Q1 2027 Deckers Outdoor Corp Earnings Call

July 23, 2026

Operator: Please stand by. Your meeting is about to begin. Good afternoon, everyone, and thank you for standing by. Welcome to the Deckers Brands' Q1 fiscal 2027 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 your questions. If anyone has any difficulties hearing the conference call, please press star zero for operator assistance at any time. Finally, I would like to remind everyone that this conference call is being recorded. I would now like to turn the call over to Ms. Erinn Kohler, Vice President, Investor Relations and Corporate Planning. Please go ahead, ma'am.

Operator: Please stand by. Your meeting is about to begin. Good afternoon, everyone, and thank you for standing by. Welcome to the Deckers Brands' Q1 Fiscal 2027 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 your questions. If anyone has any difficulties hearing the conference call, please press star zero for operator assistance at any time. Finally, I would like to remind everyone that this conference call is being recorded. I would now like to turn the call over to Ms. Erinn Kohler, Vice President, Investor Relations and Corporate Planning. Please go ahead, ma'am.

Speaker #1: Please stand by. Your meeting is about to begin. Good afternoon, everyone, and thank you for standing by. Welcome to the Deckers Outdoor Corporation first quarter fiscal 2027 earnings conference call.

Speaker #1: At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for your questions.

Speaker #1: If anyone has any difficulties hearing the conference call, please press star 0 for operator assistance at any time. And finally, I would like to remind everyone that this conference call is being recorded.

Speaker #1: I would now like to turn the call over to Ms. Erinn Kohler, Vice President of Investor Relations and Corporate Planning. Please go ahead, ma'am.

Speaker #2: Hello, and thank you, everyone, for joining us today. On the call are Stefano Caroti, President and Chief Executive Officer, and Steve Fasching, Chief Financial Officer.

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

Speaker #2: 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.

Speaker #2: These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements made on this call today, other than statements of historical fact, are forward-looking statements.

Erinn Kohler: All statements made on this call today, other than statements of historical fact, are forward-looking statements and include statements regarding our ability to drive long-term value, the dynamic macroeconomic environment, and related impacts on our business and operating results, including changes to global trade policy, freight costs, and fluctuations in foreign currency exchange rates, geopolitical conflicts, including the ongoing Middle East conflict and related supply chain logistics and cost impacts, our current and long-term strategic objectives, the expected performance of our brands and demand for our products, the anticipated impacts of our brand, product, marketing, marketplace, distribution, and investment strategies, our product development plans, and the timing and anticipated performance of product launches, changes in consumer behavior, our ability to acquire new consumers and gain market share, our ability to achieve our financial outlook and multi-year framework, including anticipated revenues, product mix, margins, expenses, inventory levels, promotional activity, anticipated rate of full price selling and earnings per share, the timing of wholesale and distributor shipments, our ability to maintain a premium full price global marketplace, statements regarding tariff refunds, and our ability to generate free cash flow and execute our capital allocation strategy, including potential share repurchases.

Speaker #2: And include statements regarding our ability to drive long-term value, the dynamic macroeconomic environment, and related impacts on our business and operating results, including changes to global trade policy, freight costs, and fluctuations in foreign currency exchange rates; geopolitical conflicts, including the ongoing Middle East conflict and related supply chain, logistics, and cost impacts; our current and long-term strategic objectives; the expected performance of our brands and demand for our products; the anticipated impacts of our brand, product, marketing, marketplace, distribution, and investment strategies; our product development plans and the timing and anticipated performance of product launches; changes in consumer behavior; our ability to acquire new consumers and gain market share; our ability to achieve our financial outlook in our multi-year framework, including anticipated revenues, product mix, margins, expenses, inventory levels, promotional activity, anticipated rate of full-price selling, and earnings per share; the timing of wholesale and distributor shipments; our ability to maintain a premium full-price global marketplace; statements regarding tariff refunds; and our ability to generate free cash flow and execute our capital allocation strategy, including potential share repurchases.

Erinn Kohler: our financial outlook and multi-year framework, including anticipated revenues, product mix, margins, expenses, inventory levels, promotional activity, anticipated rate of full price selling and earnings per share, the timing of wholesale and distributor shipments, our ability to maintain a premium full price global marketplace, statements regarding tariff refunds, and our ability to generate free cash flow and execute our capital allocation strategy, including potential share repurchases.

Speaker #2: Forward-looking statements made on this call represent management's current expectations and are based on information available at the time such statements are made. Forward-looking statements involve numerous known and unknown risks and uncertainties, and other factors, such as foreign currency rate fluctuations and changes to trade policies, that may cause our actual results to differ materially from any results predicted, assumed, or implied by the forward-looking statements.

Erinn Kohler: Forward-looking statements made on this call represent management's current expectations and are based on information available at the time such statements are made. Forward-looking statements involve numerous known and unknown risks, uncertainties, and other factors such as foreign currency rate fluctuations, and changes to trade policies that may cause our actual results to differ materially from any results predicted, assumed, or implied by the forward-looking statements. The company has explained some of these risks and uncertainties in its SEC filings, including in the Risk Factor section of its annual report on Form 10-K and quarterly reports on Form 10-Q. Except as required by law or the listing rules of the New York Stock Exchange, the company expressly disclaims any intent or obligation to update any forward-looking statements.

Speaker #2: The company has explained some of these risks and uncertainties in its SEC filings, including in the Risk Factors section of its annual report on Form 10-K and quarterly reports on Form 10-Q.

Speaker #2: 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 #2: On this call, management may refer to financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including constant currency as well as free cash flow.

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 as well as free cash flow. For example, the company reports comparable direct-to-consumer sales on a constant currency basis for operations that were open throughout the current and prior reporting periods. The company believes that these non-GAAP financial measures are useful supplemental indicators of its operating performance because they exclude items that are unrelated to and may not be indicative of its core operating results. Additionally, free cash flow is defined as net cash provided by operating activities for a particular period, less capital expenditures made during that same period. The company believes free cash flow is a useful supplemental measure of liquidity as it reflects the cash generated from operations after investments required to support the strategic growth of the business.

Speaker #2: For example, the company reports comparable direct-to-consumer sales on a constant currency basis for operations that were open throughout the current and prior reporting periods. The company believes that these non-GAAP financial measures are useful supplemental indicators of its operating performance because they exclude items that are unrelated to, and may not be indicative of, its core operating results.

Speaker #2: Additionally, free cash flow is defined as net cash provided by operating activities for a particular period, less capital expenditures made during that same period.

Speaker #2: The company believes free cash flow is a useful supplemental measure of liquidity, as it reflects the cash generated from operations after investments required to support the strategic growth of the business.

Erinn Kohler: The company believes free cash flow is a useful supplemental measure of liquidity as it reflects the cash generated from operations after investments required to support the strategic growth of the business. Thanks, Erinn. Good afternoon, and thank you all for joining today's call. Please review our earnings release published today for additional information regarding our non-GAAP financial measures. With that, I'll now turn it over to Stefano.

Speaker #2: Please review our earnings release published today for additional information regarding our non-GAAP financial measures. With that, I'll now turn it over to Stefano.

Erinn Kohler: Thanks, Erinn. Good afternoon, and thank you all for joining today's call. Please review our earnings release published today for additional information regarding our non-GAAP financial measures. With that, I'll now turn it over to Stefano.

Speaker #3: Thanks, Erinn. Good afternoon, and thank you all for joining today's call. For the first time in Deckers' history, we delivered over $1 billion of revenue in the first quarter, as total company revenue increased 5.7% versus last year.

Stefano Caroti: Thanks, Erinn. Good afternoon, and thank you all for joining today's call. For the first time in Deckers' history, we delivered over $1 billion of revenue in Q1, as total company revenue increased 5.7% versus last year, and diluted earnings per share was $0.94, both above our expectations for the quarter. As anticipated, performance was led by total company DTC, which increased 13% versus last year. Both HOKA and UGG maintained solid momentum and continued to capture high level of full price consumer demand, driving global DTC revenue growth of 17% and 6% respectively. Wholesale channel growth was in line with our expectation, which included planned international shipment timing differences moving later this year as compared to last. Underlying consumer demand for our brands remains strong across international markets, and domestically.

Speaker #3: And diluted earnings per share was $9.40 for the quarter. As anticipated, performance was led by total company DTC, which increased 13% versus last year. Both HOKA and UGG maintained solid momentum and continued to capture a high level of full-price consumer demand, driving global DTC revenue growth of 17% and 6%, respectively.

Speaker #3: Wholesale channel growth was in line with our expectations, which included planned international shipment timing differences moving later this year as compared to last. Underlying consumer demand for our brands remained strong across international markets, and domestically, HOKA and UGG each delivered healthy first-quarter growth in terms of wholesale revenue sell-in and full-price unit sell-through in the U.S.

Stefano Caroti: HOKA and UGG each delivered healthy Q1 growth in terms of wholesale revenue sell-in and full price units sell-through in the US market. I'm especially pleased with our progress across innovation and product newness, which are resonating globally. The engagement we're seeing is not limited to a single region, channel, or product family. It reflects the broader impact of our consistent approach to creating distinctive consumer-led products that connect emotionally, perform exceptionally, and amplify the relevance of our brands. Further, we have been disciplined in how we're managing supply, protecting brand heat, and avoiding unnecessary promotional pressure, reflected in both the quality of our inventories and high levels of full price business. This gives us greater flexibility and visibility as we plan forward, because we are operating from a stronger inventory position with cleaner channels, better pricing integrity, and continued consumer demand for the products we're bringing to market.

Speaker #3: I'm especially pleased with our progress across innovation and product newness, which are resonating globally. The engagement we're seeing is not limited to a single region, channel, or product family.

Speaker #3: It reflects the broader impact of our consistent approach to creating distinctive, consumer-led products that connect emotionally, perform exceptionally, and amplify the relevance of our brands.

Speaker #3: Further, we have been disciplined in how we're managing supply, taking brand heat and avoiding unnecessary promotional pressure, as reflected in both the quality of our inventories and high levels of full-price business.

Speaker #3: This gives us greater flexibility and visibility as we plan forward because we're operating from a stronger inventory position, with cleaner channels and better pricing integrity, and continued consumer demand for the products we're bringing to market.

Stefano Caroti: This gives us greater flexibility and visibility as we plan forward, because we are operating from a stronger inventory position with cleaner channels, better pricing integrity, and continued consumer demand for the products we're bringing to market. These results reinforce our confidence in our fiscal 2027 outlook and multi-year framework. Our teams are bringing new and innovative ideas to market at the right time, while staying focused on quality, authenticity, and long-term brand health. We remain committed to the fundamentals that have long differentiated Deckers: building powerful brands, preserving a pull model of demand, and investing with purpose to enhance our competitive positioning and capitalize on the opportunities ahead.

Speaker #3: These results reinforce our confidence in our fiscal '27 outlook and multi-year framework. Our teams are bringing new and innovative ideas to market at the right time, while staying focused on quality, authenticity, and long-term brand health.

Stefano Caroti: These results reinforce our confidence in our fiscal 2027 outlook and multi-year framework. Our teams are bringing new and innovative ideas to market at the right time, while staying focused on quality, authenticity, and long-term brand health. We remain committed to the fundamentals that have long differentiated Deckers: building powerful brands, preserving a pull model of demand, and investing with purpose to enhance our competitive positioning and capitalize on the opportunities ahead. While the consumer backdrop remains pressured, we continue to see people showing up for the brands they love, and we believe the compelling product pipeline for both HOKA and UGG will support continued market share gains throughout this year and beyond. Steve will provide further details on our Q1 results and fiscal year 2027 outlook later in the call. First, I will share an update on Q1 brand performance. Starting with HOKA.

Speaker #3: We remain committed to the fundamentals that have long differentiated Deckers: building powerful brands, preserving a pull model of demand, and investing with purpose to enhance our competitive positioning and capitalize on the opportunities ahead.

Speaker #3: While the consumer backdrop remains pressured, we continue to see people showing up for the brands they love. And we believe the compelling product pipeline for both HOKA and UGG will support continued market share gains throughout this year and beyond.

Stefano Caroti: While the consumer backdrop remains pressured, we continue to see people showing up for the brands they love, and we believe the compelling product pipeline for both HOKA and UGG will support continued market share gains throughout this year and beyond. Steve will provide further details on our Q1 results and fiscal year 2027 outlook later in the call. First, I will share an update on Q1 brand performance. Starting with HOKA.

Speaker #3: Steve will provide further details on our first-quarter results and fiscal year 2027 outlook later in the call. But first, I will share an update on Q1 brand performance.

Speaker #3: Starting with HOKA, global revenue in the first quarter increased 8% versus last year, to $704 million. HOKA's performance was driven by global DTC revenue increasing 17%, with all international regions continuing to deliver robust growth, and the U.S.

Stefano Caroti: Global revenue in the Q1 increased 8% versus last year to $704 million. HOKA performance was driven by global DTC revenue increasing 17%, with all international regions continuing to deliver robust growth and the US maintaining positive momentum. DTC growth was broad-based across HOKA franchise families, with continued strong demand for our most popular products, alongside well-received updates to emerging models in the assortment. As growth and consumer affinity for Clifton and Bondi continues to build, additional models driving full price DTC demand included Speedgoat 7, benefiting from our global integrated Run Wilder marketing campaign that delivered meaningful consumer engagement across all key markets. Mach 7, featuring a lower profile geometry inspired by our fastest shoe, the Cielo X1.

Speaker #3: Maintaining positive momentum, DTC growth was broad-based across HOKA franchise families, with continued strong demand for our most popular products, alongside well-received updates to emerging models in the assortment.

Speaker #3: As growth and consumer affinity for Clifton and Bondi continues to build, additional models driving full-price DTC demand included Spigot 7, benefiting from our global integrated Ronn Wilder marketing campaign that delivered meaningful consumer engagement across all key markets; Mach 7, featuring a lower-profile geometry inspired by a faster shoe; the CLX1; Mafate Speed 2, leading the HOKA brand's acquisition of global lifestyle consumers, particularly with the recent excellent collaboration that was a resounding success in building brand heat and attention to the model more broadly; and Skyward, attracting consumers to the X2 for an ultra-premium daily ride, and the Skyward Laceless as an easy pull-on recovery shoe.

Stefano Caroti: Mafate Speed 2, leading the HOKA brand's acquisition of global lifestyle consumers, particularly with the recent xScream collaboration that was a resounding success in building brand heat and attention to the model more broadly. Skyward X, attracting consumers to the Skyward X2 for an ultra-premium daily ride and the Skyward Laceless as an easy pull-on recovery shoe. We're very encouraged by the meaningful consumer engagement with these models, spanning across road running, trail, and lifestyle, which collectively contributed over half of global HOKA DTC growth in the quarter. The breadth of DTC demand across HOKA is the result of our targeted investments in capabilities across technology, design, color, lifestyle, and marketing, which have allowed HOKA to expand consumer appeal for a wider array of styles.

Speaker #3: We're very encouraged by the meaningful consumer engagement with these models, spanning across road running, trail, and lifestyle, which collectively contributed over half of global HOKA DTC growth in the quarter.

Speaker #3: The breadth of DTC demand across HOKA is the result of our targeted investments in capabilities across technology, design, color, lifestyle, and marketing, which have allowed HOKA to expand consumer appeal for a wider array of styles.

Speaker #3: This provides HOKA with an even greater opportunity to expand closet share with existing consumers and attract new consumers through models that offer a distinct HOKA performance experience, while extending into lifestyle wearing occasions.

Stefano Caroti: This provides HOKA with an even greater opportunity to expand closet share with existing consumers and attract new consumers through models that offer a distinct HOKA performance experience while extending into lifestyle wearing occasions. We expect the benefits of these investments to continue building season after season, with current product assortment representing early days of this strategic elevation and even more exciting things to come in spring 2027 and beyond. On that front, I'd like to highlight one of our most recent launches, the first ever Clifton Pro. Though it only has been in the market for about two weeks, we are very encouraged by the early response from consumers and wholesale partners, with some accounts already placing reorders.

Speaker #3: We expect the benefits of these investments to continue building season after season, with the current product assortment representing the early days of the strategic elevation—and even more exciting things to come in Spring '27 and beyond.

Speaker #3: On that front, I'd like to highlight one of our most recent launches: the first-ever Clifton Pro, which has only been in the market for about two weeks.

Speaker #3: We're very encouraged by the early response from consumers and wholesale partners, with some accounts already placing reorders. The launch of Clifton Pro is an important milestone for HOKA, as it represents the progress we're making to offer more impactful differentiation, both within our product assortment and relative to the competition.

Stefano Caroti: The launch of Clifton Pro is an important milestone for HOKA as it represents the progress we are making to offer more impactful differentiation, both within our product assortment and relative to the competition. Building on the strength of the Clifton franchise, Clifton Pro elevates the performance experience with HOKA PROGLYDE+ midsole technology, featuring a supercritical foam that offers greater resilience and efficiency with every stride. Clifton Pro introduces our updated technology branding for HOKA, creating a clear performance product architecture that makes our Fly and Glide collections more intuitive for consumers. Our Glide collection is designed to feel smooth, soft, and cushioned, which encapsulates franchises like Clifton and Bondi. On the other end of the performance spectrum, our Fly collection is designed to be responsive, fast, and propulsive, including franchises like the Mach, Cielo X, and Rocket X.

Speaker #3: Building on the strengths of the Clifton franchise, Clifton Pro elevates the performance experience with HOKA Pro Glide Plus midsole technology, featuring a supercritical foam that offers greater resilience and efficiency with every stride.

Speaker #3: Clifton Pro introduces our updated technology branding for HOKA, creating a clear performance product architecture that makes our Fly and Glide collections more intuitive for consumers.

Speaker #3: Our Glide collection is designed to feel smooth, soft, and cushioned, which encapsulates franchises like Clifton and Bondi. On the other end of the performance spectrum, our Fly collection is designed to be responsive, fast, and propulsive, including franchises like the Mach, Clox, and Rocket X.

Speaker #3: The Clifton Pro launched with selective, strategic wholesale segmentation, while the Clifton 11 update is positioned for broader wholesale distribution, with both styles available through DTC.

Stefano Caroti: The Clifton Pro launch with selected strategic wholesale segmentation, while the Clifton 11 update is positioned for broader wholesale distribution with both styles available through DTC. As we build upon the Pro concept, the Mach Pro will be our first model within the Fly collection, which is receiving very encouraging bookings in advance of its strategically segmented spring 2027 release. The introduction of HOKA brand technologies is helping create more structure and differentiation throughout our innovation pipeline across performance and lifestyle, improving model clarity for consumers, supporting premium price points, and expanding the HOKA brand's addressable market over time. From a HOKA wholesale perspective, global revenue increased 3% versus last year, aligned with our expectation that outlined an international shipment timing difference this year versus last.

Speaker #3: As we build upon the Pro concept, the Mach Pro will be our first model within the Fly Collection, which is receiving very encouraging bookings in advance of its strategically segmented Spring '27 release.

Speaker #3: The introduction of HOKA brand technologies is helping create more structure and differentiation throughout our innovation pipeline across performance and lifestyle, improving model clarity for consumers, supporting premium price points, and expanding the HOKA brand's addressable market over time.

Speaker #3: From a HOCA wholesale perspective, global revenue increased 3% versus last year, aligned with our expectation that outlined an international shipping timing difference this year versus last.

Speaker #3: Growth in the quarter was driven by the U.S. market, which delivered higher sell-in and a strong increase in full-price sell-through, reflecting a healthier marketplace and a smooth transition for Clifton.

Stefano Caroti: Growth in the quarter was driven by the US market, which delivered higher sell-in and strong increase in full price sell-through, reflecting a healthier marketplace and smooth transition for Clifton. While reported international wholesale revenue reflected the comparison to unusually early shipments last year, underlying consumer demand remains strong across regions and channels. EMEA delivered robust wholesale sell-through and another quarterly record for reorders. International DTC continued to generate exceptional revenue growth across Europe, China, and Japan. This momentum is fueled by the HOKA brand's relentless focus on innovation and performance. Last month, that spirit was on full display at the Western States Endurance Run, the oldest continuously run 100-mile trail race, where HOKA celebrates its origin in trail running as the title sponsor.

Speaker #3: While reported international wholesale revenue reflected the comparison to unusually early shipments last year, underlying consumer demand remained strong across regions and channels. EMEA delivered robust wholesale sell-through and another quarterly record for reorders.

Speaker #3: An international DTC continued to generate exceptional revenue growth across Europe, China, and Japan. This momentum is fueled by the HOKA brand's relentless focus on innovation and performance.

Speaker #3: Last month, that spirit was on full display at the Western States Endurance Run, the oldest continuously run 100-mile trail race, where HOKA celebrates its origin in trail running as the title sponsor.

Speaker #3: This year's Ultra Marathon was particularly special because our very own Senior Manager of Product Engineering and HOKA athlete, Vincent Bouillard, set a new course record, winning the race in a custom-made HOKA Tecton prototype that he helped design.

Stefano Caroti: This year's ultramarathon was particularly special because our very own Senior Manager of Product Engineering and HOKA athlete, Vincent Bouillard, set a new course record, winning the race in a custom-made HOKA Tecton prototype that he helped design. We are incredibly proud of Vincent's accomplishment, both as an athlete and as an employee. Bravo, Vincent. We are also proud to congratulate Sam Laidlow, one of the world's top triathletes, on his recent world record-setting victory at Challenge Roth, the largest iron distance triathlon in the world. Competing the HOKA Rocket X3, Sam's performance highlights the potential of HOKA innovation at the highest levels of competition. As we move into the second quarter, we are focused on advancing our global marketplace execution to elevate and differentiate our strategic partners, supported by the continued strength of our DTC business.

Speaker #3: We are incredibly proud of Vincent's accomplishment, both as an athlete and as an employee. Bravo, Vincent. We're also proud to congratulate Sam Laidlaw, one of the world's top triathletes, on his recent world-record-setting victory at Challenge Roth.

Speaker #3: The largest Iron-distance triathlon in the world. Competing in the HOKA Rocket X3, Sam's performance highlights the potential of HOKA innovation at the highest levels of competition.

Speaker #3: As we move into the second quarter, we're focused on advancing our global marketplace execution to elevate and differentiate our strategic partners, supported by the continued strength of our DTC business.

Speaker #3: In the coming quarters, we'll continue to bring HOKA innovation to market across road, trail, and lifestyle to grow brand awareness and capture global share.

Stefano Caroti: In the coming quarters, we'll continue to bring HOKA innovation to market across road, trail, and lifestyle to grow brand awareness and capture global share. Shifting to UGG. Global revenue in Q1 increased 5% versus last year to $278 million. Performance was balanced across channels, with DTC and wholesale growing 6% and 5% respectively. UGG delivered growth in both the US and international regions. Growth was led by international markets with particular strength in Asia as the mono-brand retail presence has been especially effective at driving consumer adoption of versatile UGG products across new categories. UGG performance in Q1 reflected continued progress with our 365 and men's growth initiatives. During our first fiscal quarter, we continued to allocate availability of key classic styles while directing greater marketing and product investments toward fashion-casual footwear, sneakers, and sandals.

Speaker #3: Shifting to AG, global revenue in the first quarter increased 5% versus last year, to $278 million. Performance was balanced across channels, with DTC and wholesale growing 6% and 5%, respectively.

Speaker #3: AG delivered growth in both the U.S. and international regions. Growth was led by international markets, with particular strength in Asia, as the monobrand retail presence has been especially effective at driving consumer adoption of versatile AG products across new categories.

Speaker #3: AG performance in the first quarter reflected continued progress with our 365 and men's growth initiatives. During our first fiscal quarter, we continued to allocate availability of key classic styles, while directing greater marketing and product investments toward fashion casual footwear, sneakers, and sandals.

Speaker #3: These efforts have driven increased consumer adoption across those categories, resulting in favorable product mix shifts that supported higher gross margins for the AG brand.

Stefano Caroti: These efforts have driven increased consumer adoption across those categories, resulting in favorable product mix shifts that supported higher gross margins for the UGG brand. Key franchise families that have contributed to these product mix shifts include the Mel family, which continues to drive demand through the original Lowmel franchise while expanding into low profile with the Minimel introduction, and the Golden Collection, which benefited from strong selling across new seasonal GoldenGaze silhouettes. This quarter, our 365 initiative is also reflected in the performance of our men's business, which accounted for the largest portion of incremental UGG revenue. We continue to see a combination of increased engagement for male consumers for all gender franchises like Tasman and Lowmel, as well as demand for newer products specifically designed to serve our men's consumers, such as the Otso clog.

Speaker #3: Key franchise families that have contributed to these product mix shifts include the Mill family, which continues to drive demand through the original Low Mill franchise, while expanding into low-profile with the Mini Mill introduction.

Speaker #3: And the Golden Collection, which benefited from strong sales across new seasonal Golden Glaze silhouettes. This quarter, our 365 initiative is also reflected in the performance of our men's business, which accounted for the largest portion of incremental AG revenue.

Speaker #3: We continue to see a combination of increasing engagement from male consumers for all gender franchises, like Tasman and Lowmill, as well as demand for newer products specifically designed to serve our men's consumers, such as the Otso clog.

Speaker #3: We're also encouraged by the reception to our spring AG apparel offering. Our Fleece collection performed especially well across the U.S., Europe, and Asia, reinforcing apparel as a natural extension of the AG brand, with an opportunity to deepen engagement across a broader range of occasions.

Stefano Caroti: We're also encouraged by the reception to our spring UGG apparel offering. Our fleece collection performed especially well across US, Europe, and Asia, reinforcing apparel as a natural extension of the UGG brand with an opportunity to deepen engagement across a broader range of occasions. Our common thread across UGG product successes remains our ability to reinterpret iconic brand codes through new silhouettes, categories, and consumer occasions, expanding the brand's relevance while maintaining the distinctive product attributes that consumers expect from the UGG brand. Importantly, these encouraging results reflect the UGG brand's ability to both influence and anticipate evolving consumer preferences, translating those insights into products and brand stories that help shape demand across categories and seasons. Our marketing initiatives continue to elevate the brand's cultural relevance, expand consumer engagement, and strengthen consumer connections across key markets.

Speaker #3: Our common thread across AG product successes remains our ability to reinterpret iconic brand codes through new silhouettes, categories, and consumer occasions—expanding the brand's relevance while maintaining the distinctive product attributes that consumers expect from the AG brand.

Speaker #3: Importantly, these encouraging results reflect the AG brand's ability to both influence and anticipate evolving consumer preferences, translating those insights into products and brand stories that help shape demand across categories and seasons.

Speaker #3: Our marketing initiatives continue to elevate the brand's cultural relevance, expand consumer engagement, and strengthen consumer connections across key markets. Men's momentum was supported by the continued halo from our spring product campaign.

Stefano Caroti: Men's momentum was supported by the continued halo from our spring product campaign as well as lifestyle storytelling that resonated with global consumers. At the same time, the brand benefited from a series of culturally relevant activations across Atlanta, Los Angeles, Paris, London, Chengdu, and Seoul, leveraging social-first content and talent partnerships that expanded awareness, deepened engagement, and reinforced UGG as a year-round lifestyle brand. Overall, our integrated approach to product storytelling, community-driven experiences, and digital engagement helped maintain strong consumer interest while building momentum behind iconic UGG franchise families and new footwear styles that enhance brand growth and credibility across categories and seasons. As we transition towards the fall season, our teams are focused on driving our progress forward with the introduction of the new Mule and Hidden Wedge silhouettes in the Mel franchise family.

Speaker #3: As well as lifestyle storytelling that resonated with global consumers, the brand benefited from a series of culturally relevant activations across Atlanta, Los Angeles, Paris, London, Chengdu, and Seoul.

Speaker #3: Leveraging social-first content and talent partnerships that expanded awareness, deepened engagement, and reinforced AG as a year-round lifestyle brand. Overall, our integrated approach to product storytelling, community-driven experiences, and digital engagement helped maintain strong consumer interest while building momentum behind iconic AG franchise families and new footwear styles that enhance brand growth and credibility across categories and seasons.

Speaker #3: As we transition towards the fall season, our teams are focused on driving our progress forward with the introduction of a new mule and hidden wedge silhouettes in the Mell franchise family.

Speaker #3: In addition to launching our Dusty Orchid Pink collection, which spans across classics, sneakers, and ballet-inspired models, we'll continue to cultivate this brand's energy with our Born-to-Feel Fall campaign later in the second quarter.

Stefano Caroti: In addition to launching our Dusty Orchid Pink collection, which spans across classics, sneakers, and ballet-inspired models. We will continue to cultivate this brand's energy with our Born to Feel fall campaign later in the Q2. Our team's efforts to continue strengthening the UGG brand's relevance across seasons and consumer occasions are reflected in our performance and the growing consumer demand for UGG, which gives us the confidence in the market share opportunities ahead for this special brand. With that, I will hand it over to Steve, who will provide further details on our Q1 financial results and our fiscal year 2027 outlook.

Speaker #3: Our team's efforts to continue strengthening the AG brand's relevance across seasons and consumer occasions are reflected in our performance, and in the growing consumer demand for AG.

Speaker #3: Which gives us the confidence in the market share opportunities ahead for this special brand. With that, I'll hand it over to Steve, who will provide further details on our first quarter financial results and our fiscal year 2027 outlook.

Speaker #1: Thanks, Stefano. And good afternoon, everyone. Our first quarter reflects continued consumer demand across both HOKA and UGG, supported by compelling product innovation, strong consumer engagement, and continued strength in our DTC channel.

Steven Fasching: Thanks, Stefano, and good afternoon, everyone. Our Q1 reflects continued consumer demand across both HOKA and UGG, supported by compelling product innovation, strong consumer engagement, and continued strength in our DTC channel. While our wholesale results included planned shipment timing dynamics, the underlying brand adoption for HOKA and UGG across regions and channels remained encouraging. Against that backdrop, we delivered Q1 revenue and earnings modestly above our expectations while continuing to invest in the long-term growth opportunities ahead. Now, let us dive into the details of our Q1 fiscal year 2027 results. Total company revenue was $1.02 billion, up 5.7% versus the prior year. Growth was primarily driven by HOKA increasing 8% versus last year to deliver quarterly revenue of $704 million, driven by DTC channel growth across Europe, China, Japan, and the US.

Steve Fasching: Thanks, Stefano, and good afternoon, everyone. Our Q1 reflects continued consumer demand across both HOKA and UGG, supported by compelling product innovation, strong consumer engagement, and continued strength in our DTC channel. While our wholesale results included planned shipment timing dynamics, the underlying brand adoption for HOKA and UGG across regions and channels remained encouraging. Against that backdrop, we delivered Q1 revenue and earnings modestly above our expectations while continuing to invest in the long-term growth opportunities ahead. Now, let us dive into the details of our Q1 fiscal year 2027 results. Total company revenue was $1.02 billion, up 5.7% versus the prior year. Growth was primarily driven by HOKA increasing 8% versus last year to deliver quarterly revenue of $704 million, driven by DTC channel growth across Europe, China, Japan, and the US.

Speaker #1: While our wholesale results included planned shipment timing dynamics that underlined brand adoption for HOKA and AG across regions and channels, results remained encouraging. Against that backdrop, we delivered first-quarter revenue and earnings modestly above our expectations while continuing to invest in the long-term growth opportunities ahead.

Speaker #1: Now, let's dive into the details of our first quarter fiscal year 2027 results. Total company revenue was $1.02 billion, up 5.7% versus the prior year.

Speaker #1: Growth was primarily driven by HOKA, increasing 8% versus last year, to deliver quarterly revenue of $704 million. This was driven by DTC channel growth across Europe, China, Japan, and the U.S.

Speaker #1: AG increased 5% versus last year to deliver $278 million of revenue, as year-round styles continue to resonate with consumers. Gross margin for the quarter was 56.4%, which is up 60 basis points from last year's 55.8%.

Steven Fasching: UGG increased 5% versus last year to deliver $278 million of revenue as year-round styles continue to resonate with consumers. Gross margin for the quarter was 56.4%, which is up 60 basis points from last year's 55.8%. As compared to last year, Q1 gross margin primarily benefited from favorable channel mix with DTC growing faster than wholesale, favorable product mix and full price selling, favorable foreign currency exchange rates, and unique items in the quarter primarily related to better management of product closeouts with partial offsets from the net headwind of tariffs. SG&A dollar spend in the Q1 was $420 million, which is up 13% from last year's $373 million.

Steve Fasching: UGG increased 5% versus last year to deliver $278 million of revenue as year-round styles continue to resonate with consumers. Gross margin for the quarter was 56.4%, which is up 60 basis points from last year's 55.8%. As compared to last year, Q1 gross margin primarily benefited from favorable channel mix with DTC growing faster than wholesale, favorable product mix and full price selling, favorable foreign currency exchange rates, and unique items in the quarter primarily related to better management of product closeouts with partial offsets from the net headwind of tariffs. SG&A dollar spend in the Q1 was $420 million, which is up 13% from last year's $373 million.

Speaker #1: Compared to last year, first quarter gross margin primarily benefited from favorable channel mix, with DTC growing faster than wholesale; favorable product mix and full-price selling; favorable foreign currency exchange rates; and unique items in the quarter primarily related to better management of product closeouts, with partial offsets from the net headwind of tariffs.

Speaker #1: SG&A dollar spend in the first quarter was $420 million, which is up 13% from last year’s $373 million. As anticipated, SG&A dollar growth reflects annualization of new hires in the prior year, primarily to support key brand initiatives; marketing investments to support our growth strategies; higher rent costs, primarily related to adding global HOKA stores; increased technology expenses to enhance our operating platform and improve data analytics; and an increase related to foreign currency remeasurement.

Steven Fasching: As anticipated, SG&A dollar growth reflects annualization of new hires in the prior year, primarily to support key brand initiatives, marketing investments to support our growth strategies, higher rent costs primarily related to adding global HOKA stores, increased technology expenses to enhance our operating platform and improve data analytics, and an increase related to foreign currency remeasurement. Our tax rate was 23.1%, which compares to 24% for the prior year. During the Q1, we repurchased approximately $338 million worth of shares at an average price per share of $103.79. As of 30 June 2026, the company had approximately $4.7 billion remaining under its stock repurchase authorization. These results, including a lower share count from our share repurchase activity, drove diluted earnings per share of $0.94 for the quarter, which compares to $0.93 in the prior year period.

Steve Fasching: As anticipated, SG&A dollar growth reflects annualization of new hires in the prior year, primarily to support key brand initiatives, marketing investments to support our growth strategies, higher rent costs primarily related to adding global HOKA stores, increased technology expenses to enhance our operating platform and improve data analytics, and an increase related to foreign currency remeasurement. Our tax rate was 23.1%, which compares to 24% for the prior year. During the Q1, we repurchased approximately $338 million worth of shares at an average price per share of $103.79. As of 30 June 2026, the company had approximately $4.7 billion remaining under its stock repurchase authorization. These results, including a lower share count from our share repurchase activity, drove diluted earnings per share of $0.94 for the quarter, which compares to $0.93 in the prior year period.

Speaker #1: Our tax rate was 23.1%, which compares to 24% for the prior year. During the first quarter, we repurchased approximately $338 million worth of shares at an average price per share of $103.79.

Speaker #1: As of June 30, 2026, the company had approximately $4.7 billion remaining under its stock repurchase authorization. These results, including a lower share count from our share repurchase activity, drove diluted earnings per share of $0.94 for the quarter, compared to $0.93 in the prior year period.

Speaker #1: In terms of our first quarter performance, relative to the expectations we shared in May, favorable gross margin was the primary driver of our $0.07 EPS beat relative to the high end of our guidance, which is incorporated in our updated full-year outlook.

Steven Fasching: In terms of our first quarter performance relative to the expectations we shared in May, favorable gross margin was the primary driver of our $0.07 EPS beat relative to the high end of our guidance, which is incorporated in our updated full year outlook. Turning to our balance sheet at 30 June 2026, we ended June with $1.6 billion of cash and equivalents. Inventory was $808 million, down 5% versus the same point in time last year, we had no outstanding borrowings. Moving into our updated outlook for fiscal year 2027, we still expect total company revenue in the range of $5.86 billion to $5.91 billion, reflecting high single-digit growth versus the prior year. HOKA is still expected to increase low double digits, UGG is still expected to increase mid-single digits.

Steve Fasching: In terms of our first quarter performance relative to the expectations we shared in May, favorable gross margin was the primary driver of our $0.07 EPS beat relative to the high end of our guidance, which is incorporated in our updated full year outlook. Turning to our balance sheet at 30 June 2026, we ended June with $1.6 billion of cash and equivalents. Inventory was $808 million, down 5% versus the same point in time last year, we had no outstanding borrowings. Moving into our updated outlook for fiscal year 2027, we still expect total company revenue in the range of $5.86 billion to $5.91 billion, reflecting high single-digit growth versus the prior year. HOKA is still expected to increase low double digits, UGG is still expected to increase mid-single digits.

Speaker #1: Turning to our balance sheet at June 30, 2026, we ended June with $1.6 billion of cash and equivalents. Inventory was $808 million, down 5% versus the same point in time last year, and we had no outstanding borrowings.

Speaker #1: Now, moving into our updated outlook for fiscal year 2027, we still expect total company revenue in the range of $5.86 billion to $5.91 billion, reflecting high single-digit growth versus the prior year.

Speaker #1: HOKA is still expected to increase low double digits, and AG is still expected to increase mid-single digits. We have increased our now-be-slightly-better-than 56.5%, reflecting the first quarter outperformance, while also updating our go-forward tariff rate assumption to 12.5% from the prior 10%.

Steven Fasching: We have increased our gross margin expectation to now be slightly better than 56.5%, reflecting the first quarter outperformance, while also updating our go-forward tariff rate assumption to 12.5% from the prior 10%. On the tariffs previously paid, we continue to pursue tariff refunds related to the IEEPA ruling, have not included any assumptions regarding refunds as a part of our guidance at this time. SG&A is still expected to be approximately 35% of revenue as we remain committed to investing in our key growth initiatives. As a reminder, consistent with our long-term framework, our investments in this fiscal year are focused on fortifying the foundation of our business and supporting the continued growth of our brands, positioning us to begin delivering operating expense leverage in fiscal year 2028 and beyond.

Steve Fasching: We have increased our gross margin expectation to now be slightly better than 56.5%, reflecting the first quarter outperformance, while also updating our go-forward tariff rate assumption to 12.5% from the prior 10%. On the tariffs previously paid, we continue to pursue tariff refunds related to the IEEPA ruling, have not included any assumptions regarding refunds as a part of our guidance at this time. SG&A is still expected to be approximately 35% of revenue as we remain committed to investing in our key growth initiatives. As a reminder, consistent with our long-term framework, our investments in this fiscal year are focused on fortifying the foundation of our business and supporting the continued growth of our brands, positioning us to begin delivering operating expense leverage in fiscal year 2028 and beyond.

Speaker #1: On the tariffs previously paid, we continue to pursue tariff refunds related to the IEPA ruling, but have not included any assumptions regarding refunds as part of our guidance at this time.

Speaker #1: SG&A is still expected to be approximately 35% of revenue, as we remain committed to investing in our key growth initiatives. As a reminder, consistent with our long-term framework, our investments in this fiscal year are focused on fortifying the foundation of our business and supporting the continued growth of our brands, positioning us to begin delivering operating expense leverage in fiscal year 2028 and beyond.

Speaker #1: With these updates, operating margin is now expected to be slightly better than 21.5%, reflecting an increase from our prior outlook as we flow through a higher expected gross margin.

Steven Fasching: With these updates, operating margin is now expected to be slightly better than 21.5%, reflecting an increase from our prior outlook as we flow through a higher expected gross margin. Our effective tax rate is still projected to be approximately 23%. We now expect diluted earnings per share in the range of $7.35 to $7.50, which represents a $0.05 increase due to our increased gross margin expectations on the year. This earnings per share guidance still assumes share repurchases with a value equal to approximately 80% of our projected fiscal year 2027 free cash flow. Our teams remain focused on delivering the full fiscal year 2027 guidance that I just walked through. Within this full year outlook, we continue to expect growth rates to accelerate in the H2.

Steve Fasching: With these updates, operating margin is now expected to be slightly better than 21.5%, reflecting an increase from our prior outlook as we flow through a higher expected gross margin. Our effective tax rate is still projected to be approximately 23%. We now expect diluted earnings per share in the range of $7.35 to $7.50, which represents a $0.05 increase due to our increased gross margin expectations on the year. This earnings per share guidance still assumes share repurchases with a value equal to approximately 80% of our projected fiscal year 2027 free cash flow. Our teams remain focused on delivering the full fiscal year 2027 guidance that I just walked through. Within this full year outlook, we continue to expect growth rates to accelerate in the H2.

Speaker #1: Our effective tax rate is still projected to be approximately 23%. We now expect diluted earnings per share in the range of $7.35 to $7.50, which represents a $0.05 increase due to our increased gross margin expectations for the year.

Speaker #1: This earnings per share guidance still assumes share repurchases with a value equal to approximately 80% of our projected fiscal year 2027 free cash flow.

Speaker #1: Our teams remain focused on delivering the full fiscal year 2027 guidance that I just walked through. Within this full-year outlook, we continue to expect growth rates to accelerate in the second half.

Speaker #1: Similar to our first quarter, our second quarter expectations also reflect the planned timing differences in our wholesale and distributor businesses, with shipments moving later in the year, as well as an impact from lapping last year's wind-down of the Culebura brand in Q2.

Steven Fasching: Similar to our Q1, our Q2 expectations also reflect the planned timing differences in our wholesale and distributor businesses, with shipments moving later in the year, as well as an impact from lapping last year's wind down of the Koolaburra brand in Q2. With that in mind, we'd like to provide additional context on the current quarter. In Q2 compared to last year, we continue to expect HOKA contributing high single-digit percentage growth with acceleration in the H2 of this year, UGG maintaining its mid single-digit growth rate, other brands are expected to be down approximately 50% versus last year, primarily from streamlining our brand portfolio. With this all driving consolidated revenue up approximately 5% in Q2 versus last year. Our Q2 gross margin is expected to be down due to tariffs and rising freight costs.

Steve Fasching: Similar to our Q1, our Q2 expectations also reflect the planned timing differences in our wholesale and distributor businesses, with shipments moving later in the year, as well as an impact from lapping last year's wind down of the Koolaburra brand in Q2. With that in mind, we'd like to provide additional context on the current quarter. In Q2 compared to last year, we continue to expect HOKA contributing high single-digit percentage growth with acceleration in the H2 of this year, UGG maintaining its mid single-digit growth rate, other brands are expected to be down approximately 50% versus last year, primarily from streamlining our brand portfolio. With this all driving consolidated revenue up approximately 5% in Q2 versus last year. Our Q2 gross margin is expected to be down due to tariffs and rising freight costs.

Speaker #1: With that in mind, we'd like to provide additional context on the current quarter. In the second quarter, compared to last year, we continue to expect HOKA contributing high single-digit percentage growth, with acceleration in the second half of this year, AG maintaining its mid-single-digit growth rate, and other brands are expected to be down approximately 50% versus last year, primarily from streamlining our brand portfolio.

Speaker #1: With this, all driving consolidated revenue up approximately 5% in Q2 versus last year. Our second quarter gross margin is expected to be down due to tariffs and rising freight costs.

Speaker #1: While SG&A will continue to reflect first-half weighted investments, leading to an expected diluted earnings per share in the range of $1.73 to $1.78, given the unique operational timing dynamics embedded in the first half of fiscal year 2027, the planned acceleration of revenue growth in the second half is being driven primarily by the HOKA brand in our international wholesale and distributor business.

Steven Fasching: While SG&A will continue to reflect H1 weighted investments, leading to an expected diluted earnings per share in the range of $1.73 to $1.78. Given the unique operational timing dynamics embedded in H1 of fiscal year 2027, the planned acceleration of revenue growth in H2 is being driven primarily by the HOKA brand and our international wholesale and distributor business. As we have said in the past, quarterly growth is not always linear, particularly for a brand like HOKA that continues to prioritize maintaining a pull model of demand to deliver long-term sustainable growth. Overall, the performance of our brands in Q1 was solid as underlying global demand signals for our brands continue to be strong, reinforcing our confidence in the ability to achieve our increased full fiscal year guidance.

Steve Fasching: While SG&A will continue to reflect H1 weighted investments, leading to an expected diluted earnings per share in the range of $1.73 to $1.78. Given the unique operational timing dynamics embedded in H1 of fiscal year 2027, the planned acceleration of revenue growth in H2 is being driven primarily by the HOKA brand and our international wholesale and distributor business. As we have said in the past, quarterly growth is not always linear, particularly for a brand like HOKA that continues to prioritize maintaining a pull model of demand to deliver long-term sustainable growth. Overall, the performance of our brands in Q1 was solid as underlying global demand signals for our brands continue to be strong, reinforcing our confidence in the ability to achieve our increased full fiscal year guidance.

Speaker #1: As we have said in the past, quarterly growth is not always linear, particularly for a brand like HOKA that continues to prioritize maintaining a pull model of demand to deliver long-term, sustainable growth.

Speaker #1: Overall, the performance of our brands in the first quarter was solid, as underlying global demand signals for our brands continue to be strong, reinforcing our confidence in the ability to achieve our increased full fiscal year guidance.

Speaker #1: Our top-tier levels of profitability, robust free cash flow generation, and debt-free balance sheet provide us the flexibility to continue fueling our long-term growth opportunities while remaining agile in the current environment.

Steven Fasching: Our top-tier levels of profitability, robust free cash flow generation, and debt-free balance sheet provide us the flexibility to continue fueling our long-term growth opportunities while remaining agile in the current environment. Thanks, everyone. I'll now hand the call back to Stefano for his final remarks.

Steve Fasching: Our top-tier levels of profitability, robust free cash flow generation, and debt-free balance sheet provide us the flexibility to continue fueling our long-term growth opportunities while remaining agile in the current environment. Thanks, everyone. I'll now hand the call back to Stefano for his final remarks.

Speaker #1: Thanks, everyone. I'll now hand the call back to Stefano for his final remarks.

Speaker #2: Thank you, Steve. As we've discussed today, our first quarter was defined by broad-based consumer demand across both HOKA and AG, supported by compelling product innovation, disciplined marketplace execution, and strong engagement across channels and geographies.

Stefano Caroti: Thank you, Steve. As we've discussed today, our Q1 was defined by broad-based consumer demand across both HOKA and UGG, supported by compelling product innovation, disciplined marketplace execution, and strong engagement across channels and geographies. While the external environment remains dynamic, the underlying health of our brands and the quality of demand we continue to see reinforce our confidence in the opportunities ahead. At HOKA, we're expanding consumer participation through a more differentiated product portfolio, growing international reach, and building an innovation pipeline that continues to elevate the brand. With UGG, we're broadening relevance across seasons, categories, and consumer segments, creating new avenues for long-term growth. At both brands, our teams are executing the strategies that we believe will strengthen our market position and support sustainable share gains over time.

Speaker #2: While the external environment remains dynamic, the underlying health of our brands and the quality of demand we continue to see reinforce our confidence in the opportunities ahead.

Speaker #2: At HOKA, we're expanding consumer participation, through a more differentiated product portfolio, growing international reach, and building an innovation pipeline that continues to elevate the brand with AG, we're broadening relevance across seasons categories and consumer segments, creating new avenues for long-term growth.

Speaker #2: At both brands, our teams are executing the strategies that we believe will strengthen our market position and support sustainable share gains over time. Looking ahead, we remain disciplined in our approach to delivering exceptional products that resonate with our target audience, investing behind our brands, and maintaining a premium, full-price global marketplace.

Stefano Caroti: Looking ahead, we remain disciplined in our approach to delivering exceptional products that resonate with our target audience, investing behind our brands, and maintaining a premium full price global marketplace. I want to thank our global teams for their passion and commitment, our retail partners for their collaboration, and our shareholders for their continued support. We're encouraged by the start to fiscal year 2027 and remain confident in our ability to deliver long-term value. Thank you for joining us today. Operator, we are now ready to begin Q&A.

Speaker #2: I want to thank our global teams for their passion and commitment, our retail partners for their collaboration, and our shareholders for their continued support.

Speaker #2: We're encouraged by the start to fiscal '27 and remain confident in our ability to deliver long-term value. Thank you for joining us today. Operator, we're now ready to begin Q&A.

Speaker #3: Thank you, Mr. Kurode. Ladies and gentlemen, the floor is now open for your questions. If you do have a question or comment, please press star one on your telephone.

Operator: Thank you, Mr. Caroti. Ladies and gentlemen, the floor is now open for your questions. If you do have a question or comment, please press star one on your telephone. If at any point your question is answered, you may remove yourself from the queue by pressing star two. In the interest of time and to get to as many questions as possible, we ask that you please limit yourself to one question and one follow-up. We'll go first this afternoon to Jay Sole with UBS.

Speaker #3: If at any point your question is answered, you may remove yourself from the queue by pressing star two. In the interest of time and to get to as many questions as possible, we ask that you please limit yourself to one question and one follow-up.

Speaker #3: We'll go first this afternoon to Jay Sol with UBS.

Speaker #4: Great, thank you so much. Stefano, a question for you—actually, two questions, and also one for Steve. First, you talked a lot about the new products; you talked about Clifton Pro, which is great.

Jay Sole: Great. Thank you so much. Stefano, question for you. Actually, two questions, also one for Steve. First, you know, you talked a lot about the new products. You talked about Clifton Pro, which is great. You talked about a lot of the new products that are coming out there for HOKA. I think last quarter you talked about how you had multiple franchises, which are already almost at least $100 million in revenue. Can you just talk about how the different franchises that you're launching contribute to HOKA's ability to grow double digits beyond this year into next year, and what you see from things like Torrent, which you didn't mention, or Arahi or some of the ones that seem like they're strong but you didn't mention on the call?

Speaker #4: You talked about a lot of the new products that are coming out there for HOKA. I think last quarter you talked about how you had multiple franchises which were already almost at least $100 million in revenue.

Speaker #4: Can you just talk about how the different franchises that you're launching contribute to HOKA's ability to grow double digits, you know, beyond this year, you know, into next year, and like what you've seen from things like Torrent, which you didn't mention, or Arahi or some of the ones that are seem like they're strong, but you didn't mention on the call.

Speaker #4: And then maybe just talk about Banzai 10, what you're expecting from that as you get into the first part of calendar 27. And then maybe on the gross margin, you also talked about the importance of full-price sell-through.

Jay Sole: Maybe just talk about Bondi 10, what you're expecting from that as you get into the first part of calendar 2027. Maybe on the gross margin, you also talked about the importance of full price sell-through, and I know that's one of your top KPIs. You talked about the flexibility that gives you as a brand to continue to grow, but can you just give us an example of why it's so important to stay at a high gross margin and keep the marketplace clean? Steve, can you talk about in the quarter how much upside to gross margin came from better than expected full price sell-through? Those are my questions. Thank you.

Speaker #4: And I know that's one of your top KPIs. You talked about the flexibility that gives you as a brand to continue to grow, but can you just give us an example of why it's so important to stay at a high gross margin and keep the marketplace clean? And then, Steve, can you talk about in the quarter how much upside to gross margin came from better than expected full-price sell-through? Those are my questions.

Speaker #4: Thank you.

Stefano Caroti: Okay. Thanks, Jay. Hey, consumers are responding to newness and innovation, and I'm really happy with how the new product drops, new product launches, are performing across the marketplace. Speedgoat 7 has been a resounding success. Most recently, Clifton 11 and Clifton Pro are off to a great start. We're already seeing reorders and some customers are already topping up their spring-summer 2027 orders. Consumers are responding to newness, and that's what gives me confidence that things will continue for H2. Keep in mind that for H2, Jay, we have a broader assortment. The broader assortment allows us to segment and differentiate the market even further and give us the ability to expand with key strategic partners who champion the brand. We'll have more differentiation than ever before. We have Cielo 70 for lifestyle destinations and department stores.

Speaker #1: Okay. Thanks, Jay.

Speaker #2: Hey, consumers are responding to Nunez and innovation, and I'm really happy with how the new product drops—new product launches—are performing across the marketplace.

Speaker #2: Stego 7 has been a resounding success. Most recently, Clifton 11 and Clifton Pro are off to a great start. We're already seeing reorders and some their spring/summer 27 orders.

Speaker #2: So consumers are responding to Nunez. And that's what gives me confidence that things will continue for the second half of the year. Keep in mind that for the second half of the year, Jay, we have a broader assortment.

Speaker #2: The broader assortment allows us to segment and differentiate the market even further, and gives us the ability to expand with key strategic partners. Key strategic partners are the champions of the brand.

Speaker #2: We'll have more differentiation than ever before. We have the Cielo 70 for lifestyle destinations and department stores. We have the Clifton CL for athletic lifestyle, athletic specialty destinations.

Stefano Caroti: We have the Clifton CL for athletic lifestyle, athletic specialty destination. We have a new Mach Pro for athletic specialty, and a new shoe for sporting goods called the Flybase. Consumers are responding to newness and innovation. That's what gives me the confidence that things will continue.

Speaker #2: We have a new Mark Pro for athletic specialty. And a new shoe for sporting goods called the Flypace. So consumers are responding to Nunez and innovation.

Speaker #2: That's what gives me the confidence that things will continue.

Speaker #4: On the marketplace, yeah. Yeah.

Jay Sole: Great. Can you talk about gross margin?

Stefano Caroti: Yeah.

Speaker #1: Yeah.

Jay Sole: Yeah.

Stefano Caroti: Hey, our full price sell-through continues to be strong. Inventories are tight. Inventories are down 5% for the quarter. Clearly we'll continue to drive a full model, and that's very important to us. We have scarcity in the marketplace, so consumers can buy our product full price.

Speaker #2: Hey, our full-price sell-through continues to be strong. Inventories are tight. Inventories are down 5% for the quarter. So clearly, we continue to drive a full model.

Speaker #2: And that's very, very important to us. And we're creating scarcity in the marketplace so consumers can buy our product at full price.

Speaker #1: Yeah. And Jay, just to then carry on, I think this quarter again demonstrates execution on our part to maintain that high gross margin.

Steven Fasching: Yeah. Jay, just to then carry on, I think this quarter again demonstrates execution on our part to maintain that high gross margin. As you said, we value it quite a bit, and that is what we will strive to achieve. You can see how it helps us maintain brand credibility in the marketplace. It also works well with our partners in terms of, as we've talked about in the past, profit generation for them down channel as well. Those are all important elements for our brand to be successful for ourselves as well as for our partners. When we look at Q1, to your question in terms of where we saw the overperformance, largely it was maintaining that full price selling. As I mentioned, a component of that was better product closeout this year compared to last year.

Steve Fasching: Yeah. Jay, just to then carry on, I think this quarter again demonstrates execution on our part to maintain that high gross margin. As you said, we value it quite a bit, and that is what we will strive to achieve. You can see how it helps us maintain brand credibility in the marketplace. It also works well with our partners in terms of, as we've talked about in the past, profit generation for them down channel as well. Those are all important elements for our brand to be successful for ourselves as well as for our partners. When we look at Q1, to your question in terms of where we saw the overperformance, largely it was maintaining that full price selling. As I mentioned, a component of that was better product closeout this year compared to last year.

Speaker #1: As you said, we value it quite a bit, and that is what we will strive to achieve. You can see how it helps us maintain brand credibility in the marketplace.

Speaker #1: It also works well with our partners in terms of, as we've talked about in the past, you know, profit generation for them down channel as well.

Speaker #1: So those are all important elements for our brand to be successful for ourselves as well as for our partners. When we look at Q1, to your question in terms of where we saw the overperformance, largely it was maintaining that full-price selling.

Speaker #1: As I mentioned, a component of that was better product closeout this year compared to last year. And so, just to give you a bit of a bridge in terms of how we saw that.

Steven Fasching: Just to give you a bit of a bridge in terms of how we saw that. With the better management of closeout in the quarter, we saw that it's worth about 60 basis points. The full price selling, combined with some of the chan and brand mix in the quarter contributed about 110 basis points. FX, we benefited a little bit with about 40 basis points. That was offset by increased tariffs in Q1 this year that we didn't have last year, which was about a -150 basis points. Again, that's year-over-year on Q1.

Steve Fasching: Just to give you a bit of a bridge in terms of how we saw that. With the better management of closeout in the quarter, we saw that it's worth about 60 basis points. The full price selling, combined with some of the chan and brand mix in the quarter contributed about 110 basis points. FX, we benefited a little bit with about 40 basis points. That was offset by increased tariffs in Q1 this year that we didn't have last year, which was about a -150 basis points. Again, that's year-over-year on Q1.

Speaker #1: So, with the better management of closeout in the quarter, we saw that as worth about 60 basis points. The full-price selling, combined with some of the channel and brand mix in the quarter, contributed about 110 basis points.

Speaker #1: And then FX, we benefited a little bit with about 40 basis points. And then that was offset by increased tariffs in Q1 this year that we didn't have last year, which was about a negative impact of about 150 basis points.

Speaker #1: And again, that's year over year on Q1.

Speaker #4: Got it. Super helpful. Thank you so much.

Jay Sole: Got it. Super helpful. Thank you so much.

Speaker #1: All right. Thanks, Jay.

Steven Fasching: All right. Thanks, Jay.

Steve Fasching: All right. Thanks, Jay.

Speaker #3: Thank you. We'll go next to Adrian Yee with Barclays.

Operator: Thank you. We'll go next now to Adrienne Yih with Barclays.

Adrienne Yih: Great. Thank you very much. It's nice to see the start to the quarter, and UGG looks really good. I just wanted to throw that out there. Stefano, I am going to talk about HOKA. I was wondering if you can talk about sort of the changing competitive landscape. It's clearly not promotional anymore, but there's some new entrants in this space. There's some recovering older players that are kind of coming back in this space. Can you talk about kind of where HOKA is positioned, what you're going after kind of with your traditional performance-based product? When we think about the tariffs, you had taken some price increases last year across those businesses. There are some refunds coming back. Can you talk about if you were to get those refunds, how will you Some of it was kind of from the vendors.

Speaker #5: Great. Thank you very much. It's nice to see the start to the quarter, and, uh, it's really good. So, I just wanted to throw that out there.

Speaker #5: Stefano, I am going to talk about HOKA. I was wondering if you can talk about sort of the changing competitive landscape. It's clearly not very promotional.

Speaker #5: Anymore. But there's some new entrants in this space. There's some recovering older players that are kind of coming back in this space. Can you talk about kind of where HOKA is positioned, what you're going after, kind of with your traditional performance, you know, base product?

Speaker #5: And then when we think about the tariffs, you had taken some price increases last year across both businesses. There are some refunds coming back.

Adrienne Yih: There are some refunds coming back. Can you talk about if you were to get those refunds, how will you Some of it was kind of from the vendors. Will you pass any of it back? Will you kind of hold on to current pricing and not raise prices further? Just kind of talk about some of the puts and takes on what you might do with the tariff refunds. Thank you.

Speaker #5: Can you talk about, if you were to get those refunds, how will you—some of it was kind of from the vendor—so will you pass any of it back?

Adrienne Yih: Will you pass any of it back? Will you kind of hold on to current pricing and not raise prices further? Just kind of talk about some of the puts and takes on what you might do with the tariff refunds. Thank you.

Speaker #5: Will you kind of hold on to current pricing and not raise prices further? So just kind of talk about some of the puts and takes on what you might do with the tariff refunds.

Speaker #5: Thank you.

Speaker #2: Yeah. Thanks, Adrian. On the competitive side and how HOKA is performing across the global marketplace. Hey, we continue to maintain or gain share in performance running trail.

Stefano Caroti: Yeah. Thanks, Adrienne. On the competitive side and how HOKA is performing across the global marketplace, hey, we continue to maintain or gain share in performance run and trail. I just saw the latest Circana data for the past three months, and we've gained share above $120, which is fantastic. Our products continue to perform. As I said to Jay's question before, the newness that is coming is resonating with the end consumer. Clifton Pro and Clifton 11 appear to be coexisting well. We have a new Mach Pro hitting the market. We'll continue to invest across performance run trail, hike, training fitness, and lifestyle inspired by performance. Those are the areas we'll be competing in across footwear, apparel, and accessories.

Speaker #2: I just saw the latest kind of data for the past three months, and we've gained share above $120, which is fantastic. Our products continue to perform.

Speaker #2: And as I said to Jay's question before, the Nunez that is coming is resonating with the end consumer. Clifton and Pro and Clifton 11 appear to be coexisting well.

Speaker #2: We have a new Mark Pro hitting the market. So we'll continue to invest across performance run trail hike training fitness. And lifestyle inspired by performance.

Speaker #2: Those are the areas where we could be competing across footwear, apparel, and accessories.

Steven Fasching: Adrienne, just on tariffs, the way we're looking at it. Clearly, we have not recorded anything related to a refund of the tariffs paid over the last year. We're continuing to work on that. Timing on that is not specific yet, but we look to see some recovery potentially down the road. We'll be able to provide more details when we get clarity on that. We don't see it necessarily as a lump sum. It's going to most likely come in over a period of time. To your point about how we're looking at uses of that. Clearly, we will work with our partners who shared in some of that and return some of those funds to our partners. There will likely and will be tax related to anything that we recover. There will be a portion on that.

Steve Fasching: Adrienne, just on tariffs, the way we're looking at it. Clearly, we have not recorded anything related to a refund of the tariffs paid over the last year. We're continuing to work on that. Timing on that is not specific yet, but we look to see some recovery potentially down the road. We'll be able to provide more details when we get clarity on that. We don't see it necessarily as a lump sum. It's going to most likely come in over a period of time. To your point about how we're looking at uses of that. Clearly, we will work with our partners who shared in some of that and return some of those funds to our partners. There will likely and will be tax related to anything that we recover. There will be a portion on that.

Speaker #1: And then, Adrian, just on tariffs, the way we're looking at it—so clearly, we have not recorded anything related to a refund of the tariffs paid over the last year.

Speaker #1: We're continuing to work on that. The timing on that is not specific yet, but we look to see some recovery potentially down the road. We'll be able to provide more details when we get clarity on that.

Speaker #1: We don't see it necessarily as a lump sum. It's most likely going to come in over a period of time. And so, to your point about how we're looking at uses of that…

Speaker #1: So, clearly, we will work with our partners who shared in some of that and returned some of those funds to our partners. There will likely—and will be—tax related to anything that we recover.

Speaker #1: So, there will be a portion on that. And then the other areas that we're going to continue to look at are what helps us drive the business forward.

Steven Fasching: The other areas that we're going to continue to look at is what helps us drive the business forward. We don't have a specific list yet to articulate today, but we'll look at ways that help us either drive growth in the business, and/or how we also return value to our shareholders. Those are all factors that are on the table, but we see when that happens, if that happens, is definitely beneficial to the business in terms of driving it forward. Just one more point going forward, because I know there's, especially today, more questions around where tariffs are going. I did want to just highlight that we have increased our assumption on the go-forward rate. Embedded in our raised outlook on the year, we are actually including a higher rate assumption of a tariff go-forward rate.

Steve Fasching: The other areas that we're going to continue to look at is what helps us drive the business forward. We don't have a specific list yet to articulate today, but we'll look at ways that help us either drive growth in the business, and/or how we also return value to our shareholders. Those are all factors that are on the table, but we see when that happens, if that happens, is definitely beneficial to the business in terms of driving it forward. Just one more point going forward, because I know there's, especially today, more questions around where tariffs are going. I did want to just highlight that we have increased our assumption on the go-forward rate. Embedded in our raised outlook on the year, we are actually including a higher rate assumption of a tariff go-forward rate.

Speaker #1: So we don't have a specific list yet to articulate today, but we'll look at ways that help us either drive growth in the business and/or how we also return value to our shareholders.

Speaker #1: So those are all factors that are on the table, but we’ll see when that happens, if that happens. It’s definitely beneficial to the business in terms of driving it forward.

Speaker #1: And then, just one more point, kind of going forward, because I know there's, especially today, more questions around where tariffs are going. I did want to just highlight that we have increased our assumption on the go-forward rate.

Speaker #1: So, embedded in our raised outlook on the year, we are actually including a higher rate assumption of a tariff go-forward rate. So, where we were previously at 10%, we're now assuming that goes to 12.5%.

Steven Fasching: Where we were previously at 10%, we're now assuming that goes to 12.5. We know we're in a volatile tariff environment. We're planning our business accordingly, and we're looking for ways that we're going to continue to drive the business forward, continue to grow awareness, continue to grow share while returning value back to our shareholders.

Steve Fasching: Where we were previously at 10%, we're now assuming that goes to 12.5. We know we're in a volatile tariff environment. We're planning our business accordingly, and we're looking for ways that we're going to continue to drive the business forward, continue to grow awareness, continue to grow share while returning value back to our shareholders.

Speaker #1: So you know we know we're in a volatile tariff environment. We're planning our business accordingly. And we're looking for ways that we're going to continue to drive the business forward, continue to grow awareness, continue to grow share while returning value back to our shareholders.

Speaker #5: Great. Thank you. Very helpful, Stefano.

Adrienne Yih: Great. Thank you. Very helpful. Best of luck.

Speaker #2: Thank you.

Stefano Caroti: Thank you.

Speaker #3: Thank you. We'll go next now to Laurent Vasilevsky at BNP Paribas.

Operator: Thank you. We'll go next now to Laurent Vasilescu at BNP Paribas.

Laurent Vasilescu: Good afternoon. Thank you very much for taking my question. I think in the prepared remarks, it was noted that supported by continued strength of our DTC business. Stefano, can you maybe unpack that a little bit more? Then, as we think about HOKA overall high single digits for Q2, should we think about similar channels growth dynamics until we go to H2 of the year as we think about the launches and the timing shift of distributors? Thank you very much.

Speaker #6: Oh, good afternoon. Thank you very much for taking my question. I think in the prepared mark, it was noted that supported by continued strength of our DTC business.

Speaker #6: Stefano, Steve, can you maybe unpack that a little bit more? And then, you know, as we think about HOKA overall, high single digits for the second quarter, should we think about similar channel growth dynamics until we go to the second half of the year as we think about the launches and the timing shift of distribution distributors?

Speaker #6: Thank you very much.

Speaker #1: Yeah. Laurent, I'll take that last part first. Yeah. I think the important thing here, and we articulated it on the last call and just kind of want to further re-emphasize this again on this call.

Steven Fasching: Yeah, Laurent, I'll take that last part first. Yeah, I think the important thing here, we articulated it on the last call and just want to further reemphasize this again on this call. The growth that you're seeing this year is really a change in logistics. It's not any change in assumption in demand. Right? So recall last year where we had a new warehouse that we were bringing online in Europe a year ago. That was shifting more of our wholesale and distributor orders earlier in the year, so really more H1. Whereas this year, as we're ramping that up to speed, we're seeing more of a normal shift back to a more normal cadence. That's where you're seeing really the acceleration of growth.

Steve Fasching: Yeah, Laurent, I'll take that last part first. Yeah, I think the important thing here, we articulated it on the last call and just want to further reemphasize this again on this call. The growth that you're seeing this year is really a change in logistics. It's not any change in assumption in demand. Right? So recall last year where we had a new warehouse that we were bringing online in Europe a year ago. That was shifting more of our wholesale and distributor orders earlier in the year, so really more H1. Whereas this year, as we're ramping that up to speed, we're seeing more of a normal shift back to a more normal cadence. That's where you're seeing really the acceleration of growth.

Speaker #1: The growth that you're seeing this year is really a change in logistics. It's not any change in assumption in demand, right? And so recall last year, when we had a new warehouse that we were bringing online in Europe, a year ago.

Speaker #1: That was shifting more of our wholesale and distributor orders earlier in the year—so really more first half. Whereas this year, as we're ramping that up to speed, we're seeing more of a normal shift back to a more normal cadence.

Speaker #1: So that's where you're seeing really the acceleration of growth. To your question, how we're seeing growth outside of that change in logistics—yeah, it's fairly comparable through the first half and second half.

Steven Fasching: To your question, how we're seeing growth outside of that change in logistics, yeah, it's fairly comparable through H1 and H2. Really what this is just us aligning to a different logistics. The demand continues to be very strong. Overall, the demand is strong for the year. We're just seeing a shift in fulfilling that demand slightly differently across quarters this year versus last.

Steve Fasching: To your question, how we're seeing growth outside of that change in logistics, yeah, it's fairly comparable through H1 and H2. Really what this is just us aligning to a different logistics. The demand continues to be very strong. Overall, the demand is strong for the year. We're just seeing a shift in fulfilling that demand slightly differently across quarters this year versus last.

Speaker #1: And really, what this is, is just us aligning to a different logistics. The demand continues to be very strong. Overall, the demand is strong for the year.

Speaker #1: We're just seeing a shift in fulfilling that demand slightly differently across quarters this year versus last.

Laurent Vasilescu: Yeah. Thank you, Steve, for that. Maybe can you just unpack that comment about DTC continued strength? Like how do we think about DTC for HOKA globally for Q2? I appreciate you giving us color, giving us quarterly comments, just to help for the audience, like how do we think about DTC embedded in that Q2 commentary about the top line? Thank you very much.

Speaker #6: Yeah, I mean, thank you, Steve, for that. But maybe can you just unpack that comment about DTC continued strength? Like, how should we think about DTC for HOKA globally for this second quarter?

Speaker #6: And I appreciate you giving us color, giving us, you know, quarterly comments, but just to help for the audience, like, how do we think about DTC embedded in that Q2 commentary about the top line?

Speaker #6: Thank you very much.

Speaker #1: Yeah. Now, it's basically just a quick answer there. It's not a significant change. We're still continuing to drive significant growth in our DTC channel this year.

Steven Fasching: Yeah. No, basically just a quick answer there. There's not a significant change. It still continues to drive significant growth in our DTC channel this year.

Steve Fasching: Yeah. No, basically just a quick answer there. There's not a significant change. It still continues to drive significant growth in our DTC channel this year.

Speaker #6: Okay. Okay. Maybe one more question. Because there's some concerns about warm weather, I'm just curious to know if you've had any conversations with your key partners around just maybe are you seeing any cancellations in the order book for the second half, or is that continuing to be really sturdy on that front?

Laurent Vasilescu: Okay. Maybe one more question. There's some concerns about warm weather, just curious to know if you've had any conversations with your key partners around this. Maybe, are you seeing any cancellations in the order book for H2, or is that continuing to be really sturdy on that front? Thank you very much.

Speaker #6: Thank you very much.

Stefano Caroti: No cancellations to the order book, Laurent. The great thing about the UGG brand and what the team has done is that the brand is more versatile, diversified, and balanced than ever before. Across categories, geographies, segments. Our sneakers, as I mentioned on previous calls, continue to perform well. Now we're building this little Mel family across mules. We have the wedge that we just launched that we're chasing because it's doing super well. The Minimel has done well. Our Tasman family is now become a year-round business. Sheepskin, but also Deconstructed. We just launched the Flex, which do well. Our Golden Collection has done super well. The GoldenGaze was one of the key sandals, success stories this season. The brand is more diversified than ever before. Even, we're less depending on a cold winter than ever before.

Speaker #2: Now, no cancellations to the order book. Laurent, the great thing about the Ag brand and what the team has done is that the brand is more versatile, diversified, and balanced than ever before.

Speaker #2: Across categories, geographies, segments, our sneakers, as I mentioned on previous calls, continue to perform well. Now we have—we're building this low-mule family across mules.

Speaker #2: We have the Wedge that we just launched, which we're chasing because it's doing super well. The Mini Mael has done well. Our Tasman family is now becoming a year-round business.

Speaker #2: Sheepskin, but also the constructed—we just launched the Flex, which did well. Our Golden Collection has done super well. The toe post, the Golden Gaze Toe Post, was one of the key sandal success stories this season.

Speaker #2: So the brand is more diversified than ever before. So even we're less depending on a cold winter than ever before. So even if we had a warmer winter, we believe we will continue to perform.

Stefano Caroti: Even if we had a warmer winter, we believe we will continue to perform, and we're seeing no cancellations to the order books.

Speaker #2: And we're seeing no cancellations to the order books.

Speaker #6: Fantastic. Thank you, Stefano. Best of luck.

Laurent Vasilescu: Fantastic. Thank you, Stefano. Back to the line.

Speaker #2: Thank you, Laurent.

Stefano Caroti: Thank you, Rob.

Speaker #3: Thank you. We'll go next now to Paul Lejeu at Citi.

Operator: Thank you. We'll go next now to Paul Lejuez at Citi.

Paul Lejuez: Hey, thanks, guys. I'm curious if you could talk about the Europe market a little bit more, what you're seeing in terms of promotional levels, also at point of sale, and where you're seeing market share gains and what's driving it. Steve, I just wanted one clarification on the tariff pressure in Q1. Were you still running through majority of IEEPA tariffs? Is that what ran through the P&L causing that pressure? Just wanted to understand that a little bit more. Thanks.

Speaker #6: Hey. Thanks. I'm curious if you could talk about the Europe market a little bit more, what you're seeing in terms of promotional levels, also a point of sale, and where you're seeing market share gains and what's driving it.

Speaker #6: And then, Steve, I just want one clarification on the tariff pressure in the first quarter. Were you still running through the majority of IEPA tariffs?

Speaker #6: Is that what ran through the P&L causing that pressure? I just wanted to understand that a little bit more. Thanks.

Speaker #2: Yeah. Paul, on the Europe market, we continue to see high levels of demand for both brands. As I said in the opening remarks, we saw record levels of reorders for the HOKA brand in Q1.

Stefano Caroti: Yeah, Paul. On the Europe market, we continue to see high levels of demand for both brands. As I said in the opening remarks, we saw record levels of reorders for the HOKA brand in Q1. We've seen some timing differences, as Steve outlined before in Q1, the demand continues to be robust really across all markets. Yes, the consumer in Europe is probably a bit more pressured than it is in the US as a result of energy prices going up. We're holding our own and even in times of challenge, what I've experienced is consumers gravitate to premium brands and brands that make them feel good. We anticipate having a great year in Europe.

Speaker #2: We've seen some timing differences, as Steve outlined before, in Q1. But the demand continues to be robust, really across all markets. Yes, the consumer in Europe is probably a bit more pressured than in the US, as a result of energy prices going up.

Speaker #2: But we're holding our own, and even in times of challenge, what I've experienced is consumers gravitate to premium brands and brands that make them feel good.

Speaker #2: So, we anticipate having a great year in Europe.

Speaker #1: And then on the tariffs, Paul, you're right. Basically, recall last year, the inventory that we were selling through in Q1 did not have tariffs associated with it.

Steven Fasching: On the tariffs, Paul, you're right. Basically, recall last year, the inventory that we were selling through in Q1 did not have tariffs associated with that. The inventory that we're selling through in Q1 of this year did have tariffs on it. That year-over-year headwind that I just called out is the tariffs that have impacted this year. Now, as we move into the year, we'll start to have a more comparable basis on that tariff paid last year versus tariff paid this year. Q1 was the biggest headwind, in terms of the 4 quarters that we will experience this year.

Steve Fasching: On the tariffs, Paul, you're right. Basically, recall last year, the inventory that we were selling through in Q1 did not have tariffs associated with that. The inventory that we're selling through in Q1 of this year did have tariffs on it. That year-over-year headwind that I just called out is the tariffs that have impacted this year. Now, as we move into the year, we'll start to have a more comparable basis on that tariff paid last year versus tariff paid this year. Q1 was the biggest headwind, in terms of the 4 quarters that we will experience this year.

Speaker #1: The inventory that we're selling through in Q1 of this year did have tariffs on it. So, that year-over-year headwind that I just called out is the tariffs that have impacted this year.

Speaker #1: Now, as we move into the year, we'll start to have a more comparable basis on that tariff paid last year versus tariff paid this year.

Speaker #1: But Q1 was the biggest headwind in terms of the four quarters that we will experience this year.

Speaker #6: Thanks, guys. Good luck.

Paul Lejuez: Thanks, guys. Good luck.

Speaker #1: All right.

Stefano Caroti: All right. Thank you, Paul.

Speaker #2: Thank you, Paul.

Speaker #3: We'll go next now to Sam Poser with Williams Trading.

Operator: We'll go next now to Sam Poser with Williams Trading.

Sam Poser: Thank you for taking my questions. I have a few. On HOKA, with the mix of the business, how much of both the margins and the revenue in Q1 were driven by the decision to promote on your website versus last year, you were keeping things clean. I would assume that was both sales and margin accretive to you. Am I thinking about that properly? If so, how much did that help?

Speaker #6: Thank you for taking my questions. I have a few. On HOKA, with the mix of the business, how much of both the margins and the revenue in the first quarter were driven by the decision to promote on your website, versus last year when you were keeping things clean?

Speaker #6: I would assume that was both sales and margin accretive to you. Am I thinking about that properly? And if so, how much did that help?

Speaker #1: Yeah, Sam, I'm not going to give you specifics because it's included in that margin overperformance. So, there is definitely a component to how we handled closeouts this year.

Steven Fasching: Yeah, Sam, I'm not going to give you kind of specifics because it's included in that margin overperformance. There is definitely a component to how we handled closeouts this year and its contribution to the gross margin in Q1. We definitely benefited this year kind of with that better management closeout product. It wasn't just isolated to HOKA, but in the Clifton franchise, that was a player and component within the quarter. Yeah, what you're seeing in Q1 is how we've managed closeouts better using some of that product and selling it through our direct channels, which have contributed higher gross margins and contributed to the overperformance in Q1.

Steve Fasching: Yeah, Sam, I'm not going to give you kind of specifics because it's included in that margin overperformance. There is definitely a component to how we handled closeouts this year and its contribution to the gross margin in Q1. We definitely benefited this year kind of with that better management closeout product. It wasn't just isolated to HOKA, but in the Clifton franchise, that was a player and component within the quarter. Yeah, what you're seeing in Q1 is how we've managed closeouts better using some of that product and selling it through our direct channels, which have contributed higher gross margins and contributed to the overperformance in Q1.

Speaker #1: And it's contribution to the gross margin in Q1. So we definitely benefited this year, kind of with that better management closeout product. It wasn't just isolated to HOKA, but in the Clifton franchise, that was a player and component within the quarter.

Speaker #1: But yeah, what you're seeing in Q1 is how we've managed closeouts better using some of that product and selling it through our direct channels, which have contributed higher gross margins.

Speaker #1: and contributed to the overperformance in Q1.

Speaker #6: Okay, great, and thank you. I've heard that in the US you're rethinking some of your distribution. Some smaller accounts are being cut off, and some other accounts are being fed.

Sam Poser: Okay, great. Thank you. With UGG, I've heard that in the US you're rethinking some of your distribution. Some smaller accounts are being cut off and some other accounts are being fed. Can you talk a little bit about, I guess, making certain accounts more important than others not? How much of that may have been a result of last year where it looks like, could say in early mid-November, you may have gotten some cancellations which then were taken up by others, and rewarding those retailers that supported you and not the ones that were trying to cancel orders last year and probably regretted it come the end of December.

Speaker #6: Can you talk a little bit about, I guess, making certain accounts more important than others or not, and how much of that may have been a result of last year, where it looks like, let's say in early to mid-November, you lost some—you may have gotten some cancellations, which then were taken up by others.

Speaker #6: And rewarding those retailers that supported you, and not the ones that were trying to cancel orders last year and probably regretted it at the end of December.

Speaker #2: Our goal is to continue to build a premium marketplace, and we've been doing it for some time. We want to work with retailers to completely champion the brand year-round.

Stefano Caroti: Our goal is to continue to build a premium marketplace, and we've been doing it for some time. We want to work with retailers who completely champion the brand year-round. That's why you've seen some changes. The strategy doesn't change. The strategy we've applied over the past five, six years. Things are continuing to develop according to how we set up to elevate these brands across the marketplace. No major changes.

Speaker #2: And that's why you've seen some changes. But the strategy doesn't change. It's the strategy we've applied over the past five, six years. So things are continuing to develop according to how we set up to elevate these brands across the marketplace.

Speaker #2: So no major changes.

Speaker #6: Okay. And I just want—I asked this question before, but two years ago, you had a very early response to product. The business got cooked in August.

Sam Poser: Okay. I asked this question before, but two years ago, you had a very early response to product. Business got cooking in August. Last year it happened significantly later, more in the holiday. How do you look at sort of the flow of the business, really from consumer demand perspective? Are you expecting back to school to be up and then see another lull, a big lull again in September, October, and then have it kick in back at Thanksgiving, and have another year at the end that would look similar to last year? Granted, different volumes, but from a the way the chart would look on that.

Speaker #6: But last year, it happened significantly later, more in the holiday. How do you look at the flow of the business, really from a consumer demand perspective? Are you expecting back-to-school to be up, and then see another lull—a big lull again in September and October—and then have it kick in back at Thanksgiving and have another year at the end that would look similar to last year?

Speaker #6: Granted, different volumes, but from the way the chart would look on that.

Speaker #2: I think we're seeing a bit more event-driven buying this year versus last year. That may be the difference we are experiencing, but I wouldn't say patterns are changing dramatically.

Stefano Caroti: I think we're seeing a bit more event-driven buying this year versus last year. That may be the difference we are experiencing, but I wouldn't say patterns are changing dramatically. Yes, there is a buy now wear now component, but I think we're well-prepared and we're flowing product according to key commercial moments to maximize sell-through for us and our partners. I don't anticipate major changes versus last year.

Speaker #2: Yes, there's a buy now, wear now component, but I think we're well prepared and we're flowing product according to key commercial moments to maximize sell-through for us and our partners.

Speaker #2: So you don't anticipate major, major changes versus last year.

Steven Fasching: Yeah. I think on that, Sam, I know we've talked about it in prior quarters, higher peaks and lower valleys. That goes a little bit to what Stefano says: we're seeing consumers respond to more event-driven buying. The demand for our brands, we're not seeing a change. We may be seeing some concentration of buying patterns, but what we see and the data reflects is strong consumer response to our brands. I think our gross margins are another indication of the health of the position of our brands in the marketplace. Yeah, we may see some more points of concentrated buying in periods of time, but demand remains strong.

Steve Fasching: Yeah. I think on that, Sam, I know we've talked about it in prior quarters, higher peaks and lower valleys. That goes a little bit to what Stefano says: we're seeing consumers respond to more event-driven buying. The demand for our brands, we're not seeing a change. We may be seeing some concentration of buying patterns, but what we see and the data reflects is strong consumer response to our brands. I think our gross margins are another indication of the health of the position of our brands in the marketplace. Yeah, we may see some more points of concentrated buying in periods of time, but demand remains strong.

Speaker #1: Yeah, I think on that, Sam—and I know we've talked about it in prior quarters, and this year comes to this: higher peaks and lower valleys.

Speaker #1: And that goes a little bit to what Stefano says, as we're seeing consumers respond to more event-driven buying. The demand for our brands—we're not seeing a change.

Speaker #1: Now, we may be seeing some concentration of buying patterns, but what we see in the data reflects a kind of strong consumer response to our brands.

Speaker #1: I think our gross margins are another indication of the health of the position of our brands in the marketplace. And yeah, we may see some more points of concentrated buying in periods of time, but demand remains strong.

Sam Poser: That's true. Good luck for the rest of the year.

Speaker #6: Gotcha. Good luck with the rest of the year.

Speaker #1: All right. Thanks, Sam.

Steven Fasching: All right. Thanks, Sam.

Steve Fasching: All right. Thanks, Sam.

Speaker #2: Thanks, Sam.

Stefano Caroti: Thanks, Sam.

Speaker #3: We'll go next now to Blake Anderson of Jefferies.

Operator: We'll go next, now to Blake Anderson of Jefferies.

Blake Anderson: Hi. Thanks for taking our question. Wanted to ask, first of all, for H2 for HOKA. Steve, is there any color you can give us in terms of D2C versus wholesale? I know you talked about the delay of the wholesale into H2. Does that mean that wholesale could be above D2C? Just wondering if there's any more color you could give us on how to think about the magnitude of those two channels in H2 and any other puts and takes, especially given the level of newness as well.

Speaker #7: Hi, thanks for taking our question. I wanted to ask, first of all, for the second half for HOKA. Steve, is there any color you can give us in terms of DTC versus wholesale?

Speaker #7: I know you talked about the delay kind of with wholesale into the second half. Does that mean that wholesale could be above DTC? Just wondering if there's any more color you could give us on how to think about the magnitude of those two channels in the second half and any other puts and takes especially given the level of newness as well.

Speaker #1: Yeah, sure. I think, and this really relates again to just the logistics timing change this year versus last. Where you're going to see the change is an increase in the rate of growth on HOKA in the back half, due to our logistical fulfillment of the orders that are out there.

Steven Fasching: Yeah, sure. This really relates again to just the logistics timing change this year versus last. Where you're going to see the change is an increase in the rate of growth on HOKA in H2 due to our logistical fulfillment of the orders that are out there. What you've seen in H1, that growth rate being lower than the full year number will begin to increase as you get into H2 on the wholesale and distributor orders that are international related, because that's really the change that you're seeing and the acceleration in H2. Other than that, we're not expecting a significant shift in our business.

Steve Fasching: Yeah, sure. This really relates again to just the logistics timing change this year versus last. Where you're going to see the change is an increase in the rate of growth on HOKA in H2 due to our logistical fulfillment of the orders that are out there. What you've seen in H1, that growth rate being lower than the full year number will begin to increase as you get into H2 on the wholesale and distributor orders that are international related, because that's really the change that you're seeing and the acceleration in H2. Other than that, we're not expecting a significant shift in our business.

Speaker #1: So what you've seen in the first half, that growth rate being lower than the full-year number, will begin to increase as you get into the back half on the wholesale and distributor orders that are international-related, because that's really the change that you're seeing and the acceleration in the back half.

Speaker #1: Other than that, we're not expecting a significant shift in our business.

Speaker #7: Got it. And then I wanted to ask about lifestyle in particular. You mentioned some of the newer products, and then the Clifton Pro and Mach Pro on more of the performance side.

Blake Anderson: Got it. Then wanted to ask on Lifestyle in particular. You mentioned some of the newer products and then the Clifton Pro and Mach Pro are more on the performance side. Stefano, are there any other hints you can give us on what's in the pipeline for HOKA product or retailer segmentation for Lifestyle in particular? When do you think we could start to see a larger impact from Lifestyle to HOKA's growth over time?

Speaker #7: Stefano, are there any other hints you can give us on what's in the pipeline for HOKA product or retailer segmentation, for lifestyle in particular?

Speaker #7: And when do you think we could start to see a larger impact from lifestyle on HOKA's growth over time?

Speaker #2: Yes, you'd like to see a bit more of an impact in the second half of the year. We just launched Speedgoat 2 now. We did the collaboration with Foot Locker, with the rapper Cosmino, on the Speedgoat 2.

Stefano Caroti: Yes, you'd like to see a bit more of an impact in H2. We just launched Speedgoat 2 now. We did the collaboration with Foot Locker with a rapper called Smino on the Speedgoat 2. There is more product hitting in the spring. I mentioned Cielo 70, a low-profile, running-inspired shoe that you should see in lifestyle destinations. We are building these product families, the Bondi franchise, the Bondi CL you should be able to see in key athletic specialty destinations. You will see in addition to colorways and materials of existing performance products that appeal to a lifestyle consumer. You should see a more differentiated marketplace going into H2.

Speaker #2: There's more product hitting in the spring. I mentioned Cielo 70. It low profile running-inspired shoe. You should see in lifestyle destinations, we're building these product families that Bondi franchise, the Bondi CL, you should be able to see in kiosk-like specialty destinations.

Speaker #2: So you'll see, in addition to colorways and materials of existing performance products that appeal to a lifestyle consumer, you should see a more differentiated marketplace going into the second half of the year.

Blake Anderson: Really helpful. Thanks so much.

Speaker #7: Really helpful. Thanks so much.

Speaker #2: Thanks, Blake.

Steven Fasching: Thanks, Blake.

Steve Fasching: Thanks, Blake.

Stefano Caroti: All right. Thanks, Blake.

Speaker #1: All right. Thanks, Blake.

Speaker #3: We'll go next now to Rick Patel of Raymond James.

Operator: We'll go next now to Rick Patel of Raymond James.

Speaker #8: Hey, thank you. Good afternoon. On the last call, you talked about HOKA expanding distribution to new wholesale partners. Can you just provide an update there—like, how many points of distribution could be added, and to what extent could that be a material part of the building blocks for the back-half acceleration?

Rick Patel: Hey, thank you. Good afternoon. On the last call, you talked about HOKA expanding distribution to new wholesale partners. Can you just provide an update there? How many points of distribution could be added, and to what extent could that be a material part of the building blocks for the back half acceleration?

Speaker #2: Yeah, you'll definitely see some new partners—again, partners who help elevate and champion the brand, especially in sporting goods, in the back half of the year.

Stefano Caroti: Yeah, you'll definitely see some new partners. Again, partners who help elevate and champion the brand, especially in sporting goods, in the back half of the year. Expansion, given the broader assortment that we have with the existing partners, both in sporting goods and athletic specialty. I don't think we want to provide specific numbers, but you'll see an expanded distribution with elevated retailers, elevated quality retailers across really all regions in the second half.

Speaker #2: And expansion, given the broader assortment that we have with existing partners — both in sporting goods and athletic specialty — I don't think we want to provide a specific number, but you'll see expanded distribution with elevated quality retailers across really all regions.

Speaker #2: In the second half.

Speaker #8: Okay, great. And then for UGG, I believe in the commentary you touched on gross margin tailwinds from the outperformance of certain lines. Can you just expand on that?

Rick Patel: Great. Then for UGG, I believe in the commentary you touched on gross margin tailwinds from the outperformance of certain lines. Can you just expand on that, is this something that you expected or is this something that drove upside? Then as a follow-up on UGG, maybe some context on the UGG men's business, which sounds like it's terrific and going well. Just how big that is and where it can go.

Speaker #8: And is this something that you expected, or is this something that drove upside? And then, as a follow-up on UGG—maybe some context on the UGG men's business, which sounds like it's terrific and going well.

Speaker #8: Just how big that is, and where it can go.

Speaker #2: Yeah. The men's business is still 50% of revenues, but the goal is to get it to 20% and higher. It was one of our key growth drivers this spring.

Stefano Caroti: Yeah, the men's business is still 15% of revenues, but the goal is to get it 20% and higher. It was one of our key growth drivers this spring. We have healthier assortments, healthier sell-throughs than we've had in the past and healthier margins. The diversified product, this 365 offering that I mentioned earlier, has been performing well across the marketplace and gives us confidence that things continue going into the back H2.

Speaker #2: We have healthcare assortments, healthcare sell-throughs we've had in the past, and healthcare margins. So the diversified product, this 365 offering that I mentioned earlier, has been performing well.

Speaker #2: Across the marketplace, and the existing confidence that things could continue going into the back half of the year.

Speaker #8: Thanks very much. Thanks, Rick.

Rick Patel: Thanks very much.

Steven Fasching: Thanks, Rick.

Steve Fasching: Thanks, Rick.

Speaker #3: Thank you. And it looks like we have time for one more question this afternoon. We'll take that now from Peter McGoldrick of Stifel.

Operator: Thank you. It looks like we have time for one more question this afternoon. We'll take that now from Peter McGoldrick of Stifel.

Speaker #9: Hey, guys. Thanks for fitting me in. I wanted to follow up on Jay's question about the full price dynamics. You pointed to 60 bps of benefit in the first quarter from lower closeouts.

Peter McGoldrick: Hey, guys. Thanks for fitting me in. I wanted to follow up on Jay's question about the full price dynamics. You pointed to 60 basis points of benefit in Q1 from lower closeouts. Can you help us think about what's embedded in the outlook for the remainder of the year and remind us of what the base year closeouts and full price foundation is?

Speaker #9: Can you help us think about what's embedded in the outlook for the remainder of the year, and remind us of what the base year closeouts and full price foundation are?

Speaker #1: Yeah, sure. Peter, I think the in terms of the overperformance in Q1, because of the volume of the closeouts that was planned in Q1, a bit of that tailwind that we received is unique to that quarter.

Steven Fasching: Yeah, sure, Peter. I think in terms of the overperformance in Q1, because of the volume of the closeouts that was planned in Q1, a bit of that tailwind that we received is unique to that quarter, and that's why we're calling it out as really a unique performance in the quarter. We think that as we go through the rest of the year, it is more equivalent to what we've seen in years past. We haven't assumed any significant change in the promotional cadence in the rest of the year. Again, we won't necessarily have the volumes that you do or some of the franchise changeovers in the models in the franchise that we had in Q1. That's why it is a bit of a unique benefit to Q1.

Steve Fasching: Yeah, sure, Peter. I think in terms of the overperformance in Q1, because of the volume of the closeouts that was planned in Q1, a bit of that tailwind that we received is unique to that quarter, and that's why we're calling it out as really a unique performance in the quarter. We think that as we go through the rest of the year, it is more equivalent to what we've seen in years past. We haven't assumed any significant change in the promotional cadence in the rest of the year. Again, we won't necessarily have the volumes that you do or some of the franchise changeovers in the models in the franchise that we had in Q1. That's why it is a bit of a unique benefit to Q1.

Speaker #1: And that's why we're calling it out as really a unique performance in the quarter. We think that, as we go through the rest of the year, it is more equivalent to what we've seen in years past.

Speaker #1: So we haven't assumed any significant change in the promotional cadence for the rest of the year. And again, we won't necessarily have the volumes that you do, or some of the franchise changeovers in the models and in the franchise that we have in Q1.

Speaker #1: And so that's why it is a bit of a unique benefit to Q1. And then again, just the expectation is that we will see some pressure on the gross margin in comparison to a year ago.

Steven Fasching: Again, just the expectation is we'll see some pressure on the gross margin in comparison to year-ago quarters. Overall, that overperformance has helped us lift our thinking on the year. Again, the lift is primarily driven by the Q1 performance, and it's also, again, helped us reconsider the increase in the tariffs to the 12.5 go rate. Again, that's embedded as well. With all of those factored in, that's what led us to a slight improvement in our thinking around the gross margin for the year.

Steve Fasching: Again, just the expectation is we'll see some pressure on the gross margin in comparison to year-ago quarters. Overall, that overperformance has helped us lift our thinking on the year. Again, the lift is primarily driven by the Q1 performance, and it's also, again, helped us reconsider the increase in the tariffs to the 12.5 go rate. Again, that's embedded as well. With all of those factored in, that's what led us to a slight improvement in our thinking around the gross margin for the year.

Speaker #1: Quarters, but overall, that overperformance has helped us lift our thinking on the year. So again, the lift is primarily driven by the Q1 performance, and it's also, again, helped us reconsider the increase in the tariffs to the 12.5% go rate.

Speaker #1: So again, that's embedded as well. So, with all of those factors in, that's what's led us to a slight improvement in our thinking around the gross margin for the year.

Speaker #9: Excellent. And then the follow-up for me on gross margin—just a housekeeping item on the gross margin bridge. Can you help size the underlying assumption move from 12.5% to 12.5%, from the prior 10% tariff assumption?

Peter McGoldrick: Excellent. The follow-up for me on gross margin, just a housekeeping item on the gross margin bridge. Can you help size the underlying assumption move to 12.5 from the prior 10% tariff assumption? Can you size that in basis points or EPS, however you want to represent that?

Speaker #9: Can you size that in basis points or EPS, however you want to represent that?

Speaker #1: Yeah. We haven't called it out, but I'll just tell you kind of how we're thinking about it from this perspective. So much of our inventory is in place.

Steven Fasching: Yeah. We haven't called it out, I'll just tell you kind of how we're thinking about it from this perspective. Much of our inventory is in place for what we're currently selling. As we look at the increase, there is some impact to it in Q3, and more impact on a full Q4 basis. We haven't called out the specific amount on that. You can calculate some of it in your model. The assumption there is on the inventory that we'll be receiving that will sell through kind of later Q3 and Q4 will be subject to that, what is still being negotiated, I think, in terms of an increased tariff rate.

Steve Fasching: Yeah. We haven't called it out, I'll just tell you kind of how we're thinking about it from this perspective. Much of our inventory is in place for what we're currently selling. As we look at the increase, there is some impact to it in Q3, and more impact on a full Q4 basis. We haven't called out the specific amount on that. You can calculate some of it in your model. The assumption there is on the inventory that we'll be receiving that will sell through kind of later Q3 and Q4 will be subject to that, what is still being negotiated, I think, in terms of an increased tariff rate.

Speaker #1: For what we're currently selling, as we look at the increase, there is some impact to it in Q3, and more impact on a full Q4 basis.

Speaker #1: So we haven't called out the specific amount on that. You can calculate some of it in your model. But the assumption there is on the inventory that we'll be receiving, that will sell through kind of later Q3 and Q4, will be subject to that.

Speaker #1: What is still being negotiated, I think, in terms of an increased tariff rate.

Speaker #9: Very helpful. Thank you.

Peter McGoldrick: Very helpful. Thank you.

Speaker #1: All right. Thank you.

Steven Fasching: All right. Thank you.

Steve Fasching: All right. Thank you.

Speaker #3: Thank you. And, ladies and gentlemen, that will bring us to the conclusion of today's conference call. We'd like to thank you all so much for joining the Deckers brand's first quarter fiscal 2027 earnings conference call.

Operator: Thank you. Ladies and gentlemen, that will bring us to the conclusion of today's conference call. We'd like to thank you all so much for joining the Deckers Brands Q1 fiscal 2027 earnings conference call. Please disconnect your line at this time, and have a wonderful day.

Q1 2027 Deckers Outdoor Corp Earnings Call

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