Deckers(DECK)2025-05-23 16:55Brand Operations and Sales - Koolaburra brand operations are being phased out, with Koolaburra.com closed as of March 31, 2025, and plans to wind down wholesale operations by the end of 2025[21]. - The Sanuk brand was sold on August 15, 2024, impacting the financial results for the reportable operating segments[22]. - As of March 31, 2025, the company operates 179 global retail stores, including 137 UGG brand stores and 42 HOKA brand stores[34]. - The HOKA brand has seen significant growth, becoming a leading brand in running and outdoor specialty accounts, with expanded marketing efforts driving both domestic and international sales[25]. - Net sales increased 16.3% to 2,531,351 and HOKA brand net sales up 23.6% to 3,186,709, while international net sales increased 26.3% to 4,985,612 in 2025 from 1,179,092, with operating margin increasing by 200 basis points to 23.6%[193]. - Diluted earnings per share increased 30.2% to 966,091, reflecting a 27.2% increase from 2,885,663, representing a gross margin of 57.9%, up from 55.6% in the previous year[211]. - SG&A expenses increased 17.1% to 1,706,571, a decrease of 17.1% compared to 6,000 to various non-profit organizations during fiscal year 2025 and employees volunteered approximately 24,000 hours[69]. - The company conducts regular employee engagement surveys, with a participation rate of 91.5% in the latest survey, and 89% of respondents expressed pride in working for the company[66]. - The company offers tuition reimbursement for eligible US employees up to $5,000 per calendar year[72]. - The company has established a Corporate Responsibility, Sustainability & Governance Committee to oversee its ESG strategy and initiatives[58]. Risks and Challenges - A significant portion of the products sold, particularly under the UGG and HOKA brands, are premium retail products, making them highly dependent on consumer confidence and discretionary spending[90]. - The footwear, apparel, and accessories industry is highly competitive, with intense pressure from both established companies and new entrants, which could adversely affect market share and financial performance[92]. - Economic conditions, including inflation and consumer debt levels, may adversely affect consumer spending and demand for premium products[90]. - Supply chain disruptions could lead to manufacturing delays and increased costs, negatively impacting sales and customer relationships[98]. - Changes in consumer preferences and fashion trends can significantly impact market acceptance of both current and new products[97]. - The company faces challenges in managing inventory and working capital due to the extended design and manufacturing process, which can lead to significant liquidity requirements[93]. Strategic Initiatives and Growth - The company is expanding its domestic warehouse and distribution capacity to support growth, particularly for the UGG and HOKA brands[95]. - The company is expanding its retail presence internationally, opening UGG and HOKA brand locations, which is crucial for brand positioning and financial performance[111]. - The company continues to implement international growth strategies for the HOKA and UGG brands, focusing on selective expansion and investment in key markets[198]. - The company plans to continue growing its distribution network to support long-term strategic objectives, but may face headwinds in connection with these efforts[129]. Cybersecurity and Compliance - The company is exposed to risks associated with cyber and data security incidents, which could materially harm its business and reputation[136]. - The company has implemented a comprehensive cybersecurity program to mitigate risks associated with evolving cybersecurity threats[157]. - The company has established a dedicated action team for cybersecurity risk management, integrating it into overall business strategy[159]. - The company may face civil or criminal penalties if found in violation of privacy and security laws, which could increase liabilities and harm its reputation[142]. Market and Economic Factors - The company is subject to various regulatory, operational, and reputational risks related to its international operations, including potential product recalls and regulatory penalties[125]. - The company may incur significant costs to improve climate-related resiliency and comply with evolving regulations, impacting financial condition[116]. - The global minimum tax under OECD's Pillar Two rules may impact the company's income tax expense and profitability beyond fiscal year 2025[150]. - The company is exposed to risks from potential changes in tax laws, which could increase its worldwide tax rate and affect financial results[149].