DECKERS OUTDOOR CORP

Deckers Outdoor Corporation is a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities. The company markets its products primarily under three proprietary brands: HOKA, UGG, and Teva, competing across the fashion and casual lifestyle, performance, running, and outdoor markets. The footwear, apparel, and accessories industry is highly competitive and subject to rapidly changing consumer preferences, with barriers to entry reduced by access to offshore manufacturing and evolving technologies. Deckers operates within this landscape by offering diverse lines that emphasize fashion, performance, authenticity, functionality, quality, and comfort, with products tailored to a variety of activities, seasons, and demographic groups.

The filing names no specific competitors but states that the industry is highly competitive and that some competitors are larger and have substantially greater resources, including broader brand awareness, and that the growth and visibility of the HOKA brand and UGG brand have attracted competitors specifically targeting the categories in which Deckers operates. Deckers believes its ability to compete depends on factors including predicting changing consumer tastes, producing innovative products, maintaining brand strength, pricing competitively, and managing supply chain disruptions. The company holds 201 designs and inventions with corresponding design or utility patent registrations, plus 29 designs and inventions pending registration as of March 31, 2026.

Deckers generates revenue through two primary channels: a wholesale channel, which sells products to a network of third-party retailers, including partner retailers and distributors, and a Direct-to-Consumer (DTC) channel, comprised of company-owned e-commerce websites and retail stores where products are sold at retail prices. The company operates omnichannel global marketplaces where consumers can shop and experience brands seamlessly across both channels. Independent third-party contractors manufacture all of Deckers' products, and the company generally purchases products from independent manufacturers on the basis of individual purchase orders rather than maintaining long-term purchase commitments.

The HOKA brand is an authentic premium line of year-round performance footwear offering enhanced cushioning and inherent stability with minimal weight, originally designed for ultra-runners and now appealing to world champions, tastemakers, and everyday athletes. The HOKA brand's product line includes running, trail, hiking, fitness, and lifestyle footwear offerings, as well as apparel and accessories. For fiscal year 2026, HOKA brand net sales increased 15.9% to $2,587,330. The UGG brand is described as one of the most iconic and recognized brands in the industry, born on the California coast, creating iconic products and experiences made for people to feel comfort, softness, warmth, and confidence. The UGG brand offers premium footwear, apparel, and accessories with year-round product offerings. For fiscal year 2026, UGG brand net sales increased 8.2% to $2,738,758.

Other brands consist primarily of the Teva brand, whose products are built for a range of outdoor pursuits and include a variety of footwear options from classic sandals and shoes to boots. The Other brands reportable operating segment also includes financial results of the Koolaburra brand and AHNU brand, for which the phase out of standalone operations were completed during the third and fourth quarters of fiscal year 2026, as well as financial results for the former Sanuk brand during the prior period through the sale date of August 15, 2024. For fiscal year 2026, Other brands net sales decreased 33.9% to $146,208.

During fiscal year 2026, Deckers began phasing out standalone operations for the AHNU brand, closing Ahnu.com as of October 1, 2025, and completing the phase out in the wholesale channel during the third and fourth quarters of fiscal year 2026, with no material exit costs incurred. The company also completed the phase out of the Koolaburra brand in the wholesale channel during the third and fourth quarters of fiscal year 2026, having closed Koolaburra.com as of the end of fiscal year 2025, also with no material exit costs. The sale of the Sanuk brand was completed during the second quarter of fiscal year 2025. The Board last approved an authorization of $2,250,000 on May 21, 2025, to repurchase shares of common stock. During the three months ended March 31, 2026, Deckers repurchased 2,477,225 shares at a weighted average price of $105.61 per share for $261,612. Subsequent to March 31, 2026, through May 1, 2026, the company repurchased 1,096,908 shares at a weighted average price of $105.75 per share for $115,999. On May 20, 2026, the Board approved an additional authorization of $3,500,000 to repurchase shares, resulting in an aggregate remaining authorization of approximately $4,840,000 as of that date.

For fiscal year 2026, total net sales increased 9.8% to $5,472,296, compared to $4,985,612 in fiscal year 2025. Gross profit increased 9.4% to $3,157,726, while gross margin decreased 20 basis points to 57.7%. Income from operations increased 7.1% to $1,262,903, and operating margin decreased 50 basis points to 23.1%. Net income increased 6.0% to $1,024,071, and diluted earnings per share increased 10.9% to $7.02 per share. Cash provided by operating activities was $1,181,955 for fiscal year 2026, compared to $1,044,523 in the prior year.

Deckers is focused on increasing global consumer awareness, cultural relevance, and adoption of its brands through product innovation and marketing investments across geographies and channels, while enhancing the customer experience through category expansion and loyalty-driven engagement. The company is pursuing growth strategies for the HOKA brand and UGG brand to grow international sales to represent a larger portion of total net sales, and continues to selectively expand HOKA brand presence through additional wholesale partner locations and targeted DTC channel retail store expansion. Deckers is investing in regions that provide influential market presence to build brand awareness, including through the launch of the US HOKA brand loyalty program during fiscal year 2026, and expects to continue investing in the UGG brand and HOKA brand global loyalty programs.

The company's long-term strategy is to grow its DTC channel to represent a larger portion of total net sales by differentiating the consumer experience relative to the wholesale channel and driving consumer acquisition and retention, with investments in e-commerce platform upgrades, data analytics, consumer experience initiatives, and selective global retail store expansion. Deckers expects growth in its DTC channel's net sales to continue to positively impact gross margin, but also seeks to expand distribution with wholesale partners to drive brand awareness and market share, which could pressure gross margin in certain periods. The company is also taking actions to reposition the Teva brand, including refocusing certain wholesale channel distribution toward outdoor and premium retail partners and emphasizing brand messaging around its outdoor-adventure heritage, though macroeconomic pressure on value-oriented domestic wholesale consumers may continue to adversely affect Teva brand performance.

Gross margin decreased 20 basis points to 57.7% in fiscal year 2026, primarily due to incremental tariffs on domestic goods and a slightly unfavorable channel mix, partially offset by cost-sharing arrangements, strategic price increases, favorable product mix, and slightly favorable foreign currency exchange rate fluctuations and freight costs. The filing states that Deckers may not realize similar gross margin benefits in the next fiscal year due to various factors including macroeconomic and geopolitical factors and the potential impact from pricing strategies. SG&A expenses increased 11.0% to $1,894,823, driven by higher advertising, marketing, and promotion expenses of approximately $63,600, higher other SG&A expenses of approximately $59,000, higher rent and occupancy of approximately $36,700, and higher payroll and related costs of approximately $33,000.

Deckers continues to invest in its global distribution network, including its warehouses and distribution centers, as well as third-party logistics providers, to support growth. The company is currently transitioning one of its international 3PLs to a new partner, which may create temporary operational risks. Deckers continues to diversify its independent manufacturers and the regions in which they operate, though it maintains a significant concentration of sourcing and manufacturing in Southeast Asia. The company expects to continue upgrading its global distribution network to continue meeting customer and consumer demand.

The filing does not provide specific R&D spending levels, capital expenditure plans, or dividend policy figures for the upcoming period. However, the Board approved a stock repurchase authorization of $2,250,000 on May 21, 2025, and an additional authorization of $3,500,000 on May 20, 2026. As of May 1, 2026, Deckers had $1,433,603 remaining authorized for repurchases under the stock repurchase program, and after the May 20, 2026 authorization, the aggregate remaining authorization was approximately $4,840,000. Deckers has not declared or paid any cash dividends on its common stock since inception and currently does not anticipate declaring or paying any cash dividends in the foreseeable future.

Deckers faces headwinds from evolving trade policies, including higher tariffs and restrictions affecting goods imported from certain regions where it has a concentration of sourcing and manufacturing. Recent judicial, regulatory, and administrative developments regarding tariffs imposed under the International Emergency Economic Powers Act have increased uncertainty related to both future duty costs and potential recovery of previously paid duties. As of March 31, 2026, Deckers has not recognized any amounts related to potential tariff refunds or other recoveries. The company continues to monitor developments and pursue mitigation strategies including selective pricing actions, inventory and sourcing management, supplier diversification, and negotiating cost-sharing arrangements, but may be unable to offset tariff-related cost impacts, which could materially and adversely affect gross margin and demand for products.

Macroeconomic factors including inflationary pressures, increased tariffs, rising supply chain costs, high interest rates, foreign currency exchange rate volatility, escalating global conflicts, changes in discretionary spending, and recession risks are creating a complex and challenging environment that may continue to pressure results of operations, including gross margin. Prolonged or escalating conflicts in the Middle East could disrupt the supply chain and increase energy, transportation, and commodity costs, as well as cause shipping delays. While these factors did not materially impact results of operations during fiscal year 2026, they could negatively affect the company in future periods.

Deckers faces material risk from evolving US and international trade policies, including higher tariffs on goods imported from Southeast Asia where the majority of its independent manufacturers are located, predominantly in Vietnam and Indonesia, with less than 5% from China or any other individual country. The company has not recognized any amounts related to potential tariff refunds as of March 31, 2026, and may be unable to offset tariff-related cost impacts. Sheepskin, used in a substantial portion of UGG brand products, is sourced primarily from Australia and processed largely by two tanneries in China, creating geographic and supplier concentration risk that could disrupt supply or increase costs. As of March 31, 2026, one customer represents 18.5% of trade accounts receivable, net, which is generally unsecured and exposes Deckers to collection risk. The company relies on independent manufacturers for all production needs, with a significant concentration in Southeast Asia, and does not have direct control over these manufacturers or their suppliers, exposing it to risks from regional economic, political, environmental, or operational conditions.

Management's message emphasizes that Deckers is a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, and that the company's key values guide its journey onward together to improve its business and create a better world. The strategic priorities emphasized for the period ahead include increasing global consumer awareness, cultural relevance, and adoption of brands through product innovation and marketing investments; growing the DTC channel to represent a larger portion of total net sales; expanding international sales for the HOKA brand and UGG brand; and continuing to manage marketplace inventory through product segmentation and differentiation. Management notes that promotional activity slightly increased compared to exceptionally low levels in the prior period, but the company continued to achieve high levels of full-price sell through, contributing to largely maintaining gross margin.