envelope that you mentioned seeing awareness trend and non vendors to everyday athletes and more casual styles, but how do you think about further segmenting the assortment and the distribution indicator to this consumer while still keeping your heritage and then one for Steve on SG&A.

Janine Marie Hoffman Stichter: So how do you think about just further segmenting the assortment and the distribution to cater to this consumer while still keeping your heritage? And then one for Steve on SG&A, you know, you're flipping to basically a flat SG&A rate this year after a year of de-leverage. Just kind of think about where you are in that reinvestment cycle. I know you've been playing a little bit of catch up on SG&A. And if you do see upside to your revenue guide on revenues, how do you think about further reinvestment from here? Thank you.

Speaker Change: I think that's slipping to basically a flat SG&A rate this year after a year of deleverage.

Speaker Change: About where you are in that reinvestment cycle, I know you've been paying a little bit of catch up on SG&A and ECS guys. Good afternoon.

Speaker Change: Revenues and how you think about further investment.

Speaker Change: Thank you.

David Powers: Yeah, thanks, Janine. You know, on the consumer breadth of HOKA, it's pretty exciting, right? And one thing I can guarantee you is that we will always prioritize our performance business first. And so there's no doubt, we are a performance-innovation-driven company. And that's going to be our priority. We'll always prioritize specialty-run accounts. We'll always prioritize that, you know, the hardcore running and trail running consumer. But we obviously have been adopted in a pretty substantial way from a lifestyles perspective.

Thanks Jeanine.

Speaker Change: On the consumer breath of HOKA, and it's pretty exciting.

Speaker Change: One thing I can guarantee you that we will always prioritize our performance business first and so we are whereas no doubt where performance innovation driven company.

Speaker Change: And thats going to be our priority, we will always prioritize prioritize a specialty run.

Speaker Change: Accounts, we are all we will always prioritize that the hardcore running in trail running consumer.

Speaker Change: But we obviously have been adopted in a pretty substantial way from a lifestyle perspective, and thats because of the performance thats built into the product. It's not just that they look good but they feel good and now they've become something that these consumers.

David Powers: And that's because of the performance that's built into the product. It's not just that they look good, but they feel good. And now they have become something that these consumers not only want the product, they need the product. They need the next color. They need the next version of the Bondi or the Clifton, the Arahi, and now the Mach.

Speaker Change: They not only want the product they need the product they need the next.

Speaker Change: Color they need the next version of the bond I or the Clifton <unk> and now the Mark.

David Powers: So that will just expand over time as we segment the line over time. And, you know, we've been doing this from day one with innovation that's appropriate to the channel, segmenting by channel and consumer, particularly as we get into Dix and JD and Foot Locker and broader doors. And there's, you know, I also believe there's just a generalized trend out there that running is kind of becoming the new streetwear. Those looks are adopted by more consumers now than they ever have been. And we see that continuing. And, you know, we welcome those consumers into the brand, but they will be buying performance products from us, not lifestyle design products.

Speaker Change: So that will just expand over time as we segment.

Speaker Change: The line overtime.

Speaker Change: We've been doing this from day, one is innovation that's appropriate to the channels segmenting by channel and consumer, particularly as we get into Dicks and J D in foot locker and broader doors.

Speaker Change: And there is.

Speaker Change: I also believe there is just a generalized trend out there that running is kind of becoming the new street wear those looks are adopted by more consumers now than they ever have been and we see that continuing and we.

Speaker Change: We welcome those consumers into the brand, but they will be buying performance product from us not lifestyle designed product.

Steven J. Fasching: And then, Janine, just on SG&A. So I think, you know, in terms of where we landed in FY24, the 34% spend to revenue ratio and the guide equivalent for FY25, we think that's kind of the appropriate level. We'll see. It is increasing from where we were in the past couple of years as we've made investments and continue to make investments, and I called it out in the script, in terms of building talent, infrastructure, and distribution.

Speaker Change: And then just on the SG&A. So I think in terms of where we landed FY 'twenty for the 34%.

Speaker Change: Spend to revenue in the guide equivalent for FY 'twenty, we think thats kind of the appropriate level, we will see.

Speaker Change: It is increasing from where we've been the past couple of years as we've made investments and continue to make investments and I called it out on the script.

Speaker Change: In terms of building talent infrastructure.

Speaker Change: Distribution so.

Speaker Change: As we're growing and continue to grow at a slightly faster pace than what we anticipated there is still a bit of a catch up.

Steven J. Fasching: So, you know, as we're growing and continue to grow at a slightly faster pace than what we anticipated, there's still a bit of a catch-up that you're seeing. But, I think as we continue to look at the year, we'll manage accordingly. I think that has served us well. We haven't gotten ahead of the growth, but we're carefully monitoring to keep pace with it. And that's some of the increases that you've really seen over the last couple of years.

Speaker Change: Youre seeing.

Speaker Change: As we as we continue to look at the year, we will manage accordingly, I think that has served us well.

Speaker Change: Haven't gotten ahead of the growth.

Speaker Change: But we are carefully monitoring to keep pace with it and thats some of the increases that <unk> seen really over the last couple of years.

Janine Marie Hoffman Stichter: Great, thanks so much. That's really helpful, and best of luck.

Speaker Change: Great. Thanks, so much that's very helpful and best of luck.

Jeanine: Thanks Jeanine.

Operator: Our last question for today comes from Jonathan Komp with Baird. Please go ahead.

Our last question for today comes from Jonathan Komp with Baird. Please go ahead.

Jonathan Robert Komp: Yeah, hi, thank you. Good afternoon.

Jonathan Robert Komp: Yes, hi, Thank you good afternoon, I wanted to ask about <unk>, if I could just ask a near term question.

Jonathan Robert Komp: I wanted to ask about HOCA. If I could just ask a near-term question, it looks like D2C was up in the low 20s in the fourth quarter year-over-year, and you're assuming D2C outgrows for fiscal 2025. So are you assuming a little bit of re-acceleration? And if so, could you maybe talk about the drivers?

Speaker Change: And it looks like DTC was up.

Speaker Change: Low 20 in the fourth quarter year over year, and Youre, assuming DTC outgrows for fiscal 2025. So are you assuming a little bit of a reacceleration and if so could you maybe talk about the drivers.

David Powers: When you think about the product launch strategy for HOKA this year, could you just give insight to some of the shifts there? I know we haven't seen the next version of a few of your key icons or your biggest styles like Clifton and Bondi. So just how should we think about that, the product launch cadence or cycle?

Speaker Change: When you think about the product launch strategy for HOKA. This year could you just give insight too.

Speaker Change: Yes, some of the shifts there I know we haven't seen the next version of a few of your key icons are your.

Speaker Change: Your biggest.

Speaker Change: Styles by Clifton and Bondi. So just how should we think about that product launch cadence our cycle.

David Powers: Yeah, I'll tackle with Steve the, you know, DDC versus wholesale, you know, generally, yes, we will see, you know, a slight increase in the rate of DDC growth the way we're looking at it, and that contemplates a little bit lower wholesale, but it's not dramatic on one end or the other. But, you know, as we increase our awareness, as we have more international distribution, and open select retail stores, that does drive more traffic and healthy business to our DDC channel. We convert at a very high rate when people come to our website.

Speaker Change: Okay.

Speaker Change: Yes, I'll tackle with Steve.

The DTC versus wholesale generally, yes, we will see a slight increase in the rate of growth.

Speaker Change: DTC growth the way we are looking at it.

Speaker Change: That contemplates a little bit lower wholesale, but it's not dramatic on one end or the other but as we are as our awareness increases as we have more international distribution opening select retail stores that does drive more traffic and a healthy business to our DTC channel, we convert at a very high rate when people come to our.

David Powers: And then we have, you know, just a growing repeat business from our existing customer base. And the new launch cadence, as you mentioned, brings eyeballs to the site as well. So we are in that, by design, we're strategically trying to grow DDC a little bit faster over time because we know that's good for us long term, good for margins, good for the health of the marketplace. And that pull model is working extremely well. So you'll see this year the way we've modeled it out, a little bit better in DDC. Then wholesale, but you know, on a regional basis, wholesale will be very strong too.

Speaker Change: A website.

Speaker Change: And then we have just the growing repeat business from our existing customer base and the new launch cadence as you mentioned brings eyeballs to the site as well so we are.

Speaker Change: By design, where we're strategically trying to grow DTC, a little bit faster over time, because we know that's good for us long term good for margins good for health of the marketplace and that pull model is working extremely well so you'll see this year the way we've modeled it out a little bit better in DTC.

Speaker Change: And then wholesale but on a regional basis wholesale lease.

Speaker Change: Very strong.

Steven J. Fasching: Yeah, and what I would add, John, just to that is, you know, just be careful about kind of relying too much on a quarter performance. You know, we are managing this for the long run.

Yes.

Speaker Change: What I would add John just to that is.

Speaker Change #100: Just be careful about relying too much on a quarter performance. We are managing this for the long run. So again when you have depleted inventory in the channel that might.

Steven J. Fasching: So, again, when you have depleted inventory in the channel, you know, that might impact your wholesale growth in one quarter as you're replenishing that, but it's not necessarily indicative of the longer-term view. So, back to Dave's point, as we look at growth, clearly, a focus is on trying to grow DTC faster, which is kind of what we are doing, and growing the proportion of that. I wouldn't rely too much on one quarter or a dynamic in that quarter because there are other factors that affect the short-term, but we're looking at the long-term.

Speaker Change #101: Impact your wholesale growth in one quarter as you're refilling that its not necessarily indicative of the longer term views. It back to Dave's point as we look at growth clearly our focus is on trying to grow DTC faster, which is kind of what we are doing in growing the proportion of that I wouldnt rely too much just on one quarter.

Speaker Change #101: Our a dynamic in that quarter, because there are other factors that affect the short term, but we're looking at the long term, yes, I think that's a really good point to keep in mind. We are we are not in a.

David Powers: Yeah, I think that that's a really good point to keep in mind is that we are not in a consistent model of new introductions of products and drops, right? It's been changing a little bit year over year. We're starting to formalize that a little bit more, but, you know, sometimes when you see a drop in sales, say, credit card data, you know, you've got to look at what's in the market, when do we drop things, what were we selling last year, full price versus markdown.

Speaker Change #101: Consistent model of new introductions of products and drops right, it's been changing a little bit year over year, we are starting to formalize that a little bit more but sometimes when you see a drop in sales say credit card data.

Speaker Change #101: You got to look at what's in the market when do we drop things, where we are selling last year full price versus markdown.

David Powers: And, you know, that's why I think, look at the long view of the year when we have multiple drops over the year. Our innovation engine and the pipeline hit the marketplace; it's best to look at that over a 12 to 18 month period versus three months because there are so many puts and takes from new introductions this year, last year, markdowns, et cetera. So, I think Steve's spot on on that point

Speaker Change #101: That's why I think you look at the long view of the year when we have multiple drops over the year, our innovation engine and the pipeline hits the marketplace. It's best to look at that over a 12 to 18 months period versus three months because there's so many puts and takes from new introductions. This year last year markdowns et cetera. So.

Speaker Change #102: I think Steve spot on on that point, yes.

Stefano Caroti: Yeah, and two new products, John, we have a couple of big programs hitting the market in fall and early next year, Speedgoat is our biggest trail franchise, a new Speedgoat 6 will hit the market in June, Skyflow is a new run specialty exclusive and DTC exclusive that is going to hit the market in July, that's a sizable program for us, and Bondi, which is our second biggest shoe, will hit Q4 next year, an updated Bondi and the shoe looks fantastic, I'm very excited about how it's been received by our key partners.

John David Kernan: And two new products, John that we have a couple of.

John David Kernan: Big programs hitting the market this fall and early next year.

Speaker Change #103: Speak up is our biggest Statoil franchise, new speaker Fixer will hit the market in June.

Speaker Change #104: <unk> is a new.

Speaker Change #104: Ron specialty exclusive in DTC exclusive is going to hit the market in July and.

Speaker Change #104: That's a sizable program for us.

Speaker Change #104: And Bondi, which is our second biggest shoe with a Q4 next year.

Speaker Change #104: An updated Bondi and the shoe looks fantastic I'm very excited about.

Speaker Change #104: How it has been received by our partners.

Jonathan Robert Komp: That's great. Thanks for all the color. And Dave, best of luck. Thanks again.

Speaker Change #105: That's great. Thanks for all the color and Dave.

Speaker Change #107: Best of luck. Thanks again.

David Powers: Thanks, Jonathan. Take care, man.

Speaker Change #106: Thanks, Jonathan Thanks Aman.

Speaker Change #105: Okay.

Operator: This will conclude our question and answer session. And with that, we will conclude today's conference call. Thank you all for your participation. You may now disconnect.

Speaker Change #108: This will conclude our question and answer session and with that we will conclude today's conference call. Thank you all for your participation you may now disconnect.

Speaker Change #108: Okay.

Speaker Change #108: Yeah.

Speaker Change #108: Yeah.

Speaker Change #108: Yeah.

Speaker Change #109: Thank you.

Speaker Change #109: Yeah.

Speaker Change #109: Yes.