On Thursday, Deckers Outdoor (NYSE:DECK) discussed fourth-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Deckers Outdoor Corp reported a 10% increase in revenue for fiscal year 2026, reaching nearly $5.5 billion, driven by strong performances from its HOKA and UGG brands.

The company highlighted its strategic focus on product innovation and brand marketing, particularly emphasizing HOKA's performance and lifestyle expansion and UGG's 365 strategy for year-round consumer engagement.

Deckers Outdoor Corp achieved record earnings per share of $7.02, reflecting an 11% increase, with operating margins above 23% due to high levels of full-price selling and disciplined investment.

Future guidance suggests high single-digit revenue growth through fiscal year 2030, with a focus on expanding international markets and direct-to-consumer channels.

The company announced a new share repurchase authorization, reinforcing confidence in its long-term growth strategy and shareholder value creation.

Full Transcript

OPERATOR

Good afternoon everyone. Welcome to the Deckers Outdoor Corp's fourth quarter fiscal 2026 earnings call. this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for your questions. If anyone has any difficulties hearing today's conference call, please press Star zero for operator assistance at any time and I would like to remind everyone that this conference call is being recorded. I would now like to turn the call over to Ms. Erin Kohler, Vice President, Investor Relations and Corporate Planning. Please go ahead, ma'am.

Erin Kohler (Vice President, Investor Relations and Corporate Planning)

Hello and thank you everyone for joining us today. On the call is Stefano Korodi, President and Chief Executive Officer and Steve Fasching, Chief Financial Officer. Before we begin, I would like to remind everyone of the company's safe harbor policy. Please note that certain statements made on this call are forward looking statements within the meaning of the federal securities laws which are subject to considerable risks and uncertainties. These forward looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements made on this call today, other than statements of historical fact, are forward looking statements and include statements regarding our ability to drive long term values, respond to the dynamic macroeconomic environment and the impacts on our business and operating results including as a result of changes to global trade policy, tariffs, pricing actions and mitigation strategies and fluctuations in foreign currency exchange rates, geopolitical conflicts including the ongoing Middle East conflict and related supply chain logistics and cost impacts our current and long term strategic objectives, the performance of our brands and demand for our products anticipated impacts from our brand product marketing, marketplace and distribution strategies, product development plans and the timing of product launches changes in consumer behavior including in response to price increases our ability to acquire new consumers and gain share our ability to achieve our financial outlook and multi year framework including anticipated revenues, product mix, margins, expenses, inventory levels, promotional activity, anticipated rate of full price selling and earnings per share and our capital allocation strategy including potential share repurchases. Forward looking statements made on this call represent management's current expectations and are based on information available at the time such statements are made. Forward looking statements involve numerous known and unknown risks, uncertainties and other factors such as foreign exchange rate fluctuation and changes to trade policies that may cause our actual results to differ materially from any results predicted, assumed or implied by the forward looking statements. 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 10K and quarterly reports on Form 10Q. Except as required by law or the Listing Rules of the New York Stock Exchange, the Company expressly disclaims any intent or obligation to update any forward looking statements on this call. Management may refer to financial measures that were not prepared in accordance with Generally Accepted Accounting principles in the United States, including constant currency as well as free cash flow. For example, the Company reports comparable direct to consumer sales on a constant currency basis for operations that were 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 its operations after investments required to support the strategic growth of the business. Please review our earnings release published today for additional information regarding our non GAAP financial measures. With that, I'll now turn it over to Stefano.

Stefano Korodi (President and Chief Executive Officer)

Thank you Erin Good afternoon and thank you all for joining today's call. We're closing fiscal 26 with exceptional results, strong momentum and deep conviction in the durability of our model and the demand for our consumer love products. Over the past year, our teams executed with discipline by innovating our product pipelines, building brand heat and evolving the marketplace. Collectively, these actions once again translated into outstanding financial results in a dynamic environment. We have influential globally relevant brands led by UGG and hoka, each with distinctive product propositions, deep consumer connections and meaningful runways for growth and expansion across head to toe categories. Channels and regions built on disruptive category Defining Innovation Hoka has a unique opportunity to attract an even broader global consumer base through cutting edge performance technologies while extending into a growing lifestyle audience creating a compelling pathway for continued growth. UGG has inspired generations of consumers through the evolution of iconic designs that transcend silhouettes and seasons, positioning the brand for meaningful long term growth. Our growth strategy remains clear and consistent. Build and sustain category leadership for UGG and HOKA, excite consumers and captivate a growing global audience. Prioritize high quality, full price, sell through and scale market share over the long term. In addition, we have proven our ability to create shareholder value driven by authentic innovative product that fuels the continued growth of our brands and is further supported by industry leading profitability that enables us to to keep investing in the opportunities ahead. With that, I'll start with highlights from the quarter and full fiscal year recap brand performance and provide further perspective around our longer term growth vision. In the fourth quarter, Hoka delivered its largest quarter ever, driven by new products in road and trail and robust global DTC growth including continued healthy gains in the US complemented by ongoing wholesale momentum worldwide. The AG brand's strong performance was fueled by seasonal extensions across both iconic and emerging franchises, primarily driven by strength in global dtc. Both brands contributed to expanded gross margins despite tariff headwinds as high levels of full price sell through underscored our continued focus on quality sales. This outstanding fourth quarter performance contributed to another record year for Deckers across both revenue and earnings. For the full fiscal year, total deckers revenue increased 10% versus last year to nearly $5.5 billion. Hoka and AG together added more than half a billion dollars of revenue over the prior year, record highs increasing 16% and 8% respectively. We maintain high gross margins and investment discipline, delivering best in class operating margins above 23% and we drove record earnings per share to $7.02 reflecting an 11% increase versus last year. These results further demonstrate the momentum of our brands and the continued effectiveness of our marketplace execution. Fiscal 26 strengthened our organization and fortified our foundation for future growth. Now let's dive into brand highlights starting with hoka, our fastest growing brand. Global revenue in the full fiscal year 26 increased 16% over last year to nearly $2.6 billion. Hoka growth was fueled by greater consumer adoption of its leading performance products with more people choosing the brand for various wearing occasions. Hoka continues to attract a wider audience through advancing product offerings that enhance the on foot experience, offering unparalleled combination of performance and comfort, building awareness across the globe by investing in high impact brand marketing, fostering consumer loyalty by developing direct to consumer membership programs and exclusive experiences that build the hookah community and expanding in store visibility through collaboration with strategic wholesale partners. In addition, The Hoka brand fiscal 26 product upgrade significantly boosted our global reach and appeal for the year. Growth primarily came from consumer loved upgrades to our most popular road running franchises, Bondi and Clifton, newly developed H-Frame technology and updated design aesthetic in our key stability models Arahi and Gaviota, advancements in foam midsole geometry and Meta-Rocker technology in our fastest shoes, Cielo, Rocket and Mach and expanded dimensions in the Mafate franchise. Across performance and lifestyle, our franchises function as scalable platforms representing families of products rather than single styles allowing us to extend across performance and lifestyle tiers to deepen consumer engagement. There is significant equity in our most popular franchises, which is why we've placed greater emphasis on developing product families that can include multiple styles tiered across categories. The Mafate and Bondi franchises are two great examples of this successful strategy. The mafate franchise saw a great response to the launch of its peak performance version Mafate X, which drove a halo of demand to both the trail workhorse Mafati 5 and their more lifestyle focused Mafati Speed 2. The Bondi franchise also demonstrated notable success with the Bondi 9 excelling in performance channels, while the Bondi 7 reintroduced this February and positioning key prominent lifestyle destinations has achieved robust sell through following its release. The ongoing development of franchise families supports the Hoka brand's premium positioning increase additional opportunities for segmentation and and differentiation throughout the global marketplace. By the end of fiscal 26, six Hoka franchise families had generated over $100 million of annual revenue and three more are close to reaching that milestone. Since January of 25, all nine of these top franchises have now been updated. We also have launched new complementary products in the seasons ahead. We intend to build on this momentum, enhancing and elevating how we communicate Hoka product innovation to consumers through through refined design principles, standardized technology branding and sharper franchise positioning that leverages brand equity across category and experiences. With this polished approach to product creation, we believe Hoka is well positioned to accelerate the pace of performance, to establish new standards, capture the imagination and loyalty of the next generation of athletes and maintain deep, meaningful connections with our consumers, ensuring their needs and aspirations remain at the heart of everything we create across footwear, apparel and accessories. You will see this evolution begin to take shape this fall when we augment the Clifton franchise through the introductions of Clifton 11, which introduces a premium engineered mesh upper with a streamlined esthetic crafted to extend the reach of our most beloved franchise and the all new Clifton-Pro, our pinnacle offering in the franchise with enhanced technology adding resilience and efficiency to the signature Clifton ride. This represents the first of several Hoka launches in the product pipeline, each designed to segment our most beloved franchises by capitalizing on existing franchise equity. Hoka performs best with consumers who understand its differentiated value proposition, which is why we continue to invest in brand marketing. These efforts are making an impact as Hoka brand recognition experienced notable growth over the past year. According to our proprietary brand awareness survey in the United States, Hoka awareness is now approximately 60%, reflecting an increase from 50% during the same period last year. In international markets, Hoka brand awareness now average approximately 40%, up from roughly 30% in the previous year. This increased awareness represents important progress in growing the Hoka brand's audience which we expect to continue acquiring through our focus to build great product and expand the brand's in store presence. The Hoka brand's channel performance in fiscal 26 reflected our strategic evolution of the global marketplace with wholesale increasing 18% driven by strong full price sell through and healthy reorders and DTC growing 12% reflecting second half acceleration. International regions delivered robust DTC growth across the fiscal year, while improved second half performance of the US DTC business was driven by increased consumer awareness and adoption of key franchise updates. Momentum for our enhanced Hawker membership program including new benefits such as early exclusive product access driving strong signups since the August 25th update strong product storytelling around Gaviota's Bigot and Mach highlighting full price newness and lower marketplace inventory related to better management of outgoing models. Some regional highlights from the year include maintaining top brand share in US performance road and trail footwear above $140 and becoming a top three performance running brand in France, Italy and the UK both according to Serkana. Furthermore, we also grew our premium brand presence in China with strong full price performance across existing and new retail and partner locations contributing to market share gains. These highlights reflect the power of our brand and the strong partnerships Hoka has established throughout the global marketplace. We remain committed to the strategic positioning of the Hoka brand with our trusted wholesale and distribution partners regardless of whether we're expanding or maintaining doors with individual retailers. Sustaining Hoka performance and fostering mutually beneficial partnerships are essential to our ongoing collective success. Based on the growing global demand we're seeing for hoka, we plan to continue selectively expanding wholesale distribution in both the U.S. and international regions in fiscal 27, including a few thoughtfully chosen tests with new partners this fall. Door increases for Hoka will be primarily focused on high quality sporting goods and athletic specialty retailers as the brand's presence remains relatively underpenetrated in these segments. As always, our planned door growth will be controlled with a focus on maintaining a pulled model of demand to build market share through healthy full price sell through. As part of our effort to achieve a balanced channel mix over time, we'll also continue selectively expanding the Hoka brand's retail store presence with a focus on key cities that traditionally amplify the brand's DTC performance online. As well, I want to congratulate the entire Hoka team on delivering another great year. Together. We're well poised to further elevate the Hoka brand and shape its bright future as a leading performance brand moving to AgNow which once again drove growth above expectations, delivering another record breaking year. Global AG revenue in fiscal year 26 increased 8% versus last year to $2.7 billion. AG's performance was primarily driven by more diversified product mix and broader consumer engagement with continued global market share gains. As our iconic franchise families anchored the brand's leadership in quality and craftsmanship, our 365 strategy continued to gain traction with year round products. Consumers increasingly engage in new models that resonate with authentic brand codes and the brand continues to attract new consumer cohorts including higher engagement from a male audience. Cementing the UGG brand's expanded relevance and versatility starts with the right product. Our iconic UGG franchise families continue to deliver foundational growth for the brand through incremental diversification and our product teams have done a fantastic job continuing to evolve the brand's category appeal through new collections deeply rooted in the brand codes. The Tasman remains our most popular franchise, boosted by complementary styles like the Tazelle and seasonal newness such as the Love Pack. Our iconic Classic boot franchise was refreshed through the addition of the new Classic Micro and Heritage slippers remain bestsellers. As UGG remains the go to brand in this category, we're experiencing deeper consumer engagement with core franchise families like these, including with our top selling apparel item the Tasman hoodie as well as with our newer footwear styles proving the demand of OGG as a multi category and multi seasonal brand. This is increasingly evident with our sneakers and sandals offering. Success with sneakers and sandals has come primarily through the development of the l' Malmel franchise and the Golden Collection which accounted for more than half of the brand's growth in fiscal year 26. We continue to augment these collections through seasonal newness, most recently with the Mini Male and Golden Gaze styles. These fresh silhouettes added new dimensions to each franchise and both have resonated well across the global marketplace since launching during the fourth quarter. In addition to modernized styles within multiyear collections, UGG has driven demand with all new silhouettes that leverage the brand's distinctive product DNA. Earlier this year we highlighted the success of Ballet Inspired Nunes with Zora and Quill. Most recently, the Otso Clog showcased our momentum in both innovation and in strengthening the brand's appeal to men. Supported by focused product storytelling and locally relevant influencer seating. The Also a sleek all gender clog crafted with premium materials debuted in February and delivered strong sell throughs across global regions, particularly among new male consumers. The AG brand is gaining meaningful traction with male consumers. Men's styles accounted for more than 20% of the brand's global growth in fiscal 26 with progress across all regions. As North America's exclusive collaboration with menswear brand Hidden sold out very rapidly, attracting a predominantly new and younger consumer base of the brand. With over half of the buyers new to the brand between the ages of 18 and 34, EMEA delivered the highest incremental revenue growth among all markets, reflecting exciting momentum and significant opportunity given its relatively lower penetration, and China showed broad adoption across various categories through full price sales of new products like Weather Hybris, the Auto Clog and the Minnie Mouth Sneaker. From a channel perspective, ag revenue growth versus the prior year was primarily driven by wholesale which increased 13% for the full fiscal year. The brand benefited from strong early demand in the air that led to higher wholesale channel replenishment, increased allocations of key styles and compelling new product driving higher holiday Demand for fiscal 26, DTC grew 4% over last year with growth weighted towards the second half of the year. The channel experienced temporary pressure early on in the year from improved wholesale in stock positions, reflecting our strategic increase of product allocations. Overall, channel growth was much more balanced in the second half. Looking ahead to fiscal 27, we expect Ugg to maintain a balanced business across channels, enhance its presence across the global marketplace and continue making progress to develop the 365 and men's opportunities. A big congratulations to the global ag team on another outstanding year maintaining leadership in the premium lifestyle space and increasing relevance across various product categories. As I reflect on the past couple of years, we've made significant progress to strengthen our teams, our brands and our platform for future growth. Our brands are generating increasing levels of consumer interest through distinct and innovative products and operating in growing segments of the global marketplace with expanding category and distribution opportunities. Looking ahead, our long term strategy provides clear visibility to sustain growth over the coming years. While Steve will provide specific guidance for fiscal year 27 later in the call, I would like to provide further insight into DECA's multi year growth framework, highlighting our continued strategic focus and belief in our distinctive brands, including our vision to further elevate the Hoka brand's positioning as a leading performance brand through disruptive innovation, enhanced lifestyle appeal and drive AG momentum forward as we evolve iconic franchises to expand category adoption while cementing the brand's position as a leading premium lifestyle brand. Given the significant opportunity ahead across categories, channels and geographies, all supported by our strong marketplace execution, we remain highly confident in our brand portfolio's ability to deliver high single digit revenue growth on a consolidated company basis through Our fiscal year 2030 with Hoka expected to increase low double digits annually and UGG anticipated to grow mid single digits annually over this period of time. We anticipate the composition of our revenue growth to be consistent with what we've been communicating with DTC growing faster than the wholesale channel and international growing faster than the US Region. To support our longer term growth outlook, we'll focus our investments on category defining product innovation brand marketing including greater localization of regional content, DTC capabilities that drive lifetime value and technology advancements including the responsible use of AI designed to support gains in productivity, efficiency and consumer acquisition and connectivity. Taken altogether, these investments are designed to further build brand heat, deepen consumer engagement and enhance our industry leading operations Positioning Deckers to deliver operating expense leverage beyond this fiscal year. As Such, our fiscal 28 to 30 framework incorporates maintaining strong operating margins through industry leading floor price selling, disciplined marketplace execution and realizes the benefits of our multi year investments. And with today's announcements of our Board's approval of an additional share repurchase authorization, this demonstrates the Board's confidence in a multiyear framework. Becker's disciplined operational execution paired with its increased authorization for sustained shareholder capital returns through share repurchases reinforced by superior balance sheet and robust expected free cash flow generation is expected to drive low double digit annual earnings per share growth for fiscal year 2028-2030. Building on our proven track record, this framework embodies our durable multi year multi brand growth algorithm positioning Deckers to deliver sustained long term value for shareholders. With that, I'll hand it over to Steve to provide further details on our fourth quarter and full fiscal year 26 results as well as our outlook for fiscal year 27.

Steve Fasching (Chief Financial Officer)

Thanks Stefano and good afternoon everyone. Decker's fiscal year 2026 performance was exceptional. Hoka and UGG delivered another year of sequential revenue growth underscoring growing global demand across both of these amazing brands and their premium products. Our focused execution in the global marketplace yielded high levels of full price selling to deliver strong gross margins which combined with our investment discipline and commitment to share repurchase resulted in best in class operating margins and another record earnings per share. HOKA continues to build upon its strong foundation by growing global awareness and continuing to gain market share with performance runners while also expanding demand with consumers who are looking for more technical and comfortable footwear for a variety of use cases. UGG continues to build share across genders, generations and geographies through the expansion of iconic franchises, product newness infused with unique brand codes and our 365 strategy, which all combine to drive high levels of demand in consumer adoption across a variety of distinctive product franchises. Now let's get into the details of our fourth quarter and full fiscal year 2026 results and then I will provide our initial outlook on fiscal year 2027. For the fourth quarter, revenue came in at $1.12 billion representing an increase of 10% versus the prior year. Growth in the quarter was driven by Hoca and Ugg, which increased 15% and 9% respectively. Hoka delivered revenue of $671 million, representing the largest quarter in the brand's history. DTC was the fastest growing channel in the quarter, increasing 18% versus 4 last year with wholes.a.le increasing 13% across both channels. Revenue growth reflected continued strong momentum from international regions and positive contributions. In the US, UGG delivered revenue of $409 million which was above our expectation as the brand benefited from extended selling of fall products primarily in the DTC channel. Gross margin in the fourth quarter was 57.6%, up 90 basis points versus the prior year period primarily due to higher levels of full price selling across UGG and hoka, favorable foreign currency exchange rates, reduced freight costs and a slight benefit from favorable product and channel mix with partial offsets from a net headwind of tariffs. Gross margin was well above our implied fourth quarter expectations primarily due to higher full price selling, greater freight s.a.vings and a slightly larger benefit from product mix favorability. SG&A for the quarter was $488 million representing 43.6% of revenue aligned with our expectation and taking advantage of our stronger FY26 performance. This included shifting certain expenses earlier to provide a stronger setup as we begin fiscal year 2027. This earlier and higher spend primarily related to accelerating top of the funnel marketing to build brand awareness, advanced technology and also reflected unfavorable impacts from foreign currency exchange rate remeasurement. These results drove diluted earnings per share of $0.96 which compares to $1 in the prior year period. Our fourth quarter performance marked a strong close to the year. For the full fiscal year 2026, we delivered record revenue of $5.47 billion which increased 10% versus last year as compared to last year. Revenue growth was driven by HOCA adding an incremental $354 million totaling $2.59 billion in annual revenue with double digit percentage gains across both DTC and wholes.a.le and of increasing $207 million totaling $2.74 billion of annual revenue led by the global strength of wholes.a.le as well as an increase in DTC. Gross margin for the year was 57.7%, down 20 basis points versus last year. The net headwind of tariff in the fiscal year accounted for approximately 80 basis points points of decline year over year with underlying margin expansion offsetting approximately 60 basis points, largely related to favorable product mix and lower freight costs. Product mix favorability continues to be driven by successful scaling of our highest margin products. Across Ugg and Hoka. SGA dollar spend for the year was $1.89 billion, up 11% versus the prior year, $1.71 billion. SGA represented 34.6% of revenue, which is slightly above last year's rate of 34.2%. Key areas of increased investment in fiscal year 2026 included higher marketing spend across Hoka and UGG to fuel brand initiatives, increased rent primarily from international hocus door openings, hiring additional talent primarily to support future HOCA growth opportunities and strategic technology investments. We held our unallocated enterprise and shared brand expenses roughly flat versus the prior year, which created leverage to allow for strategic investments that support the long term growth of our brands. Our exceptional levels of profitability reflect Decker's unique ability to play offense, invest behind our brands or.

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