DECKERS OUTDOOR CORP Q2 FY2025 earnings call

Guiding Principles - Consumer-first mindset: Harness insights to create resonant products. - Brand-led product creation: Leverage unique brand codes for consistent experiences. - Innovation forward: Commit to leading-edge technologies and designs. - Globally driven: Diversify and build international markets. ### Second Quarter Highlights - Revenue grew 20% to $1.3 billion, gross margin was 55.9%, and diluted earnings per share increased 39% to $1.59. - HOKA: First half revenue up 32%, driven by multi-category offense, new products like Skyflow and Mach X2, and strong regional growth. - UGG: First half revenue up 13%, powered by iconic franchises and international momentum. - Channel Highlights: DTC global revenue up 22% reported, wholesale revenue up 20% year-over-year.

In the second quarter, revenue reached $1.311 billion, representing a 20% increase year-over-year. HOKA had record quarterly revenue of $571 million, a 35% year-over-year growth. UGG saw a 13% year-over-year growth. Globally, DTC revenue increased 22% on a reported basis and 19% on a comparable basis. Wholesale revenue grew 20% year-over-year, with HOKA up 33% and UGG up 14%. The HOKA brand achieved a milestone of eclipsing $2 billion in trailing 12-month revenue for the first time.

• Revenue is expected to be approximately 12% above last year, reaching $4.8 billion (up from prior guidance of ~$4.7 billion). - HOKA is expected to grow approximately 24% year-over-year, and UGG is expected to grow mid-single digits. - Full-year gross margin is expected in the range of 55% to 55.5%. - SG&A is expected to be approximately 35%. - Operating margin is expected in the range of approximately 20% to 20.5%. - Diluted earnings per share is expected in the range of $5.15 to $5.25. Guidance excludes unforeseen charges and assumes no meaningful deterioration of current risks and uncertainties.

• Changes in consumer confidence and recessionary pressures. - Inflationary pressures. - Fluctuations in foreign currency exchange rates. - Supply chain disruptions. - Geopolitical tensions.

Q: Jay Sole asked about the impact of HOKA's higher-priced styles.

A: Stefano Caroti and Steve Fasching noted that Pinnacle products like Cielo X1, Skyward X, and Tecton X have performed better than expected, driving top-line growth and improving margin.

Q: Jonathan Komp inquired about HOKA's second half planning.

A: Steve Fasching stated that most growth occurred in the first half, with controlled distribution, and was encouraged by better performance than anticipated.

Q: Laurent Vasilescu asked about HOKA's international market.

A: Stefano Caroti said international is 2-3 years behind the US, aiming for a 50/50 split between US and international, and was encouraged by international performance.

Q: Sam Poser asked about DTC, US sales, and margin headwinds.

A: Erinn Kohler and Steve Fasching provided high-level responses.

Q: Dana Telsey asked about wholesale shipments and UGG growth.

A: Steve Fasching discussed differences by brand, controlled marketplace management, and potential upside for UGG.

Q: Rick Patel asked about Asia performance.

A: Stefano Caroti and Steve Fasching mentioned strong Asia growth, with a small but growing presence in China.

Q: Adrienne Yih asked about US door growth and demand creation.

A: Stefano Caroti said there is selective expansion, and Steve Fasching noted investing in demand creation with better performance, increasing localized content.