Financial Data and Key Metrics Changes - The company reported a revenue increase of 9% for Q2 2026 compared to the previous year, with diluted earnings per share growing by 14% [7][29] - Total company revenue for the first half of fiscal 2026 grew by 12%, with HOKA revenue increasing by 15% and UGG revenue rising by 12% [7][21] - Gross margin for Q2 was 56.2%, up 30 basis points from 55.9% in the previous year, benefiting from price increases and favorable product mix [32][34] Business Line Data and Key Metrics Changes - HOKA's revenue in the first half increased by 15%, driven by updates to major road running franchises and strong sell-through rates [11][12] - UGG's global revenue in the first half increased by 12%, with men's footwear growing at twice the rate of the overall brand [21][22] - HOKA's wholesale revenue grew by 13% in Q2, while UGG's wholesale increased by 17%, partially offset by a 10% decline in UGG's DTC [30] Market Data and Key Metrics Changes - International regions drove UGG and HOKA revenue growth, with international sales increasing by 38% year-over-year [8] - HOKA gained two points of market share in the U.S. road running category over the past twelve months, outperforming competitors in Europe [12][18] - The U.S. marketplace remains dynamic, with a shift towards multi-brand shopping experiences impacting consumer behavior [9][30] Company Strategy and Development Direction - The company aims to achieve a balanced business model with 50% of sales from direct-to-consumer (DTC) and 50% from wholesale channels [10] - Strategic focus on brand building and marketing investments to enhance consumer awareness and expand market share for HOKA and UGG [8][39] - The company is committed to long-term sustainable growth, managing brands for profitability rather than chasing short-term sales [49][95] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer sentiment in the U.S., anticipating a more cautious consumer environment due to inflation and price increases [44][94] - The company remains confident in the growth trajectory of HOKA and UGG, with expectations for continued strong demand and market share gains [39][40] - Tariff impacts are expected to be significant in the second half of the fiscal year, with mitigation strategies in place to offset some of the pressures [37][70] Other Important Information - The company ended Q2 with $1.4 billion in cash and equivalents, with no outstanding borrowings [34] - Share repurchases totaled approximately $282 million during the quarter, reflecting the company's commitment to returning value to shareholders [35] Q&A Session Summary Question: About the guidance reinstatement and consumer behavior - Management acknowledged a cautious consumer outlook due to tariffs and price increases but emphasized the strength of their brands and long-term growth strategy [44][49] Question: Insights on the back half guidance for HOKA - Management indicated more pressure in Q3 with expectations for stronger growth in Q4, depending on consumer behavior during the holiday season [55][56] Question: DTC versus wholesale channel dynamics - Management expects improvements in DTC sales in Q3 and Q4, with a focus on balancing growth between DTC and wholesale channels [63][81] Question: Long-term margin structure and tariff impacts - Management confirmed that tariff pressures will continue to affect margins, but they are committed to maintaining strong profitability levels [68][70] Question: Pricing actions and consumer demand - Management reported that price increases have not negatively impacted demand, with strong sell-throughs for key styles [77][78]

Financial Data and Key Metrics Changes - The company reported enterprise revenues of $937 million, a 1% increase compared to the prior year, exceeding guidance which anticipated a decline of approximately 1.5% [5][25] - Adjusted gross margins improved to 57.8%, up 180 basis points year-over-year, while adjusted operating margins were 23.8%, exceeding guidance by over 200 basis points [6][27] - Adjusted diluted earnings per share were $3, nearly 20% above the high end of the guidance range [7][29] Business Line Data and Key Metrics Changes - Crocs brand revenues reached $762 million, a 4% increase year-over-year, driven by double-digit growth in international markets [6][26] - Hey Dude brand revenues were $176 million, down 10% year-over-year, but better than the anticipated decline of 14% to 16% [27] - Direct-to-consumer (DTC) sales for Hey Dude grew by 8%, indicating an acceleration from the previous quarter [27] Market Data and Key Metrics Changes - International revenue for Crocs increased by 12%, with China showing over 30% growth compared to the prior year [26][18] - North American revenue for Crocs was down 3% year-over-year, which was better than expected [26][19] - The company noted robust growth in Western Europe, particularly in France and Germany [26][19] Company Strategy and Development Direction - The company is focused on maintaining competitive advantages and adapting to a volatile macroeconomic environment, including managing sourcing and cost structures [8][12] - Strategic investments are being made to enhance brand relevance and expand product offerings beyond clogs, particularly in sandals [14][15] - The company is committed to a digitally led marketing strategy, leveraging social commerce and influencer partnerships to drive brand engagement [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the unpredictability of global trade policies and their potential impact on business operations, leading to the withdrawal of full-year guidance [10][30] - The company is proactively identifying cost savings of approximately $50 million for 2025 and managing inventory levels carefully [11][34] - Despite uncertainties, management remains confident in the company's ability to generate significant free cash flow and maintain profitability [12][29] Other Important Information - The company has a diversified sourcing mix, with 47% of products anticipated to come from Vietnam in 2025, and is actively adjusting sourcing strategies in response to tariff changes [9][10] - The company repurchased 607,000 shares during the quarter, maintaining a strong liquidity position with $166 million in cash and $679 million in borrowing capacity [29][30] Q&A Session Summary Question: Can you comment on the sustainability of gross margins? - Management indicated that gross margins are sustainable due to effective vendor negotiations, investments in logistics, and favorable customer mix [40][41] Question: What is the strategy regarding pricing in light of potential cost increases? - Management acknowledged pricing as a lever to mitigate costs, with a strategic approach to potential price increases across channels [43] Question: Can you provide insights on Q2 revenue guidance? - Management expressed satisfaction with April's performance but emphasized caution due to the unpredictable global trade environment [48][49] Question: How are you planning to mitigate the potential impact of tariffs? - Management outlined a diversified sourcing strategy and indicated that they would cancel orders if tariffs remain high, rather than incur losses [50][51] Question: What is the approach to marketing spend in 2025? - Management plans to maintain marketing investments to engage consumers, despite the uncertain environment [55] Question: How is the company managing wholesale versus DTC pricing? - Management stated that while DTC pricing can be adjusted, they prefer coordinated pricing changes across channels [89][90] Question: What are the drivers for international growth? - Management highlighted brand penetration as a key driver, with significant focus on markets like China and India [78][80]