Deckers Outdoor (DECK) 10-K risk factor changes: FY2019 vs FY2018

[removed: Investing] [added: As a result, investing] in our common stock involves substantial risk.

Before [removed: making a decision] [added: deciding] to [removed: invest in,] [added: purchase,] hold or sell our common stock, stockholders and potential stockholders should carefully consider the risks and uncertainties described below, in addition to the other information contained in or incorporated by reference into this Annual [removed: Report on Form 10-K,] [added: Report,] as well as the other information we file with the SEC.

If any of [removed: the following] [added: these] risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.

In that case, the value of our common stock could [removed: decline] [added: decline,] and stockholders may lose all or part of their investment.

Refer to the section entitled [removed: "Cautionary] [added: “Cautionary] Note Regarding Forward-Looking [removed: Statements" on page 2 of] [added: Statements” within] this Annual Report [removed: on Form 10-K.][added: for additional information.]

Historically, the highest percentage of UGG brand net sales have occurred in the fall and winter months (our second and third fiscal quarters), and the highest percentage of Teva [added: brand] and Sanuk brand net sales have occurred in the spring and summer months (our first and fourth fiscal quarters).

Due to the size of the UGG brand relative to our other brands, this trend has resulted in our [removed: aggregate] net sales for the second and third fiscal quarters significantly exceeding our net sales in the first and fourth fiscal quarters.

[removed: Unexpected] [added: Unfavorable or unexpected] weather patterns may [removed: continue to] have a material, negative impact on our [added: business,] financial [removed: condition and] [added: condition,] results of [removed: operations.][added: operations and prospects.]

As a result of the relative concentration of our sales in certain months of the year, factors which specifically impact consumer spending patterns in those months, such as unexpected weather patterns, declines in consumer [removed: confidence] [added: confidence, changing consumer preferences,] or [removed: worsening] [added: uncertain] economic conditions, will have a disproportionate impact on our business and could result in our failure to achieve financial performance that is in line with our [removed: expectations.][added: expectations or the expectations of market participants.]

The footwear, apparel and accessories industry is subject to rapid changes in consumer preferences, and if we do not accurately anticipate and promptly respond to consumer demand, [removed: including through effective marketing,] we could lose sales, our relationships with customers could be [removed: harmed] [added: harmed,] and our brand loyalty could be diminished.

| • | [removed: continued consumer] [added: market] acceptance of our [removed: existing] [added: current] products and [added: new products, as well as market] acceptance of [removed: our new] [added: competitive] products; |

| • | the implementation of [removed: a] [added: our] segmentation approach to [added: the] distribution [removed: with respect to] [added: of] certain of our [removed: brands and] products; |

| • | publicity, including social media, related to us, [added: our] products, [added: our] brands, [removed: and] [added: our] marketing [removed: campaigns;] [added: campaigns and our celebrity endorsers;] |

| • | changes in consumer confidence and buying patterns, and other factors that impact discretionary income and spending; [removed: and] |

| • | changes in general [removed: economic] [added: economic, political] and market conditions. |

[removed: Furthermore,] we are dependent on consumer receptivity to our new products and to the marketing strategies we employ to promote those products.

If we fail to [added: predict or] react appropriately to changes in consumer preferences and fashion trends, consumers may consider our brands and products to be outdated or associate our brands and products with styles that are no longer popular, which may adversely affect our overall financial performance.

The value of our brands is largely based on evolving consumer perceptions, and [removed: one or more missteps] [added: concerns] with respect to factors such as product quality, product [removed: design] [added: design, technical performance, product components] or [added: materials, or] customer service, could result in negative perceptions and a corresponding loss of brand loyalty and value.

Further, [removed: the implementation of the plan] [added: our attempts to sustain or expand operating profit improvements] may require additional investments and divert management’s time and resources, which may impede our ability to achieve our [removed: goal of driving operating profit improvement.][added: other strategic objectives.]

While we expect to [removed: close or relocate a number] [added: identify additional retail stores for closure as part] of [added: our ongoing] retail [removed: stores,] [added: store fleet optimization efforts,] we may [added: simultaneously] identify opportunities to open new retail stores in the future.

In addition, since a certain amount of our retail store costs are fixed, if we have insufficient [removed: sales,] [added: sales at a new store location,] we may be unable to reduce expenses in order to avoid losses or negative cash flows.

[removed: As a result of our ongoing retail store and fleet optimization plans, and in] [added: In] light of the significant costs and impairments that can be incurred upon the closure of a retail location, we expect to conduct a thorough diligence process and apply stringent financial parameters when assessing whether to open a new retail store location.

However, there can be no assurance that any new retail location that we may identify will ultimately generate a positive return on our investment or that our investment in a [removed: brick and mortar] retail store will increase our sales.

We provide training to support these [removed: stores,] [added: stores] and set and monitor operational standards.

We face intense competition from both established companies and newer entrants into the market, and our failure to compete effectively could cause our market share to decline, which [removed: would] [added: could] harm our [added: reputation and have a material adverse impact on our] financial condition and results of operations.

The footwear, apparel and accessories industry is highly [removed: competitive] [added: competitive,] and [added: subject to changing consumer preferences and tastes,] we expect to continue to face intense competitive pressures.

We believe [removed: that] we compete on the basis of a number of factors, including our ability to:

| • | produce products that meet our requirements and consumer expectations for [removed: quality;] [added: quality and technical performance;] |

| • | maintain [removed: brand loyalty] and [removed: authenticity;] [added: enhance brand loyalty;] |

| • | implement our Omni-Channel strategy, including providing a unique customer service experience; [removed: and] |

| • | manage the impact of the rapidly changing retail [removed: environment on our business,] [added: environment,] including with respect to rising competition within the E-Commerce [removed: business.] [added: business, especially from online retailers such as Amazon.com.] |

Our inability to compete effectively with respect to one or more of these factors could cause our market share to decline, which [removed: would] [added: could] harm our [added: reputation and have a material adverse impact on our] financial condition and results of operations.

Our competitors include athletic and footwear companies, branded apparel and accessories companies, home goods [added: and sporting goods] companies, and [added: specialty] retailers with their own private labels.

In particular, we believe that, as a result of the growth of the UGG brand, certain competitors have entered [removed: into] the marketplace specifically in response to the success of our brands, and that other competitors may do so in the future.

A number of our larger competitors have significantly greater financial, technological, engineering, manufacturing, marketing, and distribution resources than we do, as well as greater brand awareness in the footwear, apparel and accessories [removed: markets.][added: markets among consumers and other market participants.]

Our competitors’ greater [added: resources and] capabilities in these areas may enable them to more effectively compete on the basis of price and production, develop new products more quickly, [added: develop products with superior technical capabilities, market their products and brands more successfully,] identify or influence consumer preferences, [removed: and] withstand [added: the impacts of seasonality, and manage] periodic downturns in the footwear, apparel and accessories industry or in economic conditions generally.

With respect to newer entrants into the market, we believe that [added: factors such as] access to offshore manufacturing and changes in technology will [removed: continue to] make it easier and more cost effective for these companies to compete with us.

For example, efforts by our competitors to dispose of their excess inventories may significantly reduce prices of competitive products, which may [removed: require] [added: put pressure on] us to reduce the pricing of our products in order to compete, or cause consumers to shift their purchasing decisions away from our products entirely.

If we fail to compete effectively in the future, our sales could [removed: decline] [added: decline,] and our margins could be impacted, either of which could have a negative impact on our financial condition and results of operations.

If we are unsuccessful at improving our operational systems and our efforts do not result in the anticipated benefits to us or result in unanticipated disruption to our business, our financial condition and operating results could be adversely [removed: affected] [added: affected,] and our business may become less competitive.

Certain statements made in this section constitute “forward-looking statements”, which are subject to numerous risks and uncertainties including those described in this section.

In addition, significant fluctuations in our financial performance from period to period as a result of these or other factors could increase the volatility of our stock price, which could cause our stock price to decline.

| • | consumer acceptance of our existing products and acceptance of our new products, including our ability to develop new products that address the needs and preferences of new consumers; |

| • | consumer perceptions of and preferences for our products and brands, including as a result of evolving ethical or social standards; |

| • | legislation restricting our ability to use certain materials in our products; and |

Furthermore,

If we are unable to sustain the cost reductions and profitability improvements achieved from the implementation of our restructuring and operating profit improvement plans, we may not achieve operating results in line with our expectations, which could cause our stock price to decline.

We implemented a restructuring plan designed to reduce overhead costs and create operating efficiencies while improving collaboration across our brands.

We also implemented an operating profit improvement plan designed to improve profitability by enhancing product development cycle times, optimizing material yields, consolidating our factory base, and relocating product manufacturing and distribution facilities.

However, we may not be able to sustain the cost reductions, profitability improvements or other expected benefits of these plans in future periods.

If we fail to sustain or expand operating profit improvements in line with our expectations, or with the expectations of research analysts or other market participants, it could have a material adverse impact on our financial performance, which could cause our stock price to decline.

| • | continue to market current products, and develop new products, that appeal to consumers; |

| • | ensure availability of raw materials and production capacity; |

| • | respond to new or proposed legislation impacting our products; and |

Further, we believe that our key customers face intense competition from other department stores, sporting goods stores, retail specialty stores, and online retailers, among others, which could negatively impact the financial stability of their businesses and their ability to conduct business with us.

However, in

Further, our industry is characterized by rapidly changing fashion trends and consumer preferences.

We believe there is a growing trend within the fashion industry towards eliminating the use of certain animal products, most notably fur.

For example, legislation has been passed in the US banning the sale of fur in certain cities, and similar legislation is being considered in other geographic locations, including New York City.

While the use of leather goods and sheepskin has typically not been subject to this type of legislation, it is possible that future legislation could have the impact of restricting or eliminating our ability to use sheepskin in the products we sell in certain geographic locations.

In addition, notwithstanding whether specific legislation is passed, it is possible that consumer preferences and tastes may change based on evolving ethical or social standards, such that our products may potentially become less desirable to certain consumers.

Because sheepskin is currently used to manufacture a significant portion of our UGG brand products, any legal or social impediments to the sale of products that include sheepskin, especially within our large target markets, could have a material adverse impact on our business, financial condition and results of operations.

| • | uncertain macroeconomic and political conditions. |

In either event, these factors could have a material adverse impact on our financial condition and operating results.

If a retailer or distributor partner fails to satisfy contractual obligations or to otherwise meet our expectations, it may be difficult to locate an acceptable substitute partner.

the rapidly changing retail environment.

Further, in order to continue to develop new products and successfully operate and grow

Additionally, our European headquarters is currently based in the UK.

There is significant uncertainty regarding the potential future impact of Brexit on the legal and commercial relationships between the UK and countries within the European Union (EU).

In particular, we could face difficulties attracting and retaining key employees in the UK, which could have a material adverse impact on our European operations.

While we continue to operate our distribution center in Camarillo, we are currently working to move all of our Camarillo distribution operations to our Moreno Valley location.

Once the migration of our distribution center operations is complete, we will be closing our Camarillo distribution center.

We anticipate this closure to be completed in the first half of fiscal year 2020.

For example, we could face disruptions in these operations as a result of ongoing uncertainty around Brexit.

| • | adverse changes in consumer perception of goods sourced from certain countries. |

| • | political or economic uncertainty or instability, including as a result of ongoing negotiations around Brexit or any similar referendums that may be held; |

inaccuracies.

In addition, there is the potential for labor disruptions in the UK as a result of ongoing uncertainty around Brexit.

International trade and import regulations may impose unexpected duty costs, the revision of current trade agreements may require us to alter current practices, changes in trade relations may result in tariffs, and transportation challenges and security procedures may cause significant delays and additional costs.

In the US and globally, international trade policy is undergoing review and revision, introducing significant uncertainty with respect to future trade regulations and existing international trade agreements.

| | |

| --- | --- |

| • | consumer perception and preference for our brands; |

If we are unsuccessful in implementing our ongoing restructuring and operating profit improvement plans, we may incur significant charges and costs without any corresponding benefits to our business, in which case our financial condition and operating results may be adversely affected.

We are in the ongoing process of restructuring our business in order to streamline brand operations, reduce overhead costs, create operating efficiencies and improve collaboration.

This includes optimizing our retail store fleet and consolidating offices and operations, including the closure of facilities and relocation of employees to realign our brands across our Fashion Lifestyle and Performance Lifestyle groups.

Key components to executing this plan include

organizational changes, continued retail store closures, and conversion of owned stores to partner retail stores, among others.

As part of our ongoing restructuring plan, we have incurred significant restructuring charges and other costs, including SG&A expenses related to the write-off of retail store related assets, the early termination of retail store leases, employee severance costs, termination of various contracts, and the disposal of equipment and software impairments, among others.

There can be no assurance that the benefits from these restructuring efforts, including from any potential reduction in overhead costs or improvement in operating efficiencies, will be sufficient to offset the restructuring charges and other costs that we have incurred.

If we fail to realize the anticipated benefits from these measures, our financial condition and operating results may be adversely affected.

While we do not currently anticipate incurring material restructuring charges in future periods, retail store and fleet optimization remains a focus.

However, the potential benefits that we may realize from our retail store and fleet optimization efforts are uncertain as a result of numerous factors, including, but not limited to, the timing of lease terminations and store closures, the actual costs associated with closing or converting stores and the timing of the realization of those costs, and the actual and estimated results of operations of each store.

We have also begun implementing a plan to drive operating profit improvement through a combination of both cost of sales improvements and SG&A expense savings.

However, there can be no assurance that we will be successful in realizing cost of sales improvements, especially if we fail to reduce product development cycle times, optimize material yields, consolidate our factory base, or move product manufacturing outside of China.

Further, if we fail to execute on our plans to lower corporate infrastructure costs, process improvement efficiencies, and reduced unallocated indirect spend, we may not achieve the SG&A expense savings which are a key component of our operating profit improvement plan.

If we are unable to realize cost of sales improvements and SG&A expense savings in the amount or on the timeline which we expect, then we may not be able to achieve the estimated profitability improvements or other expected benefits of the plan.

Both the amount and timing of the actual operating profit improvements we may achieve as a result of these transformation initiatives are uncertain and are based upon numerous factors, including, but not limited to, the timing and success of certain production and inventory control improvements, the costs associated with improving and transitioning manufacturing operations, and the net impact of certain costs savings initiatives on our operating profit.

| • | produce products that appeal to consumers; |

In 2016, we completed our business transformation project implementation, which included upgrading our Enterprise Resource Planning (ERP) systems, and inventory management and control systems.

| • | market acceptance of new products; |

Our

sheepskin suppliers currently warehouse their inventory at a limited number of facilities in China.

The loss, destruction, or disruption of work at any of these facilities would likely result in shortages in our supply of sheepskin.

If a retailer or a distributor fails to meet annual sales goals or to make timely payments, it may be difficult to locate an acceptable substitute retailer or distributor, or convert to a wholesale direct model.

Our five largest customers accounted for approximately 23.6% of worldwide net sales for the year ended March 31, 2018 and 20.3% of worldwide net sales for the year ended March 31, 2017.

Any loss of a key customer, the financial collapse or bankruptcy of a key customer, or a significant reduction in purchases from a key customer could have a material adverse effect on our financial condition and results of operations.

sales of our products.

We have also faced claims that “UGG Australia” is geographically deceptive.

For example, in response to an infringement lawsuit that we filed in March 2016 against Australian Leather Pty Ltd. (Australian Leather), Australian Leather raised a number of affirmative defenses and counterclaims, including seeking declaratory judgment that the UGG brand trademark is invalid and unenforceable in the US, cancellation of certain of our US UGG brand trademark registrations, false designation of origin and declaratory judgment that certain of our US design patents are invalid and unenforceable.

If we fail to attract, train and transfer institutional knowledge and

expertise to our new personnel, or to retain and develop our current personnel, our future growth prospects could be adversely affected and our business could be harmed.

As a result, we may have difficulty hiring and retaining qualified personnel with the skills to expand our business.

Additionally, as part of our efforts to improve overall efficiency and competitiveness of our business, we have added new leadership both within our brands and to our Omni-Channel platform, including the President of Fashion Lifestyle and the President of Performance Lifestyle, as well as streamlining and restructuring our existing personnel and brand management.

If we fail to effectively implement these management and personnel changes, we may be unable to achieve our strategic objectives and operating efficiencies.

We currently expect to move our Camarillo distribution operations to our Moreno Valley location by the end of calendar year 2019.

For example, in the second quarter of fiscal year 2017, we experienced a delay in shipments from our European 3PL that impacted sales.

| • | adverse changes in consumer perception of goods, trade, or political relations with China or Vietnam. |

Therefore, our hedging strategies may be ineffective.

In addition, the failure of financial institutions that underwrite our foreign currency exchange rate contracts may negate our efforts to hedge our foreign currency exchange rate risk and result in material foreign currency exchange rate or hedge contract losses.

The following discussion of our financial condition and results of operations should be read together with our consolidated financial statements [removed: and the accompanying notes thereto included] in Part IV [removed: of] [added: within] this Annual [removed: Report on Form 10-K.][added: Report.]

We are a global leader in designing, marketing, and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and [removed: high performance] [added: high-performance] activities.

We market our products primarily under five proprietary brands: UGG, [removed: Koolaburra, Hoka, Teva] [added: HOKA, Teva, Sanuk] and [removed: Sanuk.][added: Koolaburra.]

We sell our products through quality domestic and international retailers, international [removed: distributors] [added: distributors,] and directly to our consumers both domestically and internationally through our Direct-to-Consumer (DTC) business, which is comprised of our retail stores and E-Commerce websites.

[removed: In] [added: During] February 2016, we announced the implementation of a multi-year restructuring plan which [removed: is] [added: was] designed to realign our [removed: brands,] [added: brands across our Fashion Lifestyle and Performance Lifestyle groups,] optimize our [added: worldwide owned] retail store fleet, and consolidate our management and operations.

In general, the intent of [removed: the] [added: this] restructuring plan [removed: is] [added: was] to [removed: streamline brand operations,] reduce overhead [removed: costs,] [added: costs and] create operating efficiencies [removed: and improve collaboration.][added: while improving collaboration across brands.]

[removed: While we are seeing initial signs of improvement, our] [added: Our] decision to open or close [added: retail] store locations [removed: will be] [added: was] evaluated based on the operating results of each store [removed: and] [added: through at least two peak selling seasons, as well as] our retail store [removed: and] fleet optimization [removed: strategies, which may ultimately impact our global retail store count.][added: strategies and long-term strategic objectives.]

In connection with our restructuring plan, we [removed: have] closed [removed: 32] [added: 46 company-owned global] retail stores as of March 31, [removed: 2018,] [added: 2019,] including [removed: five in fiscal year 2016 and 20 in fiscal year 2017,] [added: conversions to partner retail stores,] and consolidated our brand operations and corporate headquarters.

| | Years Ended March 31, | | | | | | | | | | | | Cumulative Restructuring [removed: Charges] [added: Charges] | | |

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | | | |

| Retail store fixed asset impairment | [removed: — | | | | 3,614 | | | | 5,758 | | | |] 9,372 | | |

| Severance costs | [removed: — | | | | 5,773 | | | | 4,003 | | | |] 9,776 | | |

| Software and office fixed asset impairment | [removed: — | | | | 3,199 | | | | 3,788 | | | |] 6,987 | | |

| Other* | [removed: 1,518 | | | | 7,412 | | | | 2,272 | | | |] 11,202 | | |

*Includes [removed: restructuring charges for] costs related to office [removed: consolidations,] [added: consolidations and] termination of [removed: various] contracts and [removed: other] services.

The [removed: realized SG&A] [added: cumulative annualized selling, general, and administrative (SG&A)] expense savings by [added: applicable] reportable operating [removed: segment] [added: segment, realized as of March 31, 2019,] are [added: approximately] as follows:

| Direct-to-Consumer | [removed: 34,000] [added: 43,000] | | |

| Total | $ | [removed: 54,000] [added: 63,000] | |

Refer to Note [removed: 2, "Restructuring,"] [added: 1, “General,” under the heading “Restructuring Plan”] of our consolidated financial statements in Part IV [removed: of] [added: within] this Annual Report [removed: on Form 10-K] for further information on [removed: the] [added: our] remaining [removed: liability for charges incurred] [added: accrued liabilities] under our restructuring [removed: plan by reportable operating segment.][added: plan.]

Our [removed: repurchase programs] [added: Stock Repurchase Programs] do not obligate us to acquire any particular amount of common stock and may be suspended at any time at our discretion.

For further [removed: details] [added: information] on the impacts of the Tax Reform Act during the [removed: year] [added: years] ended March 31, [added: 2019 and] 2018, refer to Note 5, [removed: "Income Taxes,"] [added: “Income Taxes,”] of our consolidated financial statements in Part IV [removed: of] [added: within] this Annual [removed: Report on Form 10-K.][added: Report.]

| • | Sales of our products are highly seasonal and are sensitive to weather conditions, which are unpredictable and beyond our control. [added: To address seasonality, we continue to drive our strategy of introducing counter-seasonal products through category expansion, including the UGG brand’s spring and summer products, as well as the year-round performance product offering of the HOKA brand.] Even though we continue to expand our product lines with the goal of creating more year-round styles for our brands to drive sales and offset the impact of weather conditions, the effect of favorable or unfavorable weather on our aggregate sales and operating results may continue to be significant. [removed: To address seasonality, we are continuing to drive our strategy of introducing counter-seasonal products through category expansion, including the UGG brand’s spring and summer products, and the active-lifestyle products of the Hoka brand. We believe our net sales were positively impacted by weather conditions during the fiscal year ended March 31, 2018.] |

| • | We believe there has been a meaningful shift in the way consumers shop for products and make purchasing decisions. [added: The retail industry continues to undergo significant structural changes fueled by technology and the internet, changes in consumer purchasing behavior and a shrinking retail footprint.] In particular, [removed: brick and mortar] retail stores are experiencing significant and prolonged decreases in consumer traffic as customers continue to migrate to shopping online. This shift is [added: positively] impacting the performance of our [removed: DTC business] [added: E-Commerce business, while creating challenges] and [added: headwinds for] our [removed: wholesale customers, and] [added: retail business as well as the business of our key customers. It] is [added: also] transforming the way we approach [added: marketing, including] our [added: focus on] digital marketing efforts. |

| • | In light of the shift in consumer shopping behavior, [added: and our ongoing efforts to enhance our operating results,] we are seeking to optimize our [removed: brick and mortar] retail [removed: footprint. In pursuing] store [removed: closures,] [added: footprint. While] we [removed: have been impacted by costs] [added: expect] to [removed: exit lease agreements, employee termination costs,] [added: identify additional] retail [removed: store fixed asset impairments, and other closure costs. However,] [added: stores for closure,] we [added: may simultaneously identify opportunities to open new retail stores in the future. We currently] do not [removed: expect to continue] [added: anticipate] incurring [removed: significant] [added: material] incremental [added: retail] store closure costs, primarily because [removed: the majority of our remaining] [added: any] store closures [added: we may pursue] are expected to occur as [added: retail] store leases expire to avoid incurring [removed: additional] [added: potentially significant] lease termination [removed: costs.] [added: costs, as well as through conversions to partner retail stores.] |

| • | [removed: We] [added: As a result of changes in consumer purchasing behavior, we] expect our E-Commerce business will continue to be a driver of long-term growth, although we expect [removed: that] the year-over-year growth rate will decline over time as the size of our E-Commerce business increases. |

| • | We believe consumers are buying product closer to the particular wearing occasion [removed: ("buy] [added: (“buy] now, wear [removed: now"),] [added: now”),] which tends to shorten the purchasing windows for weather-dependent product. Not only does this trend impact our DTC business, we believe it is also impacting the purchasing behavior of our large wholesale customers. In particular, these customers appear to be shortening their purchasing windows to address the evolving behavior of retail consumers and to manage their own [removed: product inventory.] [added: product-related inventories.] |

| • | Foreign currency exchange rate fluctuations have the potential to cause variations in our operating results. While we seek to hedge some of the risks associated with foreign currency exchange rate fluctuations, these changes are largely outside of our control. We expect these changes will continue to impact the future purchasing patterns of our [removed: customers] [added: customers,] as well as our operating results. |

[added: Reportable Operating] Segment Overview

The UGG brand is one of the most iconic and recognized brands in our industry which highlights our successful track record of building niche brands into lifestyle [added: and fashion] market leaders.

With loyal consumers around the world, the UGG brand has proven to be a highly resilient line of premium footwear, [removed: apparel] [added: apparel,] and accessories with expanded product offerings and a growing global audience that attracts women, men, and children.

| • | High consumer brand loyalty due to [added: consistently] delivering quality and luxuriously comfortable [removed: UGG brand] footwear, [removed: apparel] [added: apparel,] and accessories. |

| • | Diversification of our [removed: UGG brand] product lines, including [removed: women's] [added: women’s] spring and summer, [removed: men's,] [added: men’s,] and lifestyle offerings. [removed: These efforts are part of our] [added: Our] strategy of product diversification [added: aims] to [removed: decrease our reliance on sheepskin and] mitigate the impacts of [removed: seasonality.] [added: seasonality and decrease our reliance on sheepskin.] |

| • | Continued enhancement of our Omni-Channel and digital [added: marketing] capabilities to enable us to better engage existing and prospective consumers and expose them to our brands. |

The Teva brand [removed: pioneered the sport sandal category in 1984 and now] is a [added: global] leader within the sport sandal and modern outdoor lifestyle [removed: categories.][added: categories by fueling the expression of freedom.]

Effective [removed: as of] [added: April 1, 2017,] the [removed: beginning of fiscal year 2018,] operations for the Ahnu brand were discontinued and certain remaining styles are sold under the Teva brand.

Results [added: of wholesale operations] for the former Ahnu brand are now reported in the Teva brand wholesale reportable operating segment instead of the [removed: other] [added: Other] brands wholesale reportable operating segment, as presented [removed: in] [added: for] the [removed: prior period.][added: year ended March 31, 2017.]

The Sanuk brand [removed: was founded 20 years ago, and from its origins] [added: originated] in [removed: the] Southern California surf [removed: culture,] [added: culture and] has emerged into a [added: lifestyle] brand with a presence in the relaxed casual shoe and sandal categories.

The [removed: Hoka] [added: HOKA] brand is [removed: a] [added: an authentic premium] line of [removed: running] [added: year-round performance] footwear and apparel that offers [removed: maximal] [added: enhanced] cushioning [added: and inherent stability] with minimal [removed: weight and is] [added: weight, originally] designed for [removed: runners] [added: ultra-runners, and now appeals to athletes around the world, regardless] of [removed: all capacities.][added: activity.]

The [removed: Hoka] [added: HOKA] brand is quickly becoming a [removed: top] [added: leading] brand [removed: in] [added: within] the [removed: domestic run] specialty [removed: channel and has received] [added: community with] strong [removed: word-of-mouth] marketing [removed: that has fueled] [added: fueling] both domestic and international sales growth.

The Koolaburra brand is a [removed: line of fashion] casual footwear [added: fashion line] using sheepskin and other plush [removed: materials.][added: materials, sold through our wholesale channel and is intended to target the value-oriented consumer in order to complement our UGG brand offering.]

We believe that our products are distinctive and appeal broadly to women, men and children.

We seek to differentiate our brands and products by offering diverse lines that emphasize authenticity, functionality, quality, and comfort, and products tailored to a variety of activities, seasons, and demographic groups.

All of our products are currently manufactured by independent manufacturers.

| | Amount | | |

The cumulative restructuring charges incurred by category as of March 31, 2019, are as follows:

| | | | |

| --- | --- | --- | --- |

| | | | |

| | Amount | | |

| Lease terminations | $ | 18,282 | |

| Total | $ | 55,619 | |

The cumulative restructuring charges by applicable reportable operating segment are as follows:

| UGG brand wholesale | $ | — | | | $ | — | | | $ | 2,238 | | | $ | 2,238 | |

| Sanuk brand wholesale | — | | | | — | | | | 20 | | | | 3,068 | | |

| Other brands wholesale | — | | | | — | | | | 102 | | | | 2,263 | | |

| Direct-to-Consumer | — | | | | 149 | | | | 12,771 | | | | 23,454 | | |

| Unallocated overhead costs | 295 | | | | 1,518 | | | | 13,853 | | | | 24,596 | | |

| Total | $ | 295 | | | $ | 1,667 | | | $ | 28,984 | | | $ | 55,619 | |

Cumulative restructuring charges include restructuring charges of $24,673, which were incurred during the fiscal year ended March 31, 2016.

During the years ended March 31, 2019, 2018, and 2017, total restructuring charges incurred and stated above were recorded in SG&A expenses in the consolidated statements of comprehensive income (loss).

As of March 31, 2019, we have completed our restructuring plan and achieved cumulative SG&A expense savings to date along with cumulative restructuring charges.

We currently do not anticipate incurring additional restructuring charges in connection with this restructuring plan.

During February 2017, we announced that, in addition to continuing to execute on our restructuring plan, we would implement various business transformation initiatives to further reduce expenses and improve gross margins, the projected combined impact of which was expected to be approximately $100,000 of net annualized operating profit improvement by the end of the fiscal year ending March 31, 2020.

As of March 31, 2019, we have successfully completed our plan and achieved in excess of $100,000 of net annualized operating profit improvement under both our restructuring and operating profit improvement plans.

Consistent with our strategy, the principal drivers of the net annualized operating profit improvement achieved were costs of goods sold improvements, resulting from lower input costs and improved supply chain management, and SG&A expense savings, primarily driven by retail store closures, office consolidations, lower corporate infrastructure costs and process improvement efficiencies.

We will continue to apply the lessons learned in our completed plans by pursuing opportunities to optimize profitability and seeking to enhance operating results throughout our business.

| • | Starting in the second half of 2018, we implemented a product segmentation strategy, as well as an allocation strategy for the UGG brand’s core Classics franchise in the United States (US) wholesale marketplace. We plan to continue this strategic management of the US marketplace in future seasons and expect to implement similar strategies internationally during fiscal year 2020. |

| • | We believe consumers are increasingly buying brands which advance sustainable business practices and deliver quality products while striving for minimal environmental impact with socially conscious operations. Through our Corporate Responsibility Program, we expect to continue to advance our sustainable business initiatives. |

We perform an annual assessment of the appropriateness of our reportable operating segments during the third quarter of our fiscal year.

However, due to known circumstances arising during the first quarter of the fiscal year ending March 31, 2019 (Q1 2019), management performed this assessment at that time.

These circumstances included an assessment of quantitative factors, such as the actual and forecasted sales and operating income of the wholesale operations of the HOKA brand compared to our other reportable operating segments, as well as an assessment of qualitative factors, such as the ongoing growth of, and our increased investment in, the wholesale operations of the HOKA brand.

As a result, beginning in Q1 2019, we added a sixth reportable operating segment to separately report the wholesale operations of the HOKA brand.

The wholesale operations of the HOKA brand are no longer presented under the Other brands wholesale reportable operating segment.

However, the DTC operations of the HOKA brand continue to be reported under the DTC reportable operating segment.

Prior periods presented were reclassified to reflect this change.

Our six reportable operating segments now include the worldwide wholesale operations of the UGG brand, HOKA brand, Teva brand, Sanuk brand, and Other brands, as well as DTC.

Information reported to the Chief Operating Decision Maker (CODM), who is our Principal Executive Officer, is organized into these reportable operating segments and is consistent with how the CODM evaluates our performance and allocates resources.

HOKA Brand.

The Teva brand, which pioneered the sport sandal category, is born from the outdoors and rooted in adventure.

The Teva brand’s product line includes sandals, shoes, and boots.

Independent third parties manufacture all of our products.

As part of this restructuring plan, we realigned our brands across two groups: Fashion Lifestyle and Performance Lifestyle.

The Fashion Lifestyle group includes the UGG and Koolaburra brands.

The Performance Lifestyle group includes the Teva, Sanuk and Hoka brands.

We believe our retail stores remain an important component of our Omni-Channel strategy; however, in light of the recent and continuing changes in the retail environment, we also believe it is prudent to further optimize our global brick and mortar footprint, and expect to continue to do so.

Accordingly, we anticipate generating future cost savings associated with changes in our retail presence as we optimize our retail store and fleet performance, including through closing stores or converting stores to partner retail stores in our wholesale channel.

We continue to drive and are evolving our retail store and fleet optimization strategies in line with our long-term objectives, and we are targeting a global retail store count of approximately 125 owned stores.

Remaining store closures are expected to occur as store leases expire to avoid incurring potentially significant lease termination fees.

Further, the actual number of owned stores as of any particular date is subject to uncertainty and is based upon numerous factors, including, but not limited to, the actual and projected costs associated with closing or converting stores, the actual and estimated results of operations of our overall DTC business and continuing changes in consumer buying behaviors and the retail environment.

We have incurred cumulative restructuring charges of $55,324 through March 31, 2018, with $1,667, $28,984, and $22,824 of restructuring charges recorded in selling, general and administrative (SG&A) expense during the years ended March 31, 2018, 2017, and 2016, respectively, and $1,849 in cost of sales during fiscal year 2016 in the consolidated statements of comprehensive income (loss).

The following table summarizes restructuring charges incurred by category:

| Lease termination costs | $ | 149 | | | $ | 8,986 | | | $ | 8,852 | | | $ | 17,987 | |

| Total restructuring charges | $ | 1,667 | | | $ | 28,984 | | | $ | 24,673 | | | $ | 55,324 | |

We currently do not anticipate incurring material restructuring charges in future periods, though retail store and fleet optimization remains a focus.

As a result of the implementation of our restructuring plan, we expect to realize annualized gross SG&A expense savings in the consolidated statements of comprehensive income (loss) totaling approximately $85,000 by March 31, 2020.

The annualized SG&A expense savings are expected to be primarily derived from reductions in operating costs related to the termination of retail store leases and the conversion of certain of our foreign owned retail stores to partner retail stores, as well as a reduction in overhead costs, including payroll and related benefits, depreciation and amortization, and rent and occupancy costs, among others.

As of March 31, 2018, we realized approximately $54,000 of annualized SG&A expense savings out of the anticipated $85,000 of savings from our restructuring plan.

We expect to realize approximately $31,000 of additional annualized SG&A expense savings from our restructuring plan.

The additional annualized SG&A expense savings are expected to be primarily derived from further reductions in retail-related costs, including those listed above.

These additional savings are expected to primarily impact the DTC reportable operating segment and to be fully realized by the end of fiscal year 2020.

However, both the amount and timing of the actual savings we may achieve as a result of our restructuring plan are uncertain and are based upon numerous factors, including, but not limited to, the timing of lease terminations and store closures, the actual costs associated with closing or converting stores, and the actual and estimated results of operations of each store.

In addition to the approximate $85,000 of gross annualized SG&A expense savings expected from the implementation of our restructuring plan, as discussed above, we also expect that our other transformation, initiatives announced in February 2017, will result in approximately $65,000 of additional annualized cost of sales improvements and SG&A expense savings, for a total anticipated annual gross cost savings of approximately $150,000.

Cost of sales improvements are expected to result from reducing product development cycle times, optimizing material yields, consolidating our factory base, and continuing to move product manufacturing outside of China.

Further SG&A expense savings are expected to result from lower corporate infrastructure costs, process improvement efficiencies, and reduced unallocated indirect spend.

The cost of sales improvements are expected to impact each of the reportable operating segments (excluding unallocated overhead costs) in an amount that is generally proportionate to the net sales generated by that reportable operating segment as a percentage of our total net sales.

We have achieved approximately 90% of the expected cost of sales improvements as of March 31, 2018.

The remaining additional annualized costs of sales and SG&A expense savings are expected to be realized by the end of fiscal year 2020.

We expect that the approximately $150,000 of annual gross cost savings will result in approximately $100,000 of net annualized operating profit improvement (after reinvestment in marketing and other growth-driving initiatives) by the end of fiscal year 2020.

However, both the amount and timing of the actual operating profit improvements we may achieve as a result of these transformation initiatives are uncertain and are based upon numerous factors, including, but not limited to, the timing and success of certain production and inventory control improvements, the costs associated with improving and transitioning manufacturing operations, and the net impact of certain costs savings initiatives on our operating profit.

Stock Repurchase Program.

In October 2017, our Board of Directors authorized a new $335,000 stock repurchase program.

Combined with the $65,294 remaining approved amount under our January 2015 stock repurchase program, we had the authority to repurchase up to an aggregate of $400,294 of our common stock at the time.

As of March 31, 2018, the aggregate remaining approved amount was $250,607.

For further details on our current stock repurchase strategy and its impact on our liquidity refer to the section entitled "Liquidity and Capital Resources" within this Part II, Item 7.

Cash Repatriation.

As a result of the recently enacted US H.R.1 on December 22, 2017, also known as the Tax Cuts and Jobs Act (Tax Reform Act), our cumulative foreign earnings as of December 31, 2017 were subject to a one-time, mandatory deemed repatriation tax in transition to a territorial tax regime.

In response to the new legislation, we repatriated $250,000 of cash and cash equivalents during the fourth quarter of the year ended March 31, 2018, resulting in additional state income taxes, net of federal benefit, of approximately $607.

For further details on our current cash repatriation strategy and its impact on our liquidity refer to the section entitled "Liquidity and Capital Resources" within this Part II, Item 7.

| • | For the UGG brand, and within the North American wholesale channel, we plan on implementing an allocation and segmentation approach to distribution around the UGG brand Classics franchise. |

For over 30 years, the Teva brand has fueled the expression of freedom.

[removed: We] [added: For the manufacturing of our products, we] purchase certain [added: raw] materials that are affected by commodity prices, [removed: the most significant of] which [removed: is sheepskin.][added: include sheepskin, leather and wool.]

The supply of [removed: sheepskin] [added: sheepskin, which is] used [removed: in certain] [added: to manufacture a significant portion of our] UGG brand [removed: products] [added: products,] is in high demand and there are a limited number of suppliers [added: that are] able to meet our expectations for the quantity and quality of sheepskin [removed: required.][added: that we require.]

[removed: We] [added: For sheepskin and leather, we] use purchasing [removed: contracts, pricing arrangements,] [added: contracts] and refundable deposits to attempt to manage price volatility as an alternative to hedging commodity prices.

The purchasing contracts and [added: other] pricing arrangements we use [added: for sheepskin and leather] may result in purchase [removed: obligations,] [added: obligations] which are not reflected in our consolidated balance sheets.

[removed: In] [added: With respect to sheepskin and leather, in] the event of significant [removed: commodity cost] [added: price] increases, we will likely not be able to adjust our selling prices sufficiently to eliminate the impact of such increases on our [added: operating] margins.

Refer to Note [removed: 7, "Commitments and Contingencies,"] [added: 9, “Derivative Instruments,”] of our consolidated financial statements in Part [removed: IV of] [added: IV, within] this Annual Report [removed: on Form 10-K] for further information on our [removed: sheepskin] [added: use of derivative] contracts.

We face market risk to the extent that foreign currency exchange rate fluctuations affect our foreign assets, liabilities, [removed: revenues] [added: revenues,] and expenses.

[removed: Other than changes in] [added: During] the [removed: amount of sales, expenses,] [added: year ended March 31, 2019] and [removed: financial positions denominated in foreign currencies, we do not believe that] [added: through May 17, 2019,] there [removed: has been] [added: were no factors that we would expect to result in] a material change in the [added: general] nature of our primary market risk [removed: exposures,] [added: exposure,] including the categories of market risk to which we are exposed and the particular markets that present the primary risk of loss.

[removed: As of March 31, 2018, a] [added: A] hypothetical 10.0% foreign currency exchange rate fluctuation would have [removed: caused] [added: no impact on] the fair value of our [removed: financial] [added: derivative] instruments [removed: to increase or decrease by approximately $12,000.][added: as there were none outstanding as of March 31, 2019.]

Refer to Note [removed: 9, "Foreign Currency Exchange Rate Contracts] [added: 6, “Revolving Credit Facilities] and [removed: Hedging,"] [added: Mortgage Payable,”] of our consolidated financial statements in Part IV [removed: of] [added: within] this Annual Report [removed: on Form 10-K] for further information on our [removed: foreign currency exchange rate forward contracts.][added: revolving credit facilities.]

Although the majority of our sales and inventory purchases are denominated in US [removed: currency,] [added: dollars,] these sales and inventory purchases may be impacted by fluctuations in the exchange rates between the US dollar and local currencies in the international markets where our products are sold and manufactured.

[removed: As we hold more cash and other monetary assets and liabilities in foreign currencies, we] [added: We] are exposed to financial statement transaction gains and losses as a result of [removed: re-measuring the] [added: remeasuring our] financial positions [removed: held in foreign currencies into US dollars for subsidiaries] that are [removed: US-dollar functional and also from re-measuring the financial positions held] [added: denominated] in [removed: US dollars and foreign] currencies [removed: into] [added: other than] the [added: subsidiaries’] functional [removed: currency of subsidiaries that are non-US dollar functional.][added: currencies.]

We [removed: re-measure] [added: translate] monetary assets and liabilities denominated in foreign currencies into US dollars using the exchange rate as of the end of the reporting period.

A hypothetical 1.0% increase in interest rates [added: for borrowings made] under [removed: each of] our revolving credit [removed: facility agreements] [added: facilities] would have resulted in an aggregate increase to interest expense of [removed: approximately $500 for] [added: $179 during] the year ended March 31, [removed: 2018.][added: 2019.]

We presently rely on only two tanneries to provide the majority of our sheepskin.

While we have experienced fairly stable pricing in recent years, historically there have been significant fluctuations in the price of sheepskin as the demand for this commodity from our customers and our competitors has changed.

We believe the significant factors affecting the price of sheepskin include weather patterns, harvesting decisions, incidence of disease, the price of other commodities such as wool and leather, the demand for our products and the products of our competitors, and global economic conditions.

Any factors that increase the demand for, or decrease the supply of, sheepskin could cause significant increases in the price of sheepskin.

We typically fix prices for all of our raw materials with firm pricing agreements on a seasonal basis.

Fluctuations in currency exchange rates, primarily between the US dollar and the currencies of Europe, Asia, Canada, and Latin America where we operate, may affect our results of operations, financial position and cash flows.

Gains and losses resulting from translating assets and liabilities from our subsidiaries’ functional currencies to US dollars are recognized in other comprehensive income or loss.

Our market risk exposure with respect to our revolving credit facilities is tied to changes in applicable interest rates, including the Alternative Base Rate, the federal funds effective rate, currency specific adjusted London Interbank Offered Rate, and the Canadian Dollar Offered Rate for our Primary Credit Facility, the People’s Bank of China market rate for our China Credit Facility, and the Tokyo Interbank Offered Rate for our Japan Credit Facility.

While there have historically been significant changes in the price of sheepskin, the price of sheepskin has stabilized in recent years.

There has been recent increased volatility with respect to the exchange rates between US dollars and both British Pounds and Euros.

This increased volatility may be due in part to tax, importation and other policies being contemplated by the US government, the withdrawal by the United Kingdom from the European Union (commonly referred to as Brexit) and other global economic and political issues.

We do not know whether this level of volatility

will increase or decrease in the future.

At May 25, 2018, we are not aware of any factors that are expected to result in a material change in the general nature of our primary market risk exposure.

Sensitivity analyses do not consider the actions we may take to mitigate our exposure to changes, nor do they consider the effect such hypothetical changes may have on overall economic activity.

Our foreign currency exchange rate risk arises as a result of our European and Asian operations.

In addition, certain of our foreign subsidiaries’ local currencies are their designated functional currencies, and we translate those subsidiaries’ assets and liabilities into US dollars using the exchange rates as of the end of the reporting period, which results in financial statement translation gains and losses recognized in other comprehensive income (loss).

In addition, if the US dollar strengthens, it may result in increased pricing pressure on our foreign distributors.

Our market risk exposure with respect to financial instruments is tied to changes in the prime rate, the federal funds effective rate, and the London Interbank Offered Rate (LIBOR).

Our Domestic Credit Facility provides, at our election, for interest on outstanding borrowings at interest rates tied to adjusted LIBOR or the Alternative Base Rate (ABR), and is variable based on our total adjusted leverage ratio each quarter.

The ABR is defined as the rate per annum equal to the greater of (1) the prime rate, (2) the federal funds effective rate plus 0.50%, and (3) adjusted LIBOR for a one-month interest period plus 1.00%.

Refer to Note 6, "Revolving Credit Facilities and Mortgage Payable," of our consolidated financial statements in Part IV of this Annual Report on Form 10-K for further information on our revolving credit facilities.

We are a global leader in designing, [removed: marketing] [added: marketing,] and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and [removed: high performance] [added: high-performance] activities.

We market our products primarily under five proprietary brands: UGG, [removed: Koolaburra, Hoka, Teva] [added: HOKA, Teva, Sanuk] and [removed: Sanuk.][added: Koolaburra.]

All of our products are currently manufactured by independent [removed: manufacturers, primarily in Asia.][added: manufacturers.]

[removed: In] [added: During] February 2016, we announced the implementation of a multi-year restructuring plan which [removed: is] [added: was] designed to realign our [removed: brands,] [added: brands across our Fashion Lifestyle and Performance Lifestyle groups,] optimize our [added: worldwide owned] retail store fleet, and consolidate our management and operations.

The Performance Lifestyle group includes the [added: HOKA,] Teva, [removed: Sanuk] and [removed: Hoka] [added: Sanuk] brands.

In general, the intent of [removed: the] [added: our] restructuring plan [removed: is] [added: was] to [removed: streamline brand operations,] reduce overhead [removed: costs,] [added: costs and] create operating efficiencies [removed: and improve collaboration.][added: while improving collaboration across brands.]

Refer to Part II, Item 7, [removed: "Management's] [added: “Management's] Discussion and Analysis of Financial Condition and Results of [removed: Operations,"] [added: Operations,”] and Note [removed: 2, "Restructuring,"] [added: 1, “General,” under the heading “Restructuring Plan”] of our consolidated financial statements in Part IV [removed: of] [added: within] this Annual Report [removed: on Form 10-K] for further information on our restructuring efforts and [removed: the] [added: its] impact on our results of operations and reportable operating segments.

We currently market our products primarily under five propriety brands, composed of our [removed: three] [added: four] primary brands and our [removed: other] [added: Other] brands.

Collectively, our brands compete across the fashion and casual lifestyle, [removed: outdoor, and] [added: performance,] running [added: and outdoor] markets.

The UGG brand is one of the most iconic and recognized brands in our [removed: industry] [added: industry,] which highlights our successful track record of building niche brands into lifestyle [added: and fashion] market leaders.

We intend to continue diversifying the UGG brand [removed: by driving more] [added: to drive] year-round product sales, including [added: expansion of women’s] spring and summer footwear, [removed: men's] [added: men’s] products, apparel, home goods and accessories.

The UGG brand is sold both domestically and internationally in key markets including the United States (US), [removed: United Kingdom (UK), Germany, China, Japan,] [added: Europe, Asia-Pacific, Canada] and [removed: Canada, among others.][added: Latin America.]

[added: The] Teva [removed: is a modern active lifestyle] brand, [added: which pioneered the sport sandal category, is] born from the outdoors and rooted in adventure.

[removed: As the originator of the sport sandal, the] [added: The] Teva [removed: brand's] [added: brand’s] product line [removed: now] includes sandals, shoes, and boots.

Currently, our sales force is [removed: generally] [added: typically] separated by brand, as each brand generally has certain specialty [removed: consumers.][added: consumers that expect a dedicated sales team with specialized knowledge of our brands’ product offerings.]

However, there is some overlap between the sales teams and customers, and we have aligned our [removed: brands'] [added: brands’] sales forces to position them for the future [added: success] of [removed: the] [added: each of our] brands.

We distribute products sold in the US through our distribution centers in [removed: Camarillo and] Moreno [removed: Valley,] [added: Valley and Camarillo,] California, as well as through a third-party logistics provider (3PL) in Pennsylvania.

While we continue to operate our distribution center in Camarillo, we are currently working to move all of our Camarillo distribution operations to our Moreno Valley [removed: location by the end of calendar year 2019.][added: location.]

Refer to [added: Item 2, “Properties,” and] Note 7, [removed: "Commitments] [added: “Commitments] and [removed: Contingencies,"] [added: Contingencies,”] of our consolidated financial statements in Part IV [removed: of] [added: within] this Annual Report [removed: on Form 10-K] for further disclosure and discussion.

We sell [removed: the] [added: our] UGG brand [added: products] primarily through domestic higher-end department stores such as Nordstrom, [removed: Dillard's,] [added: Dillard’s,] and [removed: Macy's,] [added: Macy’s,] as well as lifestyle retailers such as Journeys, and online retailers such as [removed: Amazon] [added: Amazon.com, Zappos.com,] and [removed: Zappos.com.][added: Zalando.com.]

As the retail marketplace continues to evolve [removed: and change] to reflect changing consumer preferences, we continually review and evaluate our UGG wholesale distribution [removed: approach] and [removed: segmentation.][added: product segmentation approach.]

We sell our Teva brand footwear primarily through specialty [removed: outdoor,] [added: outdoor retailers,] sporting [removed: goods,] [added: goods] and department stores, including [removed: retailers such as] REI, Famous Footwear, DSW, [added: Urban Outfitters, Free People,] and online retailers such as [removed: Amazon] [added: Amazon.com] and Zappos.com.

We sell our Sanuk brand footwear primarily through domestic independent action sports and outdoor specialty footwear [removed: retailers and] [added: retailers,] larger national retail chains, [added: and online retailers,] including Journeys, [removed: Dillard's,] [added: Dillard’s,] DSW, REI, and online retailers such as [removed: Amazon] [added: Amazon.com] and Zappos.com.

[removed: Our] [added: We sell our] other [removed: brands are sold] [added: brands’ footwear] primarily through [removed: domestic specialty running and] department [removed: stores, outdoor and independent specialty retailers,] [added: stores] and [removed: through] online retailers.

Key accounts of the Koolaburra brand include [removed: Kohl's] [added: Kohl’s, DSW, QVC,] and Rack Room Shoes.

[removed: As a result of our evolving Omni-Channel strategy, we believe that our] [added: Our] retail stores and websites are largely intertwined and interdependent.

[removed: We] [added: In an Omni-Channel marketplace, we] believe [removed: that] many [added: of our] consumers interact with both our [removed: brick and mortar] [added: retail] stores and our websites before making purchasing decisions.

Some examples that demonstrate the extent to which the sales channels are [removed: combined] [added: combined, which are designed to engender brand loyalty while increasing product sales] and [removed: help improve] [added: improving] our inventory [removed: productivity] [added: productivity,] include the following:

| • | [removed: "Ship] [added: “Ship] from [removed: Store":] [added: Store”:] Inventory that is available in our [removed: stores,] [added: stores] but is out of stock online can be shipped from our stores. [removed: Future] [added: We expect future] advancements in this capability will use algorithms to select the optimal fulfillment source. |

| • | [removed: "UGG Closet":] [added: “UGG Closet”:] A limited E-Commerce outlet channel [removed: which we have offered since December 2016. The] [added: that offers an] online portal [removed: functions similarly] [added: designed] to [added: provide] an [removed: outlet store in that it provides a] [added: efficient] way to closeout inventory [removed: directly] [added: through direct sales] to consumers. |

| • | “Buy Online / Return in-Store”: Our consumers can buy online and return products to [removed: the store.] [added: our retail stores.] |

| • | “Click and Collect”: Our consumers can buy online and have products delivered to certain [removed: of our] retail stores for pick-up. |

Our retail stores enable us to expose consumers to a greater [removed: breadth] [added: selection] of [removed: product,] [added: products,] directly impact our [removed: consumers' experiences,] [added: consumers’ experience with our brands, and] sell [removed: the] [added: our] products at retail prices [removed: and generate greater] [added: thereby generating larger] gross margins.

Our retail stores are predominantly UGG brand concept [added: stores] and UGG brand outlet stores.

[removed: At] [added: As of] March 31, [removed: 2018,] [added: 2019,] we had a total of [removed: 165] [added: 156 company-owned global] retail [removed: stores worldwide,] [added: stores,] which includes [removed: 98] [added: 88] concept stores and [removed: 67] [added: 68] outlet stores.

Refer to Part II, Item 7, [removed: "Management's] [added: “Management's] Discussion and Analysis of Financial Condition and Results of [removed: Operations," of] [added: Operations,” within] this Annual Report [removed: on Form 10-K] for further disclosure and discussion.

Refer to Note [removed: 1, "General,"] [added: 7, “Commitments and Contingencies,”] of our consolidated financial statements in Part IV [removed: of] [added: within] this Annual Report [removed: on Form 10-K] for further information on [removed: the research and development costs we have incurred for the last three fiscal years.][added: our minimum purchase commitments.]

To ensure quality, consistency, and efficiency in our product design and development process, we continually evaluate the availability and cost of raw materials, the capabilities and capacity of our independent [removed: manufacturers] [added: manufacturers,] and the target retail price of new products.

[removed: The] [added: Our] design and development staff [removed: works] [added: work] closely with brand management to develop new styles for our product lines.

We outsource [added: the] production [added: of our products] to independent manufacturers, [added: which are] primarily [added: located] in Asia.

As of March 31, 2019, we have completed our restructuring plan and achieved cumulative selling, general and administrative (SG&A) expense savings to date along with cumulative restructuring charges.

We currently do not anticipate incurring additional restructuring charges in connection with this restructuring plan.

During February 2017, we announced that, in addition to continuing to execute on our restructuring plan, we would implement various business transformation initiatives to further reduce expenses and improve gross margins, the projected combined impact of which was expected to be approximately $100,000 of net annualized operating profit improvement by the end of the fiscal year ending March 31, 2020.

As of March 31, 2019, we have successfully completed our plan and achieved in excess of $100,000 of net annualized operating profit improvement under both our restructuring and operating profit improvement plans.

We will continue to apply the lessons learned in our completed plans by pursuing opportunities to optimize profitability and seeking to enhance operating results throughout our business.

Refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” within this Annual Report for further information on our operating profit improvement plan and its impact on our results of operation and reportable operating segments.

HOKA.

The HOKA brand is an authentic, premium line of year-round performance footwear and apparel that offers enhanced cushioning and inherent stability with minimal weight, originally designed for ultra-runners, and now appeals to athletes around the world, regardless of activity.

The HOKA brand is quickly becoming a leading brand within the specialty community with strong marketing fueling both domestic and international sales growth.

We intend to leverage our domestic specialty strategy to expand and invest in international sales growth.

The HOKA brand is sold both domestically and internationally in key markets, including the US, Canada, Europe, and Asia-Pacific.

The Teva brand is a global leader within the sport sandal and modern outdoor lifestyle categories by fueling the expression of freedom.

The Sanuk brand originated in Southern California surf culture and has emerged into a lifestyle brand with a presence in the relaxed casual shoe and sandal categories.

The Sanuk brand’s use of unexpected materials and unconventional constructions, combined with its fun and playful branding, are key elements of the brand’s identity.

Other Brands currently consists of the Koolaburra by UGG brand, as well as other discontinued brands during the periods presented.

The Koolaburra brand is a casual footwear fashion line using sheepskin and other plush materials, sold primarily through our wholesale channel and is intended to target the value-oriented consumer in order to complement our UGG brand offering.

Once the migration of our distribution center operations from Camarillo to our Moreno Valley location is complete, we will be closing our Camarillo distribution center.

We anticipate this closure to be completed in the first half of fiscal year 2020.

HOKA Wholesale.

We sell select HOKA brand footwear primarily through full-service domestic specialty retailers and select online retailers, including Fleet Feet, Road Runner Sports, Running Specialty Group, REI, Zappos.com, Amazon.com, and Running Warehouse.

We expect to expand our HOKA brand wholesale distribution into international markets, including through strategic partners such as Intersport and Sport 2000 in Europe and Xebio Group in Japan.

Included in the total count of retail stores worldwide are nine UGG brand flagship stores, which are lead concept stores in our retail channel.

In certain key markets and prominent locations, we have opened flagship stores to showcase our UGG brand products.

These stores are typically larger and have broader product offerings and greater traffic than our general concept stores as they are primarily located in major tourist areas.

We generally purchase products from our manufacturers on the basis of individual purchase orders or short-term purchase commitments, rather than maintaining long-term purchase commitments, which provides us greater flexibility to adapt to changing consumer preferences, changes in international trade relations, and manage our inventory.

However, we do have long-standing relationships with most of these independent manufacturers, and we may not be able to identify substitute alternative manufacturers to satisfy our desire for such flexibility.

We believe our strong regional presence enhances our manufacturing processes by providing predictability of material availability, compliance with laws and regulations, and adherence to quality control standards and final design specifications.

We also enter into purchasing contracts and other pricing arrangements with certain sheepskin and leather suppliers to manage the supply

of sheepskin.

In addition, as part of an ongoing effort to eliminate waste as part of our corporate sustainability efforts, most of the wool in UGGpure is sheared from the hides we are already using in our products.

In addition, we are continuing to drive our strategy of introducing counter-seasonal products through category expansion, including the UGG brand’s spring and summer products, as well as the year-round performance footwear product offering of the HOKA brand, which we believe will help further reduce our dependency on sheepskin and UGGpure.

We have an extended design and manufacturing process, which involves the initial design of our products, the purchase of raw materials, the accumulation of inventories, the subsequent sale of the inventories, and the collection of the resulting accounts receivable.

This production cycle results in significant liquidity requirements and working capital fluctuations throughout our fiscal year.

Because our production cycle typically involves long lead times, which requires us to make manufacturing decisions several months in advance of an anticipated purchasing decision by the consumer, it is challenging for us to estimate and manage our inventory and working capital requirements.

As of March 31, 2019, our backlog was $978,200, which represents a 14.4% annual increase over our backlog as of March 31, 2018.

The backlog increase primarily relates to timing where certain top customers placed orders earlier versus the prior comparative period rather than an indication of an expected significant increase in sales.

Our People and our Culture

Employees.

For a variety of reasons, including those discussed below, we believe that our relationship with our employees is favorable.

Encouraging Diversity.

As part of this restructuring plan, we realigned our brands across two groups: Fashion Lifestyle and Performance Lifestyle.

In connection with our restructuring plan, we have closed 32 retail stores as of March 31, 2018, including five stores in fiscal year 2016 and 20 in fiscal year 2017, and consolidated our brand operations and corporate headquarters.

We have incurred cumulative restructuring charges of $55,324 through March 31, 2018, with $1,667, $28,984, and $22,824 of restructuring charges recorded in selling, general and administrative (SG&A) expense during the years ended March 31, 2018, 2017, and 2016, respectively, and $1,849 in cost of sales during fiscal year 2016 in the consolidated financial statements.

We currently do not anticipate incurring material restructuring charges in future periods, though optimization of our owned retail stores remains a focus.

We anticipate closing stores or converting stores to partner retail stores in our wholesale channel, as we continue our strategy of retail store and fleet optimization.

We continue to drive and are evolving our retail store and fleet optimization strategies in line with our long-term objectives, and we are targeting a global retail store count of approximately 125 owned stores.

While we are seeing initial signs of improvement, our decision to open or close store locations will be evaluated based on the operating results of each store and our retail store and fleet optimization strategies, which may ultimately impact our global retail store count.

As a result of the implementation of our restructuring plan, we expect to realize an annualized gross SG&A expense savings in the consolidated statements of comprehensive income (loss) totaling approximately $85,000 by March 31, 2020.

The SG&A expense savings are expected to be primarily derived from reductions in operating costs related to the termination of retail store leases and the conversion of certain of our foreign owned retail stores to partner retail stores, as well as a reduction in overhead costs, including payroll and related benefits, depreciation and amortization, and rent and occupancy costs, among others.

As of March 31, 2018, we realized approximately $54,000 of annualized

SG&A expense savings out of the anticipated $85,000 of savings from our restructuring plan.

We expect to realize approximately $31,000 of additional annualized SG&A expense savings from our restructuring plan.

The additional annualized SG&A expense savings are expected to be primarily derived from further reductions in retail store-related costs, including those listed above.

However, both the amount and timing of the actual savings we may achieve as a result of our restructuring plan are uncertain and are based upon numerous factors, including, but not limited to, the timing of lease terminations and store closures, the actual costs associated with closing or converting stores, and the actual and estimated results of operations of each store.

In addition to the approximate $85,000 of gross annualized SG&A expense savings expected from the implementation of our restructuring plan, as discussed above, we also expect that our other transformation initiatives, announced in February 2017, will result in approximately $65,000 of additional annualized cost of sales improvements and SG&A expense savings, for a total anticipated annual gross cost savings of approximately $150,000.

Cost of sales improvements are expected to result from reducing product development cycle times, optimizing material yields, consolidating our factory base, and continuing to move product manufacturing outside of China.

Further SG&A expense savings are expected to result from lower corporate infrastructure costs, process improvement efficiencies, and reduced unallocated indirect spend.

We have achieved approximately 90% of the expected cost of sales improvements as of March 31, 2018.

The remaining additional annualized costs of sales and SG&A expense savings are expected to be realized by the end of fiscal year 2020.

We expect that the approximate $150,000 of annual gross cost savings will result in approximately $100,000 of net annualized operating profit improvement (after reinvestment in marketing and other growth driving initiatives) by the end of fiscal year 2020.

However, both the amount and timing of the actual operating profit improvements we may achieve as a result of these transformation initiatives are uncertain and are based upon numerous factors, including, but not limited to, the timing and success of certain production and inventory control improvements, the costs associated with improving and transitioning manufacturing operations, and the net impact of certain costs savings initiatives on our operating profit.

During calendar year 2017, we began to leverage elements, including particular styles, of the Ahnu brand under the Teva brand.

Effective as of the beginning of fiscal year 2018, operations for the Ahnu brand were discontinued and certain remaining styles are sold under the Teva brand.

Sanuk is a global lifestyle footwear brand rooted in Southern California surf culture.

The brand has a history of product innovation and comfort with a full range of footwear.

Other brands consist of: Hoka, a line of premium, running footwear and apparel that offers maximal cushioning with minimal weight and is designed for runners of all capacities, and Koolaburra, a line of fashion casual footwear using sheepskin and other plush materials.

In June 2017, we exercised our option to expand and extend the lease of our warehouse and distribution center located in Moreno Valley, California through June 2028.

When a partner retail store is opened or a company-owned retail store is converted into a partner retail store, the related sales are recorded in our UGG or Sanuk brands wholesale reportable operating segment.

Key accounts of the Hoka brand include Running Warehouse, Road Runner Sports, Running Specialty Group, REI, and Zappos.com.

| | |

| --- | --- |

We do not manufacture our products.

We believe this regional presence provides predictability of material availability, product flow and adherence to final design specifications.

We have also entered into purchase commitments with certain sheepskin suppliers.

We generally outsource our manufacturing requirements on the basis of individual purchase orders or short-term purchase commitments rather than maintaining long-term purchase commitments with our independent manufacturers.

Community Outreach.

During fiscal year 2018, we donated approximately $1,123 to 176 nonprofit organizations.

The end of calendar year 2018 was a particularly difficult time for California.

Faced with various natural disasters from fires to mudslides, we focused much of our efforts on serving our local Santa Barbara, California community.

During fiscal year 2018, 8% of our charitable contributions were dedicated to environmental impact mitigation efforts because we understand the importance of protecting our planet.

On [removed: March 28, 2016, we filed] [added: May 10, 2019,] a [removed: lawsuit alleging trademark infringement, patent infringement, unfair competition and violation of deceptive trade practices in] [added: jury for] the US District Court for the Northern District of Illinois Eastern Division [added: ruled in our favor in our willful trademark infringement and counterfeiting lawsuit] against Australian Leather.

While we believe there is no [removed: legal] basis for [removed: liability,] a judgment [removed: invalidating] [added: finding] the UGG [removed: brand] trademark [added: unenforceable, such a ruling] would have a material adverse effect on our business.

Although we are subject to other routine legal proceedings from time to time in the ordinary course of business, including employment, intellectual property and product liability claims, we believe [removed: that] the outcome of all pending legal proceedings in the aggregate will not have a material adverse effect on our business, operating results, financial [removed: condition] [added: condition,] or cash flows.

References [removed: in] [added: within] this Annual Report [removed: on Form 10-K] to [removed: "Deckers," "we," "our," "us,"] [added: “Deckers,” “we,” “our,” “us,”] or the [removed: "Company"] [added: “Company”] refer to Deckers Outdoor Corporation, together with its consolidated subsidiaries.

Certain reclassifications were made for all prior periods presented including the fiscal years ended March 31, [added: 2018,] 2017, [removed: 2016] [added: 2016,] and 2015, [removed: the quarter ended March 31, 2014 (transition period) and the year ended December 31, 2013,] to conform to the current period presentation.

The defined periods for the fiscal years ended March 31, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016] [added: 2017] are stated herein as [removed: "year ended"] [added: “year ended”] or [removed: "years ended".][added: “years ended”.]

Australian Leather’s affirmative defense is still outstanding pending a ruling from the court.

Following entry of a final judgment, the court rulings are subject to appeal.

However, regardless of the outcome, litigation can have an adverse impact on us because of legal costs, diversion of management’s time and resources, and other factors.

Other trademarks or trade names appearing elsewhere in this Annual Report are the property of their respective owners.

Solely for convenience, the trademarks and trade names within this Annual Report are referred to without the ® and™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

In response, Australian Leather raised a number of affirmative defenses and counterclaims, including seeking declaratory judgment that the UGG brand trademark is invalid and unenforceable in the US, cancellation of certain of our US UGG brand trademark registrations, false designation of origin and declaratory judgment that certain of our US design patents are invalid and unenforceable.

The counterclaims seek declaratory judgment, an injunction, cancellation of certain of our US trademark registrations, compensatory damages, attorneys' fees and other relief.

We believe the counterclaims are without merit and intend to defend the counterclaims vigorously.

Both parties have filed briefs on Motions for Summary Judgment on various claims which are currently

pending.

Further, due to uncertainty surrounding the litigation process, we are unable to reasonably estimate a range of loss, if any, at this time.

For [removed: The] [added: the] Fiscal Year Ended March 31, [removed: 2018][added: 2019]

| (State [added: or other jurisdiction] of [removed: incorporation)] [added: incorporation or organization)] | (I.R.S. Employer Identification No.) |

| Title of each class | [added: Trading Symbol(s) |] Name of each exchange on which registered |

| Common Stock, par value $0.01 per share | [added: DECK |] New York Stock Exchange |

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the [removed: Exchange] Act.

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate website, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated filer,” [removed: and] “smaller reporting [added: company,” and “emerging growth] company” in Rule 12b-2 of the Exchange Act.

| Non-accelerated filer o | [removed: (Do not check if a smaller] [added: Smaller] reporting [removed: company)] [added: company o] |

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the [removed: Exchange] Act).

At September 30, [removed: 2017,] [added: 2018,] the last business day of the [removed: registrant's] [added: registrant’s] most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting stock held by the non-affiliates of the registrant was approximately [removed: $2,180,262,000,] [added: $3,468,302,000,] based on the number of shares held by non-affiliates of the registrant as of that date, and the last reported sale price of the [removed: registrant's] [added: registrant’s] common stock on the New York Stock Exchange on that date, which was [removed: $68.41.][added: $118.58.]

As of the close of business on May [removed: 11, 2018,] [added: 17, 2019,] the number of outstanding shares of the [removed: registrant's] [added: registrant’s] common stock, par value $0.01 per share, was [removed: 30,447,808.][added: 29,142,002.]

Portions of the [removed: registrant's] [added: registrant’s] definitive Proxy Statement on Schedule 14A relating to the [removed: registrant's 2018] [added: registrant’s 2019] annual meeting of stockholders, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, are incorporated by reference in Part III [removed: of] [added: within] this Annual Report on Form 10-K.

| [Item [removed: 1.](#s461A83A003DB511E9E4A00CFB2D8EAC9)] [added: 1.](#s12B899BFF26850989AD21A1F081ADA81)] | [removed: [Business](#s461A83A003DB511E9E4A00CFB2D8EAC9)] [added: [Business](#s12B899BFF26850989AD21A1F081ADA81)] | [removed: [3](#s461A83A003DB511E9E4A00CFB2D8EAC9)] [added: [3](#s12B899BFF26850989AD21A1F081ADA81)] |

| [Item [removed: 1A.](#s0D5E8DA470C65FB5B4F922D87AC1142A)] [added: 1A.](#sD127A4078F625E9FAC6515DA03734AF7)] | [Risk [removed: Factors](#s0D5E8DA470C65FB5B4F922D87AC1142A)] [added: Factors](#sD127A4078F625E9FAC6515DA03734AF7)] | [removed: [10](#s0D5E8DA470C65FB5B4F922D87AC1142A)] [added: [10](#sD127A4078F625E9FAC6515DA03734AF7)] |

[removed: PART I][added: | | [PART I](#sC356163F2B72519C9BAD3CA65F1E629E) | |]

10-K 1 deck331201910-kdocument.htm DECK 3 31 2019 10-K

For the Fiscal Year Ended March 31, 2019

| --- | --- | --- |

| | | |

10-K 1 deck331201810-k.htm 10-K

| | |

| --- | --- |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

(Check one):

| | Smaller reporting company o |

| | [PART I](#sAE36DB156D52511BA9380304802245AB) | |

| Item 1B. | Unresolved Staff Comments | * |

| [Item 2.](#s6528B03E33295B1E8AEE375D9A18ED48) | [Properties](#s6528B03E33295B1E8AEE375D9A18ED48) | [25](#s6528B03E33295B1E8AEE375D9A18ED48) |

| [Item 3.](#s38856EEACF0B502E84739395A38B50DB) | [Legal Proceedings](#s38856EEACF0B502E84739395A38B50DB) | [26](#s38856EEACF0B502E84739395A38B50DB) |

| Item 4. | Mine Safety Disclosures | * |

| | [PART II](#s2CBCDFA0E2E359BEA79496232CF39AAE) | |

| [Item 5.](#s1B1EF0FB2C5253FA913AF11B9C009706) | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#s1B1EF0FB2C5253FA913AF11B9C009706) | [27](#s1B1EF0FB2C5253FA913AF11B9C009706) |

| [Item 6.](#sC0CAF2A8E82D51778239FFDFCB66AF74) | [Selected Financial Data](#sC0CAF2A8E82D51778239FFDFCB66AF74) | [29](#sC0CAF2A8E82D51778239FFDFCB66AF74) |

| [Item 7.](#s175BEC70DF6159C4A8A256D16ACB7DA3) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#s175BEC70DF6159C4A8A256D16ACB7DA3) | [31](#s175BEC70DF6159C4A8A256D16ACB7DA3) |

| [Item 7A.](#sA5B5A9C5FC875C37BBFCA25DA43070FD) | [Quantitative and Qualitative Disclosures about Market Risk](#sA5B5A9C5FC875C37BBFCA25DA43070FD) | [52](#sA5B5A9C5FC875C37BBFCA25DA43070FD) |

| [Item 8.](#sA1F9E937504B5AEF940EC20C17F0694F) | [Financial Statements and Supplementary Data](#sA1F9E937504B5AEF940EC20C17F0694F) | [53](#sA1F9E937504B5AEF940EC20C17F0694F) |

| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | * |

| [Item 9A.](#sF30F22E875125B9C9FEC06F43D1A4D54) | [Controls and Procedures](#sF30F22E875125B9C9FEC06F43D1A4D54) | [54](#sF30F22E875125B9C9FEC06F43D1A4D54) |

| Item 9B. | Other Information | * |

| | [PART III](#s0462CAFDA2C8571C93C37D8EF131C071) | |

| [Item 10.](#s45C416A01A4B5AF3916B24A436832665) | [Directors, Executive Officers and Corporate Governance](#s45C416A01A4B5AF3916B24A436832665) | [55](#s45C416A01A4B5AF3916B24A436832665) |

| [Item 11.](#s5E0725BB8EFB5AC48BFA2D8D8191D09D) | [Executive Compensation](#s5E0725BB8EFB5AC48BFA2D8D8191D09D) | [55](#s5E0725BB8EFB5AC48BFA2D8D8191D09D) |

| [Item 12.](#sD029B17B68935C0299063C2480C5D1E8) | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#sD029B17B68935C0299063C2480C5D1E8) | [55](#sD029B17B68935C0299063C2480C5D1E8) |

| [Item 13.](#s9B1C11BAE6BF5F4CA4B4889D1ADEBEE7) | [Certain Relationships and Related Transactions, and Director Independence](#s9B1C11BAE6BF5F4CA4B4889D1ADEBEE7) | [55](#s9B1C11BAE6BF5F4CA4B4889D1ADEBEE7) |

| [Item 14.](#sC775CC070D4E5BCAAA33891B27892F70) | [Principal Accounting Fees and Services](#sC775CC070D4E5BCAAA33891B27892F70) | [55](#sC775CC070D4E5BCAAA33891B27892F70) |

| | [PART IV](#sDED9330063CF55679F17EB1236A9B14C) | |

| [Item 15.](#s62DE4AB3ECE65251B835EE785602C81A) | [Exhibits and Financial Statement Schedule](#s62DE4AB3ECE65251B835EE785602C81A) | [57](#s62DE4AB3ECE65251B835EE785602C81A) |

| | [Signatures](#s09FB5556E22A5D72A4575098165C8F51) | [60](#s09FB5556E22A5D72A4575098165C8F51) |

| | [Index to Consolidated Financial Statements and Financial Statement Schedule](#s4E0ADCD144ED5C9EB95FE26209C2EEE6) | [F-1](#s4E0ADCD144ED5C9EB95FE26209C2EEE6) |

| *Not applicable. | | |

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on May 30, 2018 (Annual Report on Form 10-K), and the information and documents incorporated by reference in this Annual Report on Form 10-K, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements 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.

Forward-looking statements include all statements other than statements of historical fact contained in, or incorporated by reference into, this Annual Report on Form 10-K, including statements regarding our future or assumed condition, results of operations, business plans and strategies, competitive position, and market opportunities.

We have attempted to identify forward-looking statements by using words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” or “would,” and similar expressions or the negative of these expressions.

Specifically, this Annual Report on Form 10-K, and the information and documents incorporated by reference in this Annual Report on Form 10-K, contain forward-looking statements relating to, among other things:

| • | the results of and costs associated with our restructuring and operating profit improvement plans; |

| • | our global business, growth, operating, investing, and financing strategies; |

| • | our product offerings, distribution channels, and geographic mix; |

| [Item 2.](#s1A3E35143250521C8108A3F8ACEAB948) | [Properties](#s1A3E35143250521C8108A3F8ACEAB948) | [27](#s1A3E35143250521C8108A3F8ACEAB948) |

| [Item 3.](#s8f79fd00f6714652988f893ae41a4e3a) | [Legal Proceedings](#s8f79fd00f6714652988f893ae41a4e3a) | [28](#s8f79fd00f6714652988f893ae41a4e3a) |

| | [PART II](#sB0A0DF6C7B7A5B5F85EB10B67EB0529B) | |

| [Item 5.](#sA4B5635BE5485BA59DA1E0F5C6BF6438) | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#sA4B5635BE5485BA59DA1E0F5C6BF6438) | [29](#sA4B5635BE5485BA59DA1E0F5C6BF6438) |

| [Item 6.](#s268A44CA9C7D5BE6AA318DCCCCCE1D07) | [Selected Financial Data](#s268A44CA9C7D5BE6AA318DCCCCCE1D07) | [31](#s268A44CA9C7D5BE6AA318DCCCCCE1D07) |

| [Item 7.](#s06845349E6FE57BF9701743F01F80D6C) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#s06845349E6FE57BF9701743F01F80D6C) | [32](#s06845349E6FE57BF9701743F01F80D6C) |

| [Item 7A.](#s7B143F9891CB5B028397E10B820302B1) | [Quantitative and Qualitative Disclosures about Market Risk](#s7B143F9891CB5B028397E10B820302B1) | [54](#s7B143F9891CB5B028397E10B820302B1) |

| [Item 8.](#sEBEB650C23D5562F891B4202E318D976) | [Financial Statements and Supplementary Data](#sEBEB650C23D5562F891B4202E318D976) | [55](#sEBEB650C23D5562F891B4202E318D976) |

| [Item 9A.](#s2AB63975E63A557BBEDC5B3E99C4C11A) | [Controls and Procedures](#s2AB63975E63A557BBEDC5B3E99C4C11A) | [55](#s2AB63975E63A557BBEDC5B3E99C4C11A) |

| | [PART III](#sE370E07555EA5317AF1CA3A45F9AAEED) | |

| [Item 10.](#sEA35B5CDF11E53E5BE1F1B03E2F69CB3) | [Directors, Executive Officers and Corporate Governance](#sEA35B5CDF11E53E5BE1F1B03E2F69CB3) | [57](#sEA35B5CDF11E53E5BE1F1B03E2F69CB3) |

| [Item 11.](#s11A85830EB585E02A230C0600326EB67) | [Executive Compensation](#s11A85830EB585E02A230C0600326EB67) | [57](#s11A85830EB585E02A230C0600326EB67) |

| [Item 12.](#sFE2C8BA254C45C46AA21B31F23DA9E19) | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#sFE2C8BA254C45C46AA21B31F23DA9E19) | [57](#sFE2C8BA254C45C46AA21B31F23DA9E19) |

| [Item 13.](#s96A5C64BAE665BB886C6493A9D84A6EC) | [Certain Relationships and Related Transactions, and Director Independence](#s96A5C64BAE665BB886C6493A9D84A6EC) | [57](#s96A5C64BAE665BB886C6493A9D84A6EC) |

| [Item 14.](#sD22C6568D6825239AE562804D6B4F327) | [Principal Accounting Fees and Services](#sD22C6568D6825239AE562804D6B4F327) | [57](#sD22C6568D6825239AE562804D6B4F327) |

| | [PART IV](#s2b6ec65f4a104c99b4aced7435669543) | |

| [Item 15.](#sCC97B60F4CCC591DAD45A60C3FF4EF03) | [Exhibits and Financial Statement Schedule](#sCC97B60F4CCC591DAD45A60C3FF4EF03) | [59](#sCC97B60F4CCC591DAD45A60C3FF4EF03) |

| | [Signatures](#sA0C276A1DC2550A3A090F157484C06A1) | [62](#sA0C276A1DC2550A3A090F157484C06A1) |

| | [Index to Consolidated Financial Statements and Financial Statement Schedule](#sFF4F308F63DB5897A36126E82408B477) | [F-1](#sFF4F308F63DB5897A36126E82408B477) |

| | | |

| *Not applicable. | | |

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K for our fiscal year ended March 31, 2019 (Annual Report), and the information and documents incorporated by reference into this Annual Report, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), which statements 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.

Forward-looking statements include all statements other than statements of historical fact contained in, or incorporated by reference into, this Annual Report.

We have attempted to identify forward-looking statements by using words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” or “would,” and similar expressions or the negative of these expressions.

Specifically, this Annual Report, and the information and documents incorporated by reference into this Annual Report, contain forward-looking statements relating to, among other things:

| | |

| --- | --- |

| • | our business, operating, investing, capital allocation, marketing and financing strategies; |

| | |

| --- | --- |

| • | the impacts of our restructuring and operating profit improvement plans; |

| | |

| --- | --- |

| • | the impacts of our ongoing operational system upgrades; |

| | |

| --- | --- |

| • | the expansion of our brands and product offerings, and changes to the geographic mix of our products; |

| | |

| --- | --- |

| • | changes to our product distribution channels, including the implementation of our product segmentation strategy; |

| | |

| --- | --- |

| • | changes in consumer tastes and preferences with respect to our brands and products in particular, and the fashion industry in general; |

| | |

| --- | --- |

| • | trends impacting the purchasing behavior of wholesale customers and retail consumers, including those impacting retail and E-commerce businesses; |

| | |

| --- | --- |

| • | the impact of seasonality and weather on consumer behavior and our results of operations; |

| | |

| --- | --- |

| • | the impact of our efforts to continue to advance sustainable and socially conscious business operations; |

| | |

| --- | --- |

| • | expectations relating to the expansion of Direct-to-Consumer capabilities; |

| | |

| --- | --- |

Our corporate headquarters [removed: are] [added: is] located in Goleta, California.

We began operating [removed: our] [added: this] warehouse and distribution center in [removed: Moreno Valley, California, in] the fourth quarter of fiscal year 2015 [removed: and] [added: and,] since June [removed: 2017] [added: 2017,] have [removed: begun to expand] [added: expanded our] operations at this location.

While we continue to operate our distribution center in Camarillo, [removed: California,] we are currently working to move all of our Camarillo distribution operations to our Moreno Valley [removed: location by the end of calendar year 2019.][added: location.]

Our international distribution centers are managed by 3PLs and are located in Canada, China, [removed: Hong Kong,] Japan, the Netherlands, and the [removed: UK, as well as a domestic distribution center located in Pennsylvania.][added: UK.]

We also have offices in China, Hong [removed: Kong] [added: Kong, Vietnam, Japan, France, Germany, the Netherlands, Switzerland,] and [removed: Vietnam to] [added: the UK for which some] oversee the quality and manufacturing standards of our products, [removed: an office in Macau to coordinate logistics, offices in China, Hong Kong,] and [removed: Japan to coordinate sales and marketing efforts, and offices in France, Germany, the Netherlands, Switzerland, and the UK to oversee European] [added: others are for regional] sales, operations and administration.

[removed: At] [added: As of] March 31, [removed: 2018,] [added: 2019,] we had [removed: 56] [added: 54] retail stores in the US ranging from approximately 1,000 to 7,000 square feet.

Internationally, we had [removed: 109] [added: 102] retail stores in Austria, Belgium, Canada, China, France, Germany, Japan, the Netherlands, Switzerland and the UK.

The following table provides details regarding our significant physical properties [removed: at] [added: as of] March 31, [removed: 2018:][added: 2019:]

| Moreno Valley, California | | Warehouse and Distribution Center | | Lease | | [removed: 794,000] [added: 1,530,944] | |

| Camarillo, California | | Warehouse and Distribution Center | | Lease | | [removed: 723,000] [added: 423,106] | |

We have one primary US distribution center, which is located in Moreno Valley, California.

Once the migration of our distribution center operations is complete, we will be closing our Camarillo distribution center.

We anticipate this closure to be completed in the first half of fiscal year 2020.

We also have a domestic distribution center managed by a 3PL, located in Pennsylvania.

We also have offices in Macau and Hong Kong to coordinate logistics and facilitate procurement.

In April 2016, we completed the acquisition of approximately four acres of land adjacent to our corporate headquarters to accommodate future expansion.

We have two US distribution centers.

In June 2017, we exercised our option to extend the lease of our warehouse and distribution center located in Moreno Valley, California, through June 2028 and to lease approximately 736,000 of additional square feet beginning in fiscal year 2019.

Our common stock has traded under the symbol [removed: "DECK"] [added: DECK] on the [removed: New York Stock Exchange (NYSE)] [added: NYSE] since May [removed: 5,] 2014 and was traded on the NASDAQ Global Select Market prior to that date.

[removed: At] [added: As of] May [removed: 11, 2018,] [added: 17, 2019,] we had [removed: approximately 43] [added: 41] stockholders of record based [removed: upon] [added: on] the records of our transfer agent, which does not include beneficial owners of our common stock whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.

We did not sell any equity securities during the year ended March 31, [removed: 2018] [added: 2019] that were not registered under the Securities [removed: Act of 1933, as amended (Securities Act).][added: Act.]

Below is a graph comparing the percentage change in the cumulative total [removed: stockholder] return on our common stock against the cumulative total return of the [removed: NYSE Composite Index, and the] S&P 500 Apparel, Accessories & [added: Luxury Goods Index and the NYSE Composite Index for the five-fiscal year periods commencing April 1, 2014 and ending March 31, 2019.]

The data represented [added: in the graph] below assumes one hundred dollars invested in [removed: each share of] our common stock, the [removed: NYSE Composite Index and the] S&P 500 Apparel, Accessories & Luxury Goods Index [added: and the NYSE Composite Index] on [removed: January] [added: April] 1, [removed: 2013.][added: 2014.]

The stock performance graph [added: and related information] shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report [removed: on Form 10-K] into any filing under the Securities Act, or under the [removed: Securities] Exchange [removed: Act of 1934, as amended (Exchange Act),] [added: Act,] except to the extent that we specifically incorporate this information by [removed: reference,] [added: reference] and shall not otherwise be deemed filed under [removed: either of] the Securities Act or [added: the] Exchange Act.

[removed: ][added: ]

| | [removed: January] [added: April] 1, | | | | [removed: Year] [added: Years] Ended [removed: December] [added: March] 31, | | | | [removed: Years Ended March 31,] | | | | | | | | | | | | | | |

| | [removed: 2013 | | | | 2013] [added: 2014] | | | | 2015 | | | | 2016 | | | | 2017 | | | | 2018 | | | [added: | 2019 | | |]

| S&P 500 Apparel, Accessories & Luxury Goods Index | 100.0 | | | | [removed: 124.9] [added: 95.5] | | | | [removed: 119.3] [added: 84.8] | | | | [removed: 105.9] [added: 67.4] | | | | [removed: 84.2] [added: 86.4] | | | | [removed: 108.0] [added: 83.7] | | |

Our current revolving credit agreements allow us to declare and pay cash dividends, as long as [added: we do not exceed certain leverage ratios and] no event of default has [removed: occurred under these arrangements.][added: occurred.]

Stock Repurchase [removed: Program][added: Programs]

In [removed: January 2015,] [added: October 2017,] our Board of Directors approved a stock repurchase program [added: which, together with a stock repurchase program approved in 2015, authorized us] to repurchase [added: a total of] up to [removed: $200,000] [added: $400,294] of our common stock in the open market or in [removed: privately-negotiated] [added: privately negotiated] transactions, subject to market conditions, applicable legal requirements, and other [removed: factors.][added: factors (2017 Repurchase Program).]

Our [removed: repurchase programs] [added: Stock Repurchase Programs] do not obligate us to acquire any particular amount of common stock and may be suspended at any time at our discretion.

Refer to [added: Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Liquidity and Capital Resources” and] Note [removed: 8, "Stockholders' Equity,"] [added: 10, “Stockholders' Equity,”] of our consolidated financial statements [added: and accompanying notes thereto (referred to herein as the “consolidated financial statements”)] in Part IV [removed: of] [added: within] this Annual Report [removed: on Form 10-K] for further information on repurchases of our common stock.

| Deckers Outdoor Corporation | $ | 100.0 | | | $ | 86.3 | | | $ | 70.9 | | | $ | 70.7 | | | $ | 106.6 | | | $ | 174.0 | |

| The NYSE Composite Index | 100.0 | | | | 109.7 | | | | 105.6 | | | | 122.1 | | | | 135.8 | | | | 142.3 | | |

In January 2019, our Board of Directors approved the 2019 Repurchase Program, which authorizes us to repurchase up to $261,000 of our common stock.

As of March 31, 2019, the aggregate remaining approved amount under the 2017 Repurchase Program and 2019 Repurchase Program (collectively, our “Stock Repurchase Programs”) was $350,212.

Our current revolving credit agreements allow us to make share repurchases under these programs, as long as we do not exceed certain leverage ratios and no event of default has occurred under these arrangements.

As of March 31, 2019, we were in compliance with these arrangements.

During the fourth quarter of the year ended March 31, 2019, we did not repurchase any shares of our common stock and had an aggregate remaining approved amount under our Stock Repurchase Programs of $350,212 as of March 31, 2019.

The following table shows the range of low and high closing sale prices per share of our common stock, based on the last daily sale, for the periods indicated.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | Common Stock Price Per Share | | | | | | |

| | Low | | | | High | | |

| Year Ended March 31, 2018 | | | | | | | |

| Fourth Quarter | $ | 78.96 | | | $ | 98.29 | |

| Third Quarter | 64.57 | | | | 80.25 | | |

| Second Quarter | 61.60 | | | | 69.43 | | |

| First Quarter | 55.78 | | | | 71.92 | | |

| Year Ended March 31, 2017 | | | | | | | |

| Fourth Quarter | $ | 44.99 | | | $ | 60.98 | |

| Third Quarter | 50.76 | | | | 64.80 | | |

| Second Quarter | 56.99 | | | | 68.57 | | |

| First Quarter | 48.89 | | | | 59.25 | | |

Luxury Goods Index for the five-year period commencing December 31, 2012 and ending March 31, 2018, excluding the transition period for the quarter ended March 31, 2014.

The NYSE Composite Index is an index that measures the performance of all stocks listed on the NYSE.

The following table assumes one hundred dollars invested on January 1, 2013 and assumes dividends are reinvested.

| Deckers Outdoor Corporation | $ | 100.0 | | | $ | 209.7 | | | $ | 181.0 | | | $ | 148.8 | | | $ | 148.3 | | | $ | 223.6 | |

| The NYSE Composite Index | 100.0 | | | | 126.4 | | | | 138.7 | | | | 133.5 | | | | 154.4 | | | | 171.4 | | |

At March 31, 2018, we were in compliance with this provision and we remain in compliance as of May 25, 2018.

In October 2017, our Board of Directors authorized a new $335,000 stock repurchase program.

Since inception through March 31, 2018, we have repurchased approximately 3,722,502 shares under these combined programs for approximately $284,393, or an average price of $76.40 per share, leaving the remaining approved amount at approximately $250,607.

The following table summarizes the stock repurchase activity under the programs discussed above during the three months ended March 31, 2018:

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | Total number of shares purchased* (in thousands) | | | Average price paid per share | | | | Approximate dollar value of shares added/(purchased) | | | | Approximate dollar value of shares that may yet be purchased | | |

| February 1, 2018 — February 28, 2018 | 930 | | | $ | 93.85 | | | $ | (87,293 | ) | | $ | 288,314 | |

| March 1, 2018 — March 31, 2018 | 412 | | | 91.56 | | | | (37,707 | | ) | | 250,607 | | |

*All shares were repurchased as part of publicly-announced programs in open-market transactions.

The following [added: tables present our selected] consolidated financial [removed: information] [added: data and] should be read [removed: together with our consolidated financial statements] in [removed: Part IV of this Annual Report on Form 10-K and the accompanying notes thereto, and Part II,] [added: conjunction with] Item 7, [removed: "Management's] [added: “Management's] Discussion and Analysis of Financial Condition and Results of [removed: Operations".][added: Operations,” and Part IV, Item 15, “Exhibits and Financial Statement Schedule,” within this Annual Report.]

| | [removed: 2018 | | | | 2017] [added: 2019] | | | | [removed: 2016] [added: 2018] | | | | [removed: 2015] [added: 2017] | | | | [removed: 2014] [added: 2016] | | | | [removed: 2013] [added: 2015] | | |

| Income Statement [removed: Data: | | | |] [added: Data] | | | | | | | | | | | | | | | | | | | |

| Net sales [removed: to external customers:] | | | | | | | | | | | | | | | | | | | | [removed: | | | |]

| UGG brand wholesale | $ | [removed: 841,893 | | | $ | 826,355] [added: 888,347] | | | $ | [removed: 918,102] [added: 841,893] | | | $ | [removed: 903,926] [added: 826,355] | | | $ | [removed: 83,271] [added: 918,102] | | | $ | [removed: 818,377] [added: 903,926] | |

| Sanuk brand wholesale | [removed: 78,283 | | | | 77,552] [added: 69,791] | | | | [removed: 90,719] [added: 78,283] | | | | [removed: 102,690] [added: 77,552] | | | | [removed: 28,793] [added: 90,719] | | | | [removed: 94,420] [added: 102,690] | | |

| Direct-to-Consumer | [removed: 715,724 | | | | 666,340] [added: 715,034] | | | | [removed: 644,317] [added: 715,724] | | | | [removed: 617,358] [added: 666,340] | | | | [removed: 118,707] [added: 644,317] | | | | [removed: 496,211] [added: 617,358] | | |

| Total net sales | [removed: 1,903,339 | | | | 1,790,147] [added: 2,020,437] | | | | [removed: 1,875,197] [added: 1,903,339] | | | | [removed: 1,817,057] [added: 1,790,147] | | | | [removed: 294,716] [added: 1,875,197] | | | | [removed: 1,556,618] [added: 1,817,057] | | |

| Cost of sales | [removed: 971,697 | | | | 954,912] [added: 980,187] | | | | [removed: 1,028,529] [added: 971,697] | | | | [removed: 938,949] [added: 954,912] | | | | [removed: 150,456] [added: 1,028,529] | | | | [removed: 820,135] [added: 938,949] | | |

| Gross profit | [removed: 931,642 | | | | 835,235] [added: 1,040,250] | | | | [removed: 846,668] [added: 931,642] | | | | [removed: 878,108] [added: 835,235] | | | | [removed: 144,260] [added: 846,668] | | | | [removed: 736,483] [added: 878,108] | | |

| Selling, general and administrative expenses | [removed: 709,058 | | | | 837,154] [added: 712,930] | | | | [removed: 684,541] [added: 709,058] | | | | [removed: 653,689] [added: 837,154] | | | | [removed: 144,668] [added: 684,541] | | | | [removed: 528,586] [added: 653,689] | | |

| Income (loss) from operations | [added: 327,320 | | | |] 222,584 | | | | (1,919 | | ) | | 162,127 | | | | 224,419 | | | [removed: | (408 | | ) | | 207,897 | | |]

| Other [added: (income)] expense, net | [removed: 1,888 | | | | 5,067] [added: (1,614] | | [added: )] | | [removed: 5,242] [added: 1,888] | | | | [removed: 3,280] [added: 5,067] | | | | [removed: 334] [added: 5,242] | | | | [removed: 2,340] [added: 3,280] | | |

| Income (loss) before income taxes | [added: 328,934 | | | |] 220,696 | | | | (6,986 | | ) | | 156,885 | | | | 221,139 | | | [removed: | (742 | | ) | | 205,557 | | |]

| Income tax expense (benefit) | [added: 64,626 | | | |] 106,302 | | | | (12,696 | | ) | | 34,620 | | | | 59,359 | | | [removed: | 1,943 | | | | 59,868 | | |]

| Net income [removed: (loss)] | [removed: 114,394 | | | | 5,710] [added: 264,308] | | | | [removed: 122,265] [added: 114,394] | | | | [removed: 161,780] [added: 5,710] | | | | [removed: (2,685] [added: 122,265] | | [removed: )] | | [removed: 145,689] [added: 161,780] | | |

| Total other comprehensive [removed: income] (loss) [removed: | 13,468 | | |] [added: income] | [removed: (5,894] [added: (9,671] | | ) | | [removed: (89] [added: 13,468] | | [removed: )] | | [removed: (18,425] [added: (5,894] | | ) | | [removed: 600] [added: (89] | | [added: )] | | [removed: (1,243] [added: (18,425] | | ) |

| Comprehensive income (loss) | $ | [removed: 127,862 | | | $ | (184] [added: 254,637] | [removed: )] | | $ | [removed: 122,176] [added: 127,862] | | | $ | [removed: 143,355] [added: (184] | [added: )] | | $ | [removed: (2,085] [added: 122,176] | [removed: )] | | $ | [removed: 144,446] [added: 143,355] | |

| Net income [removed: (loss)] per [removed: share: | | | |] [added: share] | | | | | | | | | | | | | | | | | | | |

| Basic | $ | [removed: 3.60 | | | $ | 0.18] [added: 8.92] | | | $ | [removed: 3.76] [added: 3.60] | | | $ | [removed: 4.70] [added: 0.18] | | | $ | [removed: (0.08] [added: 3.76] | [removed: )] | | $ | [removed: 4.23] [added: 4.70] | |

| Diluted | $ | [removed: 3.58 | | | $ | 0.18] [added: 8.84] | | | $ | [removed: 3.70] [added: 3.58] | | | $ | [removed: 4.66] [added: 0.18] | | | $ | [removed: (0.08] [added: 3.70] | [removed: )] | | $ | [removed: 4.18] [added: 4.66] | |

| Weighted-average common shares [removed: outstanding: | | | |] [added: outstanding] | | | | | | | | | | | | | | | | | | | |

| Basic | [removed: 31,758 | | | | 32,000] [added: 29,641] | | | | [removed: 32,556] [added: 31,758] | | | | [removed: 34,433] [added: 32,000] | | | | [removed: 34,621] [added: 32,556] | | | | [removed: 34,473] [added: 34,433] | | |

| Diluted | [removed: 31,996 | | | | 32,355] [added: 29,903] | | | | [removed: 33,039] [added: 31,996] | | | | [removed: 34,733] [added: 32,355] | | | | [removed: 34,621] [added: 33,039] | | | | [removed: 34,829] [added: 34,733] | | |

| | As of March 31, | | | | | | | | | | | | | | | | | | | [removed: | As of December 31, | | |]

| Balance Sheet [removed: Data: | | | |] [added: Data] | | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents | $ | [removed: 429,970 | | | $ | 291,764] [added: 589,692] | | | $ | [removed: 245,956] [added: 429,970] | | | $ | [removed: 225,143] [added: 291,764] | | | $ | [removed: 245,088] [added: 245,956] | | | $ | [removed: 237,125] [added: 225,143] | |

| Working capital | [removed: 721,524 | | | | 661,770] [added: 844,881] | | | | [removed: 547,267] [added: 721,524] | | | | [removed: 519,051] [added: 661,770] | | | | [removed: 501,647] [added: 547,267] | | | | [removed: 508,786] [added: 519,051] | | |

| Total assets | [removed: 1,264,379 | | | | 1,191,780] [added: 1,427,206] | | | | [removed: 1,278,068] [added: 1,264,379] | | | | [removed: 1,169,933] [added: 1,191,780] | | | | [removed: 1,064,204] [added: 1,278,068] | | | | [removed: 1,259,729] [added: 1,169,933] | | |

| Long-term liabilities | [removed: 134,434 | | | | 78,474] [added: 131,552] | | | | [removed: 72,099] [added: 134,434] | | | | [removed: 65,379] [added: 78,474] | | | | [removed: 53,140] [added: 72,099] | | | | [removed: 51,092] [added: 65,379] | | |

| Stockholders' equity | [removed: 940,779 | | | | 954,255] [added: 1,045,130] | | | | [removed: 967,471] [added: 940,779] | | | | [removed: 937,012] [added: 954,255] | | | | [removed: 888,849] [added: 967,471] | | | | [removed: 888,119] [added: 937,012] | | |

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| | Years Ended March 31, | | | | | | | | | | | | | | | | | | |

| HOKA brand wholesale | 185,057 | | | | 132,688 | | | | 93,064 | | | | 74,937 | | | | 47,614 | | |

| Teva brand wholesale | 119,390 | | | | 117,478 | | | | 103,694 | | | | 143,280 | | | | 136,028 | | |

| Other brands wholesale | 42,818 | | | | 17,273 | | | | 23,142 | | | | 3,842 | | | | 9,441 | | |

| | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

Change in Fiscal Year

In February 2014, our Board of Directors approved a change in our fiscal year end from December 31st to March 31st.

The change was intended to better align our planning, financial and reporting functions with the seasonality of our business.

The fiscal years 2018 through 2015, as presented below, relate to the years ended March 31, 2018, 2017, 2016 and 2015, respectively.

The 2014 transition period relates to the quarter ended March 31, 2014 to coincide with the change in our fiscal year end.

The 2013 year relates to the calendar year ended December 31, 2013.

Consolidated Financial Data

We derived the following selected consolidated financial data from our consolidated financial statements.

The financial data are derived from, and qualified by reference to, the following audited consolidated financial statements not included in this Annual Report on Form 10-K:

| | |

| --- | --- |

| • | Consolidated statements of comprehensive income (loss) for the fiscal year ended March 31, 2015, quarter ended March 31, 2014 (transition period), and the calendar year ended December 31, 2013. |

| • | Consolidated balance sheets as of March 31, 2016, March 31, 2015 and March 31, 2014. |

The financial data are further derived from, and qualified by reference to, the following consolidated financial statements in Part IV of this Annual Report on Form 10-K:

| • | Consolidated statements of comprehensive income (loss) for the years ended March 31, 2018, March 31, 2017 and March 31, 2016. |

| • | Consolidated balance sheets as of March 31, 2018 and March 31, 2017. |

Historical results are not necessarily indicative of expected future results.

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | Years Ended March 31, | | | | | | | | | | | | | | | | Quarter Ended March 31,(transition period) | | | | Year Ended December 31, | | |

| Teva brand wholesale | 117,478 | | | | 103,694 | | | | 121,239 | | | | 116,931 | | | | 45,283 | | | | 109,334 | | |

| Other brands wholesale | 149,961 | | | | 116,206 | | | | 100,820 | | | | 76,152 | | | | 18,662 | | | | 38,276 | | |

The Consolidated Financial Statements, the Financial Statement Schedule, and the Reports of Independent Registered Public Accounting Firm, are filed [removed: with] [added: within] this Annual Report [removed: on Form 10-K] in a separate section following Part IV, as shown on the index under Item 15, [removed: "Exhibits] [added: “Exhibits] and Financial Statement [removed: Schedule," of] [added: Schedule,” within] this Annual [removed: Report on Form 10-K.][added: Report.]

Under the supervision and with the participation of management, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, [removed: 2018.][added: 2019.]

Based [removed: upon] [added: on] that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of March 31, [removed: 2018.][added: 2019.]

[removed: At] [added: As of] March 31, [removed: 2018,] [added: 2019,] our management, including our Principal Executive Officer and Principal Financial Officer, assessed the effectiveness of our internal control over financial reporting using the criteria set forth in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (commonly referred to as COSO).

Based on this assessment, our management concluded that our internal control over financial reporting was effective based on those criteria as of March 31, [removed: 2018.][added: 2019.]

The registered public accounting firm that audited our consolidated financial statements in Part IV [removed: of] [added: within] this Annual Report [removed: on Form 10-K] has issued an attestation report on our internal control over financial reporting.

[removed: Please refer] [added: Refer] to [removed: the section entitled] [added: Part IV,] “Report of Independent Registered Public Accounting [removed: Firm”] [added: Firm - Internal Control Over Financial Reporting,”] on page F-3 [removed: of] [added: within] this Annual [removed: Report on Form 10-K.][added: Report.]

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the year ended March 31, [removed: 2018] [added: 2019] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The certifications of our Principal Executive Officer and Principal Financial and Accounting Officer required by Rule 13a-14(a) of the Exchange Act are filed herewith as Exhibit 31.1 and Exhibit 31.2, and furnished as Exhibit 32, [removed: to] [added: within] this Annual [removed: Report on Form 10-K.][added: Report.]

References [removed: in] [added: within] this Annual Report [removed: on Form 10-K] to [removed: "Deckers," "we," "our," "us,"] [added: “Deckers,” “we,” “our,” “us,”] or the [removed: "Company"] [added: “Company”] refer to Deckers Outdoor Corporation, together with its consolidated subsidiaries.

The defined periods for the fiscal years ended March 31, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016] [added: 2017] are stated in Items 10, 11, 12, 13, and 14 herein as [removed: "year ended"] [added: “year ended”] or [removed: "years ended".][added: “years ended”.]

The information required by this item will be disclosed in our definitive proxy statement on Schedule 14A (Proxy Statement) for our [removed: 2018] [added: 2019] annual meeting of stockholders and is incorporated herein by reference.

The Proxy Statement will be filed with the [removed: Securities and Exchange Commission] [added: SEC] within 120 days after the end of the year ended March 31, [removed: 2018] [added: 2019] pursuant to Regulation 14A under the [removed: Securities] Exchange [removed: Act of 1934, as amended.][added: Act.]

The information required by this item will be disclosed in the Proxy [removed: Statement,] [added: Statement] and is incorporated herein by reference.

The information required by this item will be disclosed in the Proxy [removed: Statement,] [added: Statement] and is incorporated herein by reference.

The information required by this item will be disclosed in the Proxy [removed: Statement,] [added: Statement] and is incorporated herein by reference.

The information required by this item will be disclosed in the Proxy [removed: Statement,] [added: Statement] and is incorporated herein by reference.

References [removed: in] [added: within] this Annual Report [removed: on Form 10-K] to [removed: "Deckers," "we," "our," "us,"] [added: “Deckers,” “we,” “our,” “us,”] or the [removed: "Company"] [added: “Company”] refer to Deckers Outdoor Corporation, together with its consolidated subsidiaries.

The defined periods for the fiscal years ended March 31, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016] [added: 2017] are stated in Item 15 herein as [removed: "year ended"] [added: “year ended”] or [removed: "years ended".][added: “years ended”.]

UGG® (UGG), Teva® (Teva), Sanuk® (Sanuk), HOKA One One® (HOKA), Koolaburra® (Koolaburra), Ahnu® (Ahnu) and UGGpureTM (UGGpure) are some of our trademarks.

Other trademarks or trade names appearing elsewhere in this Annual Report are the property of their respective owners.

Solely for convenience, the trademarks and trade names within this Annual Report are referred to without the ® and™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.