filings.toolsItem 1A. , “Risk Factors,” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
130K characters. Original on sec.gov · Markdown
Item 1A. , “Risk Factors,” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations,” within this Annual Report, as well as in our other filings with the Securities and Exchange Commission (SEC), which
are available free of charge on the SEC’s website at www.sec.gov and our website at ir.deckers.com. You should read this
Annual Report, including the information and documents incorporated by reference herein, in its entirety and with the
understanding that our actual future results may be materially different from the results expressed or implied by these forward-
looking statements. Moreover, new risks and uncertainties emerge occasionally, and it is not possible for management to predict
all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or
combination of factors, may cause our actual future results to be materially different from any results expressed or implied by any
forward-looking statements. Except as required by applicable law or the listing rules of the New York Stock Exchange, we
expressly disclaim any intent or obligation to update any forward-looking statements. We qualify all our forward-looking
statements with these cautionary statements.
PART I
References within this Annual Report to “Deckers,” “we,” “our,” “us,” “management,” or the “Company” refer to
Deckers Outdoor Corporation, together with its consolidated subsidiaries. HOKA® (HOKA), UGG® (UGG), Teva®
(Teva), Koolaburra by UGG® (Koolaburra), AHNU® (AHNU), UGGpure® (UGGpure) and UGGplush**TM (UGGplush)
are some of our trademarks. Other trademarks or trade names appearing elsewhere within this Annual Report are
the property of their respective owners. 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 indication that their respective
owners will not assert their rights to the fullest extent under applicable law.
Unless otherwise indicated, all figures herein are expressed in thousands, except share and per share data*.*
R**eferences to “domestic” refer to our business and operations in t**he US*.* The periods covered by the fiscal years
ended March 31, 2026*,* 2025*, and* 2024 are stated herein as “year ended” or “years ended.” We also refer to these
fiscal years as “fiscal year 2026,” “fiscal year 2025,” and “fiscal year 2024,” respectively. Fiscal year 2026 is also
referred to as “the current period” and fiscal year 2025 is referred to as “the prior period”.
| ITEM 1. BUSINESS |
General
We are a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories
developed for both everyday casual lifestyle use and high-performance activities. We market our products primarily
under three proprietary brands: HOKA, UGG, and Teva.
Our brands compete across the fashion and casual lifestyle, performance, running, and outdoor markets. We
believe our products are distinctive and appeal to a broad demographic. Our brands sell our products through
quality domestic and international retailers and international distributors in our wholesale channel, and directly to
global consumers through our Direct-to-Consumer (DTC) channel, which is comprised of an e‑commerce and retail
store presence. We seek to differentiate our brands and products by offering diverse lines that emphasize fashion,
performance, authenticity, functionality, quality, and comfort, and products tailored to a variety of activities, seasons,
and demographic groups. Independent third-party contractors manufacture all of our products (independent
manufacturers).
Brands
 | The HOKA brand is an authentic premium line of year- round performance footwear, which offers enhanced cushioning and inherent stability with minimal weight. Originally designed for ultra-runners, the brand now appeals to world champions, tastemakers, and everyday athletes. Expansion into additional product categories, elevated marketing campaigns, and investments in brand experiences, coupled with strategic marketplace presence have fueled both domestic and international sales growth of the HOKA brand, which has quickly become a leading brand within run and outdoor specialty wholesale accounts and is growing across its global marketplace. The HOKA brand’s product line includes running, trail, hiking, fitness, and lifestyle footwear offerings, as well as apparel and accessories. | |
 | 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 consumer- focused fashion lifestyle market leaders. Born on the California coast to warm surfers after they caught and rode the waves, we create iconic products and experiences that are made for people to feel comfort, softness, warmth, and confidence. With loyal consumers around the world, innovative products, and elevated storytelling, the UGG brand has proven to be a highly resilient consumer-focused line of premium footwear, apparel, and accessories that has driven both domestic and international sales growth with year-round product offerings that appeal to a growing global audience and a broad demographic. | |
 | Other brands consist primarily of the Teva brand. The Teva brand’s products are built for a range of outdoor pursuits and include a variety of footwear options, from classic sandals and shoes to boots. |
The Other brands reportable operating segment includes financial results of the Koolaburra brand and AHNU brand,
for which the phase out of standalone operations were completed during the third and fourth quarters of fiscal year
2026, as well as financial results for the former Sanuk brand during the prior period through the sale date of August
15, 2024 (Sanuk Brand Sale Date).
Refer to the section titled “Reportable Operating Segments” below for further details about our reportable operating
segments.
Channel Distribution
We operate omnichannel global marketplaces for our brands where consumers can shop and experience our
brands seamlessly across both channels outlined below.
Wholesale. Our wholesale channel sells products to a network of third-party retailers, including partner retailers,
and distributors. This approach enables us to expand market reach and leverage the scale and operational
capabilities of our wholesale partners to serve a broad base of end consumers.
We sell our HOKA brand products primarily through full-service specialty retailers, outdoor and sporting goods
retailers, select online retailers, fashion lifestyle retailers, sports style partners, and higher-end department stores.
We continue to expand our HOKA brand wholesale distribution globally, including through additional mono-branded
locations operated by partner retailers.
We sell our UGG brand products primarily through fashion lifestyle retailers, higher-end department stores,
streetwear and sports style partners, online retailers and partner retailers. As the retail marketplace continues to
evolve to reflect changing consumer preferences, we continually review and evaluate our UGG wholesale
distribution and product segmentation approach.
We sell our Teva brand products primarily through outdoor and sporting goods retailers, fashion lifestyle retailers,
large national retail chains, higher-end department stores, and online retailers.
Direct-to-Consumer. Our DTC channel is comprised of our Company-owned e-commerce websites and retail
stores where products are sold at retail prices. Our e-commerce websites and retail stores are intertwined and
interdependent in an omnichannel marketplace, which engenders brand loyalty while increasing product sales and
improving our inventory productivity. In addition, we believe some of our consumers interact with both before making
purchasing decisions in store and online. For example, consumers may feel or try on products in our retail stores
and then place an order online later, or they may initially research products online and then make a purchase in
store.
E-Commerce Websites. Our global e-commerce websites provide us with an opportunity to directly engage and
connect with our consumers and communicate a consistent message that promotes awareness of our brands’
promises and key initiatives, offers targeted information to specific consumer demographics, and drives consumers
to our retail stores. Our e‑commerce websites provide consumers with access to the broadest selection and
assortment of our products. As of March 31, 2026, we operate Company-owned e-commerce websites in 54
different countries.
Retail Stores*.* Retail stores enable us to expose consumers to a curated selection of products and directly influence
our consumers’ experience with our brands. We continue to open mono-branded retail stores in key markets to
further grow the UGG brand and HOKA brand presence and appeal to a broader consumer base, while also
prioritizing the revitalization and recalibration of our existing retail store fleet to enhance overall brand impact and
consumer experience. As of March 31, 2026, we have a total of 203 global Company-owned retail stores (including
141 UGG brand retail stores and 62 HOKA brand retail stores), which include 105 concept stores and 98 outlet
stores.
Geographic Distribution
US Distribution. In our wholesale channel, we sell our products in the US through sales representatives, organized
by brand and either geography or account type, as each brand generally has certain strategic customers that expect
a dedicated sales team with specialized knowledge of the brand’s product offerings. In addition to our wholesale
channel, we sell products directly to consumers through our DTC channel and fulfill online orders through our
warehouses and DCs, and retail stores. We currently distribute products sold in the US through our DCs in Moreno
Valley, California, and Mooresville, Indiana. We also distribute products to our wholesale channel customers through
a DC bypass program.
International Distribution. Collectively, our brands are sold internationally, including in Canada, Europe, Asia, and
Latin America. We sell our products internationally in our wholesale channel through wholly owned subsidiaries and
independent distributors, some of which operate partner retail stores. In addition, in certain countries we sell
products through our DTC channel. For our wholesale and DTC channels, we distribute our products through a
number of warehouses and DCs managed by 3PLs in certain international locations. We are currently transitioning
one of our international 3PLs to a new partner.
Refer to Part I, Item 2, “Properties,” and Note 7, “Leases,” of our consolidated financial statements in Part IV within
this Annual Report for further information on our properties and leases. Refer to Note 2, “Revenue Recognition and
Business Concentrations,” of our consolidated financial statements in Part IV within this Annual Report for further
information regarding geographic areas and concentration of related business risks.
Reportable Operating Segments
As of March 31, 2026, our three reportable operating segments include the worldwide operations of the HOKA
brand, UGG brand, and Other brands (collectively, our reportable operating segments). Other brands consist
primarily of the Teva brand. The Other brands reportable operating segment includes current and historical results of
brands previously sold and brands for which standalone operations have been phased out, as discussed below.
Consistent with our continuous focus on pursuing the most profitable long-term opportunities, we have taken the
following strategic actions to streamline our brand portfolio within the Other brands reportable operating segment:
- During the second quarter of fiscal year 2026, we began phasing out standalone operations for the
AHNU brand. We closed Ahnu.com as of October 1, 2025, and completed the phase out of the
AHNU brand in the wholesale channel during third and fourth quarters of fiscal year 2026. We did
not incur material exit costs or obligations associated with this plan.
- During the third quarter of fiscal year 2025, we began phasing out standalone operations for the
Koolaburra brand. We closed Koolaburra.com as of the end of fiscal year 2025 and completed the
phase out of the Koolaburra brand in the wholesale channel during the third and fourth quarters of
fiscal year 2026. We did not incur material exit costs or obligations associated with this plan.
- The sale of the Sanuk brand was completed during the second quarter of fiscal year 2025. The
financial results for the reportable operating segments present the former Sanuk brand through the
Sanuk Brand Sale Date.
Refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
the section titled “Basis of Presentation,” in Note 1, “General,” and to Note 13, “Reportable Operating Segments,” of
our consolidated financial statements in Part IV within this Annual Report for further information on our reportable
operating segments.
Product Design and Development
We are committed to designing innovative, functional, and distinctive products that enable consumers to move
through the world with greater comfort, confidence, and performance. Our design and development teams
collaborate to create seasonal product lines that meet consumers where they are and exceed their expectations.
Each brand follows a disciplined product creation path that begins with engaging key consumer segments to gather
insights, conducting in-depth market and trend analysis, and incorporating color and material research. While this
process is consistent across the portfolio, each brand applies it differently based on its unique consumer and design
philosophy. The HOKA brand emphasizes high‑performance innovation informed by biomechanics, athlete
partnerships, and iterative dynamic testing to refine cushioning systems, rocker geometries, and technical
components. The UGG brand focuses on premium materials, sensory comfort, and modern lifestyle aesthetics, with
development centered on tactile experience, durability, and seasonal versatility. The Teva brand product creation
focuses on offerings to reflect its modern outdoor versatility. These differentiated approaches ensure that each
brand delivers products that reflect its identity and the expectations of its target consumer.
Throughout the creation process, our teams conduct concept and design reviews, develop prototypes assembled by
our independent manufacturers, and complete multiple rounds of sampling for fit, comfort, and performance.
Depending on the brand and product application, this may include athlete testing or specialized laboratory testing
performed by external partners. Our internal research and development specialists collaborate with experts in
engineering, industrial design, chemistry, and materials science to advance new technologies, cushioning systems,
and material innovations that can be leveraged across brands. At every stage, we evaluate raw material availability
and cost, manufacturing capabilities and capacity, and target product pricing. Our multi‑brand portfolio enables us to
share learnings, scale innovations, and drive efficiencies across product lines, supporting both product excellence
and operational performance.
Marketing and Advertising
Our marketing and advertising efforts are designed to strengthen brand awareness, deepen consumer engagement,
and drive purchase intent across our portfolio of brands. We seek to connect with consumers through distinctive
brand storytelling, product innovation, consumer insights, and integrated marketing campaigns that communicate
the unique positioning of each brand and support long-term brand affinity.
We invest in a mix of digital advertising, social media, influencer and ambassador partnerships, experiential
activations, content, public relations, and traditional media to deliver relevant and impactful messaging. These
efforts are intended to attract new consumers, retain and engage existing consumers, and reinforce the authenticity,
relevance and desirability of our brands.
Our campaigns reflect the distinct positioning of each brand. The HOKA brand highlights its premium performance
heritage rooted in enhanced cushioning, inherent stability, and minimal weight, appealing to world champions,
tastemakers, and everyday athletes across running, trail, hiking, fitness, and lifestyle categories for its footwear,
apparel, and accessories. The UGG brand emphasizes its iconic status and year‑round premium footwear, apparel,
and accessories that resonate with a broad global audience, creating iconic products and experiences made for a
growing global demographic to feel comfort, softness, warmth, and confidence. The Teva brand emphasizes modern
outdoor versatility, responsible materials, and elevated design.
We continually evaluate the effectiveness of our marketing investments and adjust our strategies to align with
evolving consumer behaviors and marketplace trends.
Manufacturing and Supply Chain
The production of our finished goods is outsourced to independent manufacturers, the majority of which are in
Southeast Asia. During the year ended March 31, 2026, production of our finished goods was predominantly from
Vietnam and Indonesia, while less than 5% was from China or any other individual country. We continue to diversify
our independent manufacturers and the regions in which they operate.
Production by our independent manufacturers is performed in accordance with our detailed product specifications
and rigorous quality control and operating compliance standards. We maintain a buying office in Hong Kong, as well
as on-site supervisory offices in Vietnam, China, and Indonesia, which collectively serve as a strong link to our
independent manufacturers. We believe our substantial regional presence enhances our manufacturing processes
by providing predictability of material availability and ensuring adherence to quality control standards and final
design specifications.
We generally purchase products from independent manufacturers on the basis of individual purchase orders, rather
than maintaining long-term purchase commitments, which provides us greater flexibility to adapt to changing
consumer preferences, shifts in economic conditions, changes in international trade relations, and evolving
inventory management requirements.
The majority of the raw materials and components used in the production of our products by our independent
manufacturers are purchased from independent suppliers that we designate (designated suppliers), who work with
subcontractors that extract, process, or convert these raw materials.
Sheepskin used to manufacture a significant portion of our UGG brand products is sourced primarily from Australia
and processed by two tanneries in China. We currently enter into fixed purchasing contracts with designated
suppliers of sheepskin and sugarcane-derived ethylene-vinyl acetate (sugarcane-derived EVA) to manage price
volatility and ensure availability. Excluding sheepskin, UGGplush, UGGpure, sugarcane-derived EVA, and certain
branded components, we believe that substantially all raw materials and components used to manufacture our
products are generally available from multiple sources at competitive prices. While alternative materials may be
available for certain branded components, which may be limited, such alternatives would not include the same
trademarks. We believe current supplies are sufficient to meet our anticipated demand for the next 12 months.
Refer to the subsection titled “Contractual Obligations” under the section “Liquidity” within Part II, Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 8,
“Commitments and Contingencies,” of our consolidated financial statements in Part IV within this Annual Report for
further information on our purchase obligations.
We require our independent manufacturers and designated suppliers to adopt our Ethical Supply Chain Supplier
Code of Conduct (Supplier Code of Conduct), which requires them to comply with all local laws and regulations
governing human rights, working conditions, anti-corruption, restricted substances, and environmental compliance,
including animal welfare and conflict minerals, before we are willing to conduct business with them. Refer to the
section titled “Environmental, Social, and Governance” below for further information.
Inventory Management and Product Returns
We have an extended design and manufacturing process, which involves product designs, the purchase of raw and
other materials, inventory accumulation, the subsequent sale of finished product, and the collection of resulting
accounts receivable. This production cycle results in significant liquidity requirements and working capital
fluctuations throughout our fiscal year. Because the cycle typically involves long lead times, which requires us to
make manufacturing decisions several months in advance of anticipated customer demand, it is challenging for us
to accurately estimate and manage our inventory and working capital requirements.
We manage our inventory levels by considering existing orders, as well as forecasted sales and budgets by brand
for both the wholesale and DTC channels, taking into account customer delivery requirements. Our systems and
processes are designed to improve our product planning and forecasting, inventory control and supply chain
management capabilities, including our Company-owned e-commerce websites. In addition, added discipline
around SKU productivity, product purchasing decisions, lead time reduction, and selling excess inventory through
our liquidation channels, are key areas of focus that have enhanced inventory performance, including higher
inventory turnover, and partially mitigated product cost increases.
We encourage our customers to place a significant portion of orders through pre-season programs, which are
typically placed up to 12 months prior to shipment, while also allowing for in-season replenishment orders. These
pre-season programs enable us to better plan our production schedules, inventory levels, and shipping
requirements.
Our general practice, consistent with industry standards, is to offer customers in our wholesale channel the right to
return defective or improperly shipped merchandise, and to accept returns from our consumers in the DTC channel
between 30 to 90 days from the point of sale for cash or credit.
Refer to the section titled “Liquidity” within 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 liquidity.
Environmental, Social, and Governance
As a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, our
worldwide reach and impact is significant. We believe consumers are increasingly buying brands that deliver quality
products while striving for minimal environmental impact by employing sustainable business practices. Our
sustainability policies and strategies are informed by our ongoing efforts with multi-stakeholder initiatives, which
involve our stockholders, employees, suppliers, and customers, as well as other brands and non-governmental
organizations.
Through our holistic ESG program, we are committed to advancing our sustainable business initiatives. As a result
of our efforts, during fiscal year 2026, we were recognized as a Net Zero Leader by Forbes, by Wall Street Journal
as one of the Best-Managed Companies and by Newsweek as one of America’s Most Responsible Companies, one
of the World’s Greenest Companies and one of America’s Most Charitable Companies.
ESG Oversight. Our Corporate Responsibility, Sustainability & Governance Committee (Corporate Governance
Committee) is comprised of four independent members of our Board of Directors (Board) who oversee our ESG
strategy and have ultimate oversight over all sustainability initiatives, strategies, and programs, including those
related to climate change, human rights, community engagement, charitable giving, and belonging. The Corporate
Governance Committee and Board regularly receive updates on the status of our ESG program. In addition, the
Audit & Risk Management Committee (Audit Committee) of the Board periodically assesses risk management,
including climate-related risks and policies, to ensure a consistent corporate strategy. The Board considers whether
the ESG program adequately identifies material risks in a timely fashion, implements appropriate responsive risk
management strategies, and ensures that management transmits necessary information with respect to material
risks within the organization. Our Chief Administrative and Legal Officer (CALO) is responsible for the day-to-day
management of our ESG program. The program’s execution is driven by our leadership team and various cross-
functional teams including our ethical sourcing, facilities, warehouses and DCs, brands, innovation, materials, and
supply chain teams.
Our ESG program aligns our internal teams with our Sustainable Development Goals (SDGs), which we adopt to
guide our ESG strategy, and establishes policies to encourage our partners and suppliers to employ sustainable
business practices. We annually assess risks related to ESG issues as part of our overall enterprise risk
management approach. In addition, our internal audit team provides periodic targeted reviews of our ESG-related
policies and procedures to the Audit Committee.
Sustainable Development Goals. We work to establish SDGs that we believe are the most relevant to our
business, our operations, our stockholders, and the communities in which we operate. We are a member of the
United Nations Global Compact (UNGC), the world’s largest voluntary corporate sustainability initiative. This
membership requires an annual statement of progress, which is reflected in our Corporate Responsibility and
Sustainability Report (Creating Change Report). Our CALO identifies specific SDGs established by the UNGC,
which we adopt to guide our ESG strategy.
Our annual Creating Change Report for fiscal year 2026, which will be published in calendar year 2026, will provide
more information regarding our fiscal year 2026 ESG achievements with a focus on the SDGs. In addition, during
fiscal year 2026, we adopted a comprehensive Climate Transition Plan, reflecting our commitment to proactive
environmental stewardship.
We recognize that agility and continuous improvement are essential to advancing our global ESG strategy, enabling
us to respond effectively to evolving challenges and opportunities in sustainability. To that end, we have aligned the
reporting standards included in our Climate Transition Plan to the Transition Plan Taskforce and our Creating
Change Report with various frameworks including the Financial Stability Board’s Task Force on Climate-Related
Financial Disclosures (commonly referred to as TCFD), Global Reporting Initiative’s (commonly referred to as GRI)
Core Standards, and Sustainability Accounting Standards Board’s (commonly referred to as SASB), and now part of
the International Finance Reporting Standard (or IFRS) Foundation Consumer Goods Sector Apparel, Accessories
and Footwear Index.
Stakeholder Engagement. We highly value stakeholder input and have consistently demonstrated our commitment
to maintaining open and interactive dialogue on ESG matters with our stakeholders, including non-governmental
organizations, employees, stockholders, suppliers, industry groups, communities, and governments, to ensure their
views are actively considered in executing our ESG program. Our stakeholder outreach program is led by a cross-
functional team that includes members of our investor relations, compliance, sustainability, and legal teams.
Additionally, we actively engage with our employees to obtain valuable feedback and track progress, including
through regular employee engagement surveys.
Human Capital - Our People and Our Culture
Employees. As of March 31, 2026, we employed approximately 6,000 global employees, reflecting an increase of
9.1%, compared to March 31, 2025. This includes approximately 2,200 employees in our retail stores but excludes
temporary and seasonal employees.
Culture**.** Our key values, which guide our journey onward together to improve our business and create a better
world around us, and help hold us accountable to deliver on this purpose, are as follows:
Our values define our Company and serve as the driving force behind how we work together and with our
customers, consumers, partners, suppliers, and communities. We also have detailed policies that support our
commitment to ethical behavior and legal compliance across our Company. Through our open-door policy and
culture, employees are encouraged to approach their managers if they believe violations of standards or policies
have occurred and are able to make confidential and anonymous reports using a 24/7 online or telephone hotline
hosted by an independent third-party provider.
At Deckers, we believe our culture makes us unique. We regularly conduct employee surveys to understand our
employees’ experiences on a variety of topics focused on employee engagement. Our latest survey completed in
August 2025 had a participation rate of 92.3%. Of those employees who completed the survey, 88.4% noted they
were proud to work for Deckers.
We believe an inclusive workplace that promotes belonging for everyone brings together those with a unique set of
experiences, opinions, and thoughts on critical issues. In turn, these varied perspectives enhance our business and
drive better outcomes. Our people are at the center of everything we do. Their perspectives and passion for
innovation enable us to build brands and create products that people around the world love. We strive to create an
environment where employees can come as they are and are free to bring their authentic selves to work every day.
We publish workforce metrics in our annual Equal Employment Opportunity filing (EEO-1) which is publicly available
at deckers.com/responsibility/policies. The content of our website, including our annual EEO-1 filing, is not
incorporated by reference into this Annual Report or in any other report or document we file with the SEC.
Charitable Giving and Volunteering. Our charitable contributions, product donations, and employee volunteer
efforts are an essential part of our culture. We annually contribute to our local communities through monetary
donations, volunteer efforts, and in-kind donations. During fiscal year 2026, we donated over $5,400 to various non-
profit organizations around the globe, primarily to organizations focused on uplifting youth, community, belonging,
education, and the environment. We also continued our Art of Kindness events, where employees volunteer during
a week-long event in our local communities. Despite having only one event during fiscal year 2026, our employees
volunteered approximately 10,500 hours. Our strategic giving and community-engagement efforts continued to be
aligned with our SDGs.
Talent Development and Retentio****n. The ability to attract, develop, and retain employees is critical to our long-term
success. We focus on our employees’ growth, creating experiences that align with our strategic priorities and
promote inclusion, performance, connection, and opportunities for development. For example, we offer a week fully
dedicated to employee learning, connection, and development across the globe (Explore Week), and four global
leadership development programs for leaders at varying levels (Voyagers, Trailblazers, Navigator, and Ascent).
Further, our executive leadership team and Board commit substantial time to succession planning, evaluating the
bench strength of our leadership and supporting their career development while improving organizational
performance. We are proud to offer a wide range of programs intended to support global employee development
and retention.
We have demonstrated a history of investing in our workforce by offering competitive salaries and wages. We
provide tuition reimbursement for eligible US employees up to $5 thousand per calendar year. Further, to foster a
stronger sense of ownership and align the interests of management with stockholders, equity awards are granted to
a substantial proportion of our leadership team. In addition, employees across the US business have the opportunity
to purchase stock at a discounted price through our Employee Stock Purchase Plan. Further, we engage an
independent compensation consultant, FW Cook, which provides us with information to evaluate the effectiveness
of our executive compensation program, including competitive pay practices and trends in our industry, the design
and structure of our executive compensation program, and the formulation of and benchmarking against our peers
within our industry.
Employee Wellness**.** We strive to be one of the best places to work and recognize our employees are at different
stages of life and have individual needs. We offer affordable, innovative, comprehensive, and competitive benefits
package that range from health insurance, retirement plan, life insurance, disability, accident coverage, paid time
off, paid and unpaid leave including parental leave, mental health benefits, and other voluntary benefits such as
health savings accounts and our solar and electric car reimbursement program.
Employee Health and Safety. The health and safety of our employees is our highest priority. We have
comprehensive safety training programs to help ensure our employees know how to do their jobs safely and in
compliance with laws and regulations. We prioritize the safety of our facilities and work to ensure they are modern
and efficient.
Seasonality
A significant part of the UGG brand’s business has historically been seasonal, with the highest percentage of net
sales occurring in the third fiscal quarter, which has contributed to variation in results of operations from quarter to
quarter. However, as the HOKA brand’s net sales have increased as a percentage of our aggregate net sales, the
impacts of seasonality have been partially mitigated as HOKA brand sales are generally more evenly distributed
throughout the fiscal year, although quarterly results may fluctuate based on the timing of product launches. This
trend is expected to continue. In addition, we have further mitigated the impacts of seasonality by diversifying and
expanding our year-round product offerings across our brands.
Refer to Part I, Item 1A, “Risk Factors,” and Part II, Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” within this Annual Report for further discussion of the impacts of seasonality.
Competition
The industry and markets in which we operate are highly competitive. Our competitors include fashion, casual,
lifestyle, and athletic footwear companies, branded apparel companies, and retailers with their own private labels.
Although the industry is fragmented, some of our competitors are larger and have substantially greater resources,
and several sell products that compete directly with our products. In particular, we face competition from domestic
and international competitors selling products designed to compete directly or indirectly with products similar to
those of our HOKA brand and UGG brand. In addition, access to offshore manufacturing and the growth of e-
commerce have made it easier for new companies to enter the markets in which we compete, further increasing
competition in the footwear, apparel, and accessories industry.
We believe our ability to successfully compete depends on numerous factors, including our ability to predict, assess,
and respond quickly to changing consumer tastes and preferences, produce exceptional and innovative products
that meet expectations for product craft, quality and technical performance, maintain and enhance the image and
strength of our brands, price our products competitively, and manage the impacts of supply chain disruptions. In
addition, we believe 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. Refer to Part I, Item 1A, “Risk Factors,” within this
Annual Report for further discussion of the potential impact of competition on our business.
Trademarks and Patents
We utilize trademarks for virtually all our products, and we believe having distinctive marks that are readily
identifiable is an important factor in establishing and maintaining a market for our products, promoting our brands,
and distinguishing our products from the products of others. We currently hold trademark registrations for “HOKA,”
“UGG,” and “Teva,” and other marks in the US, and for certain of the marks in many other countries, including
Canada, China, the United Kingdom (UK), various countries in the European Union (EU), Japan, and Korea. As of
March 31, 2026, we hold 201 designs and inventions with corresponding design or utility patent registrations, plus
29 designs and inventions which are currently pending registration. These patents expire at various times. Current
figures reflect natural expiration and strategic portfolio rationalization undertaken during the current period. We
regard our proprietary rights as valuable assets and vigorously protect such rights against infringement by third
parties.
Government Regulation
We are subject to a wide range of laws and regulations, including US federal, state, and local laws; the laws of
jurisdictions where we operate or plan to operate; and the laws of jurisdictions from which we source our products.
Based on the information and circumstances known to us at this time, compliance with such applicable laws and
regulations is not expected to have any material effect on our business, results of operations, financial condition, or
competitive position.
Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements
and information statements (and any amendments or supplements to the foregoing) filed with or furnished to the
SEC pursuant to the Exchange Act are available free of charge on our website at ir.deckers.com. Such documents
and information are available as soon as reasonably practicable after they are filed with or furnished to the SEC. We
also make certain corporate governance and responsibility documents available through our website at
ir.deckers.com/governance, deckers.com/responsibility, and deckers.com/responsibility/policies, respectively,
including Ethical Supply Chain Supplier Code of Conduct, Audit & Risk Management Committee Charter, Talent &
Compensation Committee Charter, Corporate Responsibility, Sustainability, & Governance Committee Charter,
Code of Ethics, Creating Change Report, Climate Transition Plan, Accounting and Finance Code of Ethics, EEO-1
Report, and Corporate Governance Guidelines. The information contained on or accessed through our website
does not constitute part of this Annual Report, and references to our website address within this Annual Report are
inactive textual references only.
| ITEM 1A. RISK FACTORS |
Our short and long*-term success is subject to numerous risks and uncertainties, many of which involve factors that*
are difficult to predict or beyond our control. As a result, investing in our common stock involves substantial risk.
Before deciding to 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 Report*, as well as the other information we file with the* SEC*. If any of*
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 decline, and stockholders may lose all or
part of their investment. Furthermore, additional risks and uncertainties of which we are currently unaware, or which
we currently consider to be immaterial, could have a material adverse effect on our business.
Certain statements made in this section constitute “forward-looking statements,” which are subject to numerous
risks and uncertainties including those described in this section. Refer to the section entitled “Cautionary Note
Regarding Forward-Looking Statements” within this Annual Report for further information.
Risks Related to Our Business and Industry
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 and spending patterns, we
could lose sales, our relationships with customers could be harmed, and our brand loyalty could be
diminished.
The footwear, apparel, and accessories industry is subject to rapid changes in consumer preferences and fashion
tastes, which makes it difficult to anticipate demand for our products and forecast our results of operations. Our
success depends, in part, on brand loyalty, and there can be no assurance that consumers will continue to prefer
our brands. Consumer demand for our products relies on the continued strength of our brands, which in turn
depends on our ability to anticipate, understand, and respond promptly to evolving preferences, fashion trends, and
consumer spending patterns with appealing merchandise and effective brand-building initiatives. As our brands and
product offerings evolve, our products must appeal to a broader and more diverse range of consumers whose
preferences cannot be predicted with certainty. New products may not achieve market acceptance, including due to
pricing that consumers are unwilling to bear, or our brands may fall out of favor, which could impede our ability to
maintain or grow sales, adversely affect brand perception, and negatively impact our results of operations. If we do
not effectively respond to these changes, we could experience reduced sales and pressure on our gross profit as a
percentage of net sales (gross margin), including as a result of reduced pricing power and increased reliance on
promotional activity.
The value of our brands is also driven by evolving consumer perceptions, including shifting ethical, political, or
social standards. Concerns related to product pricing, quality, design, technical performance, components or
materials (including sustainability), customer service, or the effectiveness of our brand loyalty initiatives, including
loyalty programs, could result in negative perceptions, diminished consumer engagement, and a loss of brand
loyalty or value. These risks may be amplified by adverse publicity concerning us or our products, brands, marketing
campaigns, partners, or endorsers, particularly where social media and digital marketing channels accelerate the
dissemination, amplification, or persistence of negative claims, regardless of their accuracy, which could harm our
reputation and sales and have a material adverse effect on our business. In addition, actions or statements by
third‑party partners, collaborators, or organizations with which we are associated, including in connection with social
or political issues, could lead to consumer backlash, operational disruptions, or reputational harm. If our brand-
related initiatives, including loyalty programs, fail to drive sustained consumer engagement or incremental demand,
or involve increased costs or operational complexity that negatively affect customer perceptions, we could
experience reduced sales and pressure on our gross margin, adversely affecting our results of operations.
Changes to economic conditions may adversely affect our financial condition and results of operations.
Volatile economic conditions and changes in the market have affected, and may continue to affect, consumer
confidence and discretionary spending. A significant portion of our HOKA brand and UGG brand products are
premium, discretionary purchases, and demand for these products is sensitive to macroeconomic factors, including
inflation, wages and employment, consumer debt, declines in net worth driven by market conditions, interest rates,
tariffs, and public health issues such as a pandemic. During periods of economic uncertainty, consumers may
reduce discretionary purchases, trade down to lower-priced alternatives, or delay buying decisions, which could
require us to increase promotional activity or reduce prices, adversely affecting our sales and profitability.
We sell a significant portion of our products through higher-end specialty and department store retailers and online
marketplaces. These customers may be adversely affected by economic conditions, geopolitical instability, foreign
currency fluctuations, reduced demand for premium products, limited access to credit, and increased competition.
Financial difficulties among our customers could negatively affect our credit exposure, reserves, and relationships
with key customers, and could reduce orders or increase the risk of delayed payments or defaults.
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 could harm our reputation and
have a material adverse effect on our financial condition and results of operations.
The footwear, apparel, and accessories industry is highly competitive and subject to rapidly changing consumer
preferences. If we are unable to compete effectively, we could experience a decline in market share, reduced
demand for our products, pricing pressure, or damage to our reputation, which could have a material adverse effect
on our financial condition and results of operations. Competition in our markets is influenced by factors such as
brand recognition, product innovation and performance, pricing, speed‑to‑market, marketing effectiveness, use of
data analytics and AI, access to manufacturing capacity, and control of distribution channels.
Our competitors include both established global brands and newer market entrants, including competitors whose
broader product assortments and higher sales volumes may be more important to certain customers. We believe
that the growth and visibility of our HOKA brand and UGG brand have attracted competitors specifically targeting
the categories in which we operate. Barriers to entry have been reduced by access to offshore manufacturing and
evolving technologies, allowing competitors to develop and scale products more quickly and at lower cost.
Some of our competitors also have substantially greater financial, technological, manufacturing, marketing, and
distribution resources than we do, as well as broader brand awareness, which may enable them to compete more
effectively on price, accelerate product development, leverage advanced data analytics or AI, adapt to technological
changes, and withstand periods of excess inventory or reduced consumer demand. As a result, we face ongoing
competition for customer relationships and distribution channels, including competition for preferred access to key
retail accounts, shelf space, and digital visibility.
Consistent with these dynamics, we have experienced, and expect to continue to experience, pricing and
promotional pressure across our brands and channels, particularly during periods of elevated industry inventory
levels or inflationary pressure. Increased discounting or promotional activity by competitors may require us to
reduce prices or increase promotions to remain competitive, negatively affecting our gross margin and results of
operations, and could cause consumers to shift purchases to competing products. In addition, many of our key
wholesale customers face intense competitive pressures, and deterioration in their financial condition could
adversely affect their ability to do business with us.
I****f we are unsuccessful at managing inventory planning, forecasting, and global supply chain execution, we
may be unable to accurately forecast our inventory and working capital requirements, which may have a
material adverse effect on our financial condition and results of operations.
Like other companies in our industry, we have an extended design and manufacturing process, which involves
product design, material purchases, inventory accumulation and the subsequent sale of the inventories, and
accounts receivable collection. This cycle requires us to incur significant expenses relating to the design,
manufacturing, and marketing of our products in advance of the realization of sales, and results in significant
liquidity requirements and working capital fluctuations throughout our fiscal year, which may be amplified by supplier
performance issues and broader supply chain constraints. As a result, these liquidity and working capital demands
may limit our ability to adjust inventory levels and respond efficiently to changes in consumer demand, particularly
during periods of macroeconomic uncertainty. Our forecasting processes rely on assumptions, data, and systems
that may not accurately reflect future consumer or customer demand, or supply chain conditions, including
manufacturing capacity, raw material availability, and logistics constraints. Further, variability and constraints within
our global supply chain may drive higher inventory procurement positions that could negatively affect our working
capital and gross margin as a result of selling excess quantities through close out channels. As a result, our
inventory levels, working capital requirements, and results of operations may be adversely affected by a number of
factors, including:
- constraints or inefficiencies in transportation capacity, delivery timing, inventory flow, or production
scheduling, which may contribute to uneven inventory receipts, elevated inventory levels, or delays
in fulfilling demand;
- unfavorable or unexpected weather patterns that affect consumer demand for seasonally-driven
products, particularly within our UGG brand, which may be intensified by the effects of climate
change;
- changes in consumer preferences, discretionary spending patterns, prevailing fashion trends, and
pricing pressure that may require increased promotional activity to sell inventory;
- macroeconomic conditions, including inflation, interest rate volatility, or global economic uncertainty,
that may affect consumer purchasing behavior, supplier capacity, or logistics costs; and
- market acceptance of our products and competing offerings, and variability in product availability.
The evolution and expansion of our brands and product offerings have made our inventory management activities
more challenging. For example, if we overestimate demand for any products or styles, we may be forced to increase
promotional activity or adjust pricing to sell excess inventories, which would result in lower sales and reduced gross
margin, and we may not be able to recover our investment in the development of new styles and product lines. On
the other hand, if we underestimate demand, or if our independent manufacturing facilities are unable to supply
products in sufficient quantities or on a timely basis, we may experience inventory shortages that may prevent us
from fulfilling customer orders or result in delays in shipments to customers. If that occurred, we could lose sales,
our relationships with customers could be harmed, and our brand loyalty could be diminished. In either event, these
factors could have a material adverse effect on our results of operations.
We rely upon a number of warehouse and distribution facilities to operate our business, and any damage to
one of these facilities, or any disruptions caused by incorporating new facilities into our operations, could
have a material adverse effect on our business.
We rely upon a broad network of warehouses and distribution facilities to store, sort, package and distribute our
products. Our distribution operations depend on the effective functioning of global transportation and logistics
networks, including ports, carriers, and third-party service providers. Disruptions to these networks, including labor
shortages or disputes, capacity constraints, fuel and freight cost volatility, routing inefficiencies, or infrastructure
limitations could increase delivery times, delay inbound or outbound shipments, strain distribution capacity, increase
fulfillment and other costs, and impair our ability to efficiently receive, store, and distribute products.
In the US, we distribute products primarily through self-managed warehouses and DCs in Moreno Valley, California,
and in Mooresville, Indiana, which feature a complex warehouse management system that enables us to efficiently
pack products for direct shipment to our customers and consumers. We could face a significant disruption in our
domestic warehouse and DC operations if our warehouse management system does not perform as anticipated or
ceases to function for an extended period of time, which could occur due to damage to the facility, failure of software
or equipment, cyber-security incidents, power outages or similar problems. Any significant disruption to our
domestic warehouse or DC operations could adversely affect our ability to fulfill customer orders. In addition,
increased reliance on automation, data analytics, and system integrations within our warehouse operations,
including to address outdated or no longer supported software, systems and equipment, may increase the risk of
system failures, data inaccuracies, or operational disruptions if such systems are not implemented or maintained
effectively, which could similarly have a material adverse effect on our business.
Internationally, we distribute our products through warehouses and DCs managed by 3PLs in certain international
locations. For example, we are currently transitioning certain international 3PL operations to a new partner. While
we conduct diligence prior to entering into service agreements with 3PLs, we depend on these providers to operate
their warehouses and DCs in a manner that meets our business and performance requirements, including with
respect to data security and compliance with applicable data protection and privacy laws, and the provision of
quality services on a timely basis at the prices we expect. If our 3PLs fail to manage these responsibilities, including
during or following an operational transition, system cutover, or data migration, or if their operations are disrupted as
a result of factors outside of their control, such as sanctions that could in the future be imposed by the US
government, or broader disruptions or inefficiencies in global logistics and transportation networks, our distribution
operations could face delays, reduced reliability, or increased costs. The loss of or disruption to the operations of
any one or more of these facilities could materially and adversely affect our sales, business performance, and
results of operations. Although we believe we possess adequate insurance to cover the potential effect of a
disruption to the operations of these facilities, such insurance may not be sufficient to cover all of our potential
losses and may not continue to be available to us on acceptable terms, or at all.
We rely upon independent manufacturers for all of our production needs, and the failure of these
manufacturers to manage these responsibilities would prevent us from filling customer orders, which
would result in loss of sales and harm our relationships with customers.
We rely upon independent manufacturers and their respective material suppliers for all of our production needs, the
majority of which are located in Southeast Asia, predominantly in Vietnam and Indonesia, which exposes us to
geographic concentration risk, including risks arising from regional economic, political, environmental, or operational
conditions, and we do not have direct control over these manufacturers or their suppliers. We expect our
independent manufacturers to finance the production of goods ordered, maintain manufacturing capacity, comply
with our policies, and store finished goods in a safe location pending shipment. The ability of our independent
manufacturers to meet these expectations may be adversely affected by liquidity constraints or limitations in their
access to third-party financing arrangements supporting their supply chains or working capital needs, which could
reduce available production capacity, delay shipments, or result in lost sales. Disruptions arising from these
geographic concentrations, our limited control over independent manufacturers and their suppliers, or our
manufacturers’ inability to meet these expectations could adversely affect our ability to manufacture products or
fulfill customer orders, which could negatively affect our results of operations.
There can be no assurance of a long-term, uninterrupted supply of products from our independent manufacturers.
Our dependence on a limited number of key manufacturing partners may increase our exposure to disruptions,
pricing changes, or capacity constraints. While we have long-standing relationships with most of these
manufacturers, they could terminate our engagement, seek to increase their prices, or extract other concessions
from us, and we may not be able to timely engage a suitable alternative. If we are required to find alternative
manufacturers, we could experience manufacturing delays, increased manufacturing costs, and substantial
disruption to our business, any of which could negatively affect our results of operations.
Interruptions in the supply of our products can also result from adverse events that impair our manufacturers’
operations. For example, we keep proprietary materials necessary to produce our products, such as shoe molds
and other materials, in the custody of our independent manufacturers. If these independent manufacturers were to
lose or damage these proprietary materials, we cannot be assured that the manufacturers would have adequate
insurance to cover such loss or damage, and, in any event, the replacement of such materials would likely result in
significant delays in the production of our products, which could result in a loss of sales and earnings.
Our financial success is influenced by the success of our customers, and the loss of a key customer could
have a material adverse effect on our results of operations.
Much of our financial success is related to the ability of our customers in the wholesale channel, including
international distributors and retail partners, to effectively market and sell our brands to consumers. These
relationships are typically governed by contractual arrangements. If a customer fails to meet contractual obligations,
satisfy our expectations and standards, or experiences operational or financial difficulties, it may be challenging and
time-consuming to identify and transition to an acceptable alternative. In addition, disputes under these
arrangements could result in litigation, arbitration, settlement costs, or operational disruptions.
We may also be adversely affected by our customers’ actions or omissions, including failures to comply with
applicable laws, regulatory requirements, labor or employment standards, or our policies. Such conduct could harm
our reputation, subject us to regulatory scrutiny or liability, disrupt our relationships with other customers and
business partners, and adversely affect demand for our products. Transitioning away from an existing customer,
whether due to performance or compliance concerns, may result in lost sales, significant transition costs, and
operational disruption as we identify, onboard, and integrate replacement distribution or retail partners, and there
can be no assurance that a replacement will generate comparable or improved results.
We face the risk that key customers may not increase their business with us as anticipated, may significantly reduce
purchases, or may terminate their relationships with us. However, no single customer accounted for 10.0% or more
of our total net sales during fiscal year 2026. The failure to increase sales to these customers could negatively affect
our growth prospects, and any reduction or loss of their business could materially and adversely affect our net sales
and results of operations, particularly if we are unable to offset such declines through our DTC channel. As of March
31, 2026, one customer represents 18.5% of trade accounts receivable, net, which is generally unsecured and
exposes us to collection risk that could affect our results of operations and liquidity.
We rely on customer purchase orders and delivery schedules for forecasting sales and results of operations. If
customers postpone, cancel, reduce, or discontinue orders, we may fail to meet our forecasts. These risks may be
exacerbated by structural changes in the retail industry including shifts in technology, consumer and wholesale
partner purchasing behavior, economic conditions, and a shrinking retail footprint. The loss of a key customer, or a
significant reduction in orders, could result in lower sales, excess inventory and related write-downs, and materially
and adversely affect our financial condition or results of operations. In addition, a key customer may liquidate
excess inventory through discounted channels, including unauthorized sellers, which could negatively impact brand
perception and divert demand from our authorized distribution channels.
We depend on qualified talent and, if we are unable to retain or hire executive officers, key employees, and
skilled talent, we may not be able to achieve our strategic objectives, which could adversely affect our
results of operations.
To execute our growth plan, we must continue to attract and retain highly qualified talent, including executive
officers and key employees. In addition, to develop new products and successfully operate and grow our key
business processes, we rely on employees with specialized expertise across design, marketing, merchandising,
sourcing, technology, operations, and support functions, including talent in areas such as data analytics, digital
commerce, and supply chain management. Competition for executive officers, key employees, and skilled talent is
intense within our industry, and we continue to experience upward pressure on compensation costs. Changes to our
office environment or work models may not meet employees’ expectations, and many of the companies with which
we compete for talent have greater name recognition and financial resources than we have. Continued strength in
our results may also increase the risk that our employees are targeted by competitors. If our overall employment
proposition, including compensation, benefits, culture, work model, or career development opportunities, is not
perceived as favorable relative to other employers, our ability to attract, hire, and retain qualified personnel could be
adversely affected. We are committed to offering competitive compensation and benefits, which may increase our
selling, general, and administrative (SG&A) expenses. Further, our domestic headquarters are located in Goleta,
California, which may further limit our ability to attract qualified professionals.
If we hire employees from competitors, their former employers may assert that we or these employees have
breached legal obligations, resulting in a diversion of management time and resources. Prospective and existing
employees also often consider the value of stock-based compensation when deciding whether to accept or remain
in a position. Accordingly, volatility in our stock price may adversely affect our ability to recruit and retain qualified
talent. Any inability to attract, retain, or motivate executive officers, key employees, or other skilled personnel could
adversely affect our ability to achieve our long-term strategic objectives, harm our results of operations, and impair
our ability to compete effectively.
The continued service of our executive officers and key employees is particularly important, and the departure of
such talent may disrupt our business or result in the depletion of significant institutional knowledge. Our executive
officers and key employees are employed on an at-will basis, which means that they can terminate their
employment with us at any time. The loss of one or more of our executive officers or other key employees or
significant turnover in our senior management, and the often-extensive process of identifying and hiring other talent
to fill those key positions, could have a material adverse effect on our results of operations.
S****heepskin and other raw materials are used to manufacture a significant portion of our products, and
disruptions in the availability, pricing, or quality standards of these inputs could have a material adverse
effect on our business.
We purchase raw materials and components that are subject to supplier and geographic concentration, most
significantly sheepskin, which is used in a substantial portion of our UGG brand products. Sheepskin is in high
demand and sourced primarily from Australia and processed largely by two tanneries in China capable of meeting
our quality, volume, and animal welfare standards. This geographic and supplier concentration exposes us to supply
disruption risk. We also rely on designated suppliers for certain other specialized raw materials, including
sugarcane-derived EVA, used in certain components of our products.
If suppliers of sheepskin, including tanneries involved in its processing, sugarcane-derived EVA, or other materials
are unable to meet our quality, sustainability, or volume requirements, or if their operations are disrupted or cease,
we may not be able to obtain adequate quantities of these materials or suitable substitutes on acceptable terms, or
at all. Although alternative materials may be available for certain branded components, which may be limited, such
alternatives would not include the same trademarks. As a result, supply disruptions could require product redesign
or delayed production, increase costs, reduce inventory availability, result in loss of sales or increased returns, and
harm our reputation.
In addition, the raw materials used in the manufacturing of our products are subject to commodity price volatility,
most significantly sheepskin. Although sheepskin pricing has been relatively stable in recent years, prices and
availability may fluctuate due to changes in supply and demand, weather conditions, energy and logistics costs,
labor disruptions, regulatory developments, disease incidence, the effects of climate change, and broader market
dynamics. While we use contracts and other pricing arrangements to mitigate price volatility, prolonged increases in
sheepskin costs or other key inputs could increase manufacturing expenses and negatively impact our gross
margin, and we may be unable to offset such increases through pricing actions or changes in product mix.
Evolving fashion trends, social expectations, and ethical considerations, including increased opposition to the use of
animal-derived materials, as well as existing or potential legislation restricting the sale of such products in certain
jurisdictions, could also reduce consumer demand for sheepskin products or limit our ability to sell them in key
markets. Because sheepskin is integral to the UGG brand, adverse changes in consumer preferences, regulatory
requirements, or sourcing standards applicable to sheepskin could have a material adverse effect on our business,
financial condition, and results of operations.
We rely on technical innovation to compete in the market for our products, and if we fail to innovate
effectively or in a timely manner, our competitive position and results of operations could be adversely
affected.
Our success relies in part on our continued innovation in both the materials we use and the design of our footwear.
In particular, our HOKA brand maintains its competitiveness through continuous product innovation and timely
introduction of new features and technologies that align with current and emerging consumer expectations,
including our ability to bring such innovations to market ahead of or in line with competitors. Also, we continue to
invest in research and development to increasingly incorporate recycled, renewable, regenerated, and certified/
natural materials (preferred materials) in our products as part of our sustainability efforts. We also increasingly use
preferred synthetics, regenerated or synthetic cellulosic fibers, and plant fibers. Although we continue to refine our
materials and develop new properties for specific applications, if we fail to introduce technical innovation in our
products in a timely or commercially successful manner, or experience issues with the quality of our products or
materials, consumer demand for our products could decline and we may experience reputational damage. In
addition, if our competitors introduce superior or more cost-effective innovations, we may lose market share or be
required to increase promotional activity to remain competitive. Further, as our brands transition to suppliers with
preferred materials, we may be subject to increased costs or supply constraints, which could reduce our sales and
profitability and have a material adverse effect on our financial condition and results of operations. Our investments
in research and development and new materials may not result in commercially successful products or may not
generate the expected return on investment, which could adversely affect our results of operations.
We may not succeed in implementing our growth strategies, in which case we may not be able to take
advantage of certain market opportunities and our competitive position and results of operations could be
adversely affected.
As part of our overall growth strategy, we seek to enhance the positioning of our brands, diversify our product
offerings, extend our brands into complementary product categories and markets, expand geographically, and
optimize our retail presence both in stores and online. Our future growth depends in part on our expansion efforts
outside of the United States (international growth strategy). For example, we have opened UGG brand and HOKA
brand retail locations in international markets through Company-owned stores and through third-party retailers. If we
are unable to identify new retail locations with consumer traffic sufficient to support a profitable sales level or elevate
our brand market positioning, our retail growth may be limited, and we may be unable to avoid losses or negative
cash flows from these locations. In addition, investments in new or expanded retail locations may not generate
expected returns and could result in impairments or reduced profitability. Furthermore, our future growth depends in
part on our ability to effectively manage the profitability of our existing retail locations. For example, our failure to
successfully identify and close underperforming stores in a timely manner could have a number of material adverse
effects, such as impairments and a negative impact on our financial condition and results of operations.
We also license the right to operate our brand retail stores to third parties through our partner retail program. All of
the partner retail stores are operated in international markets. We provide training to support these stores and set
and monitor operational standards. However, the quality of these store operations may decline due to the failure of
these third parties to operate the stores in a manner consistent with our standards or our failure to adequately
monitor these third parties, which could result in reduced sales and harm our brand image.
As part of our international growth strategy, we may transition certain brands in certain geographies from a third-
party distribution model to a direct distribution model or vice versa. Failure to effectively implement our growth
strategies, including transitioning between distribution models or developing our business in international markets,
or disappointing growth within existing markets, could negatively affect our sales growth rate. In addition, taking
steps to implement our growth strategies could have a number of negative effects, including increasing our working
capital needs, causing us to incur costs without corresponding benefits, and diverting management time and
resources away from our existing business. Our growth initiatives may not be successful, may take longer than
anticipated to achieve expected results, or may expose us to operational complexities that we are unable to
effectively manage.
Increasing expectations from investors, regulators, and other key stakeholders with respect to our ESG
practices may impose additional costs on us or expose us to additional risks.
Investors, advocacy groups, customers, consumers, employees, regulators, and other stakeholders are increasingly
scrutinizing companies’ ESG practices and disclosures, including the social and environmental impacts of their
operations. We periodically communicate ESG initiatives, including through our annual Creating Change Report and
may face heightened scrutiny, regulatory inquiries, or litigation regarding the accuracy, completeness, or
consistency of such disclosures, including allegations of “greenwashing.” Our ESG disclosures address a broad
range of topics, including human rights, governance, environmental compliance, sustainability, human capital
management, supply chain practices, and diversity and inclusion.
Despite our efforts, our ESG practices, the pace at which we implement related initiatives, or our disclosures may
not meet evolving stakeholder expectations. Perceptions regarding our ESG priorities, whether viewed as over- or
under-emphasized, could adversely affect customer demand, employee recruitment and retention, or investor
relations, or lead to reputational harm, regulatory action, or litigation. In addition, developing ESG goals, metrics,
and data collection processes is complex, costly, and subject to evolving standards, internal controls, and regulatory
regimes, including ESG-related disclosure requirements of the SEC, European, and other regulators, such as those
in California. Failure, or perceived failure, to achieve or accurately report progress against our ESG initiatives or
adapt to changing regulatory requirements could increase compliance costs, damage our reputation, and negatively
affect our business and results of operations.
C****limate change, natural disasters, public health issues, or other events beyond our control, as well as
related regulations, have adversely affected, and could in the future adversely affect, our business.
Natural disasters and other catastrophic events, including those associated with climate change and extreme
weather conditions, may disrupt our operations, supply chain, international markets, and the global economy. Our
business is subject to interruption from events such as extreme weather, power shortages, pandemics, war, political
instability, terrorism, and failures of infrastructure or communications systems. Although we maintain disaster and
business continuity plans designed to support critical operations and information systems, these events could
disrupt our operations, impair employee availability, damage facilities, interrupt supply chains, or compromise the
integrity of our IT systems, which could materially increase costs, reduce sales, or otherwise adversely affect our
business continuity.
In addition, climate-related regulatory developments and evolving standards may require us to incur significant
capital expenditures or other costs to enhance the resiliency of our infrastructure, comply with legal requirements, or
implement mitigation measures. We may also experience increased costs for energy, transportation, raw materials,
production, and insurance, including higher premiums or deductibles. Our insurance coverage may not be sufficient
to cover all losses or may not remain available on acceptable terms. Further, severe weather events, health crises,
or other widespread disruptions may reduce consumer demand, impair the ability of our manufacturers, third-party
distributors, or other partners to operate effectively, or disrupt the supply of key raw materials, any of which could
adversely affect our results of operations.
We face risks associated with strategic acquisitions and divestitures, and our failure to successfully
integrate any acquired business could have a material adverse effect on our results of operations and
financial condition.
As part of our overall strategy, we may periodically consider strategic acquisitions to expand our brands into
complementary product categories and markets, or to acquire new brands, technologies, intellectual property, or
other assets. Our ability to do so depends on our ability to identify and successfully pursue suitable acquisition
opportunities. Such acquisitions involve numerous risks, challenges, and uncertainties, including the potential to:
-
expose us to risks inherent in entering into new markets or geographic regions;
-
lose significant customers or key personnel of the acquired business;
-
encounter difficulties integrating and managing acquired assets;
-
encounter difficulties marketing to new consumers or managing geographically dispersed
operations;
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divert management’s time and attention away from other aspects of our business operations; and
-
incur costs relating to potential acquisitions that we fail to consummate, which we may not recover.
Additionally, we may not be able to successfully integrate acquired businesses into our operations or achieve the
expected benefits of such acquisitions. We may also face cannibalization of existing product sales by newly
acquired products unless we successfully differentiate target consumers and increase our overall market share.
Further, we may be required to issue equity securities to finance an acquisition, which would be dilutive to our
stockholders, and equity securities may have rights or preferences senior to those of our existing stockholders. If we
incur indebtedness to finance an acquisition, it will result in debt service costs, and we may be subject to covenants
restricting our operations or liens encumbering our assets.
As part of our overall strategy to allocate resources that best align with our long-term objectives, we may seek to
sell one or more brands. For example, during fiscal year 2026, we completed the phase out of the standalone
operations of the Koolaburra brand and AHNU brand. Further, during fiscal year 2025, we completed the sale of the
Sanuk brand. These transactions involve financial and operational risks, including diverting management and
employee time and attention from other aspects of our business, separating personnel and financial and other
systems, impairments, and adversely affecting relationships with existing suppliers and customers.
The process of completing any acquisitions or divestitures may be time-consuming, involve significant costs and
expenses, and the expected benefits of such acquisitions or divestitures may not be realized. Our business, results
of operations, and financial condition could be negatively impacted. In addition, we may overestimate the value of
acquisition targets or fail to realize anticipated synergies, which could result in impairments or reduced returns on
our investments.
Risks Related to Our Global Business Strategy and Operations, and
International Commerce
Our reliance on independent manufacturers and suppliers located primarily in Southeast Asia exposes us
to risks associated with unpredictable and evolving international trade policies, regulatory environments,
and geopolitical conditions that could materially increase our costs, disrupt our global supply chain, and
adversely affect our results of operations.
The production of our finished goods is outsourced to independent manufacturers, the majority of which are in
Southeast Asia. During fiscal year 2026, production of our finished goods was predominantly from Vietnam and
Indonesia, while less than 5% was from China or any other individual country. As a result, we are exposed to
geographic concentration risk arising from regional and global economic conditions, changes in diplomatic and trade
relationships (including the imposition of new or increased tariffs), political and social instability, armed conflict,
disease outbreaks, natural disasters, and other regulatory, environmental, and geopolitical developments.
The majority of raw materials and components used by our independent manufacturers are sourced from
designated suppliers, and tariffs, duties, or other trade restrictions may be imposed, modified, or expanded with
limited notice. These measures could require us or our independent manufacturers to seek alternative sourcing
options that may not be available in sufficient quantities, at acceptable quality levels, or in a timely manner. Evolving
international trade dynamics could materially increase our cost of goods sold, disrupt logistics or inventory flows,
adversely affect product pricing and demand, and reduce our gross margin. Customs authorities may also challenge
our tariff classifications or treatment of certain products, resulting in additional costs or penalties. In addition, certain
tariffs imposed under the International Emergency Economic Powers Act have been invalidated by a recent US
Supreme Court decision, and additional tariffs may be invalidated, modified, or refunded in the future. As a result,
we may face uncertainty regarding the treatment of tariff-related costs, including the potential recovery or refund of
tariff amounts previously paid or partially reflected in selective pricing actions or cost-sharing arrangements. These
and other judicial, regulatory, or trade policy developments could increase compliance complexity, create cost
volatility, impair our ability to plan sourcing, pricing, and inventory strategies, and result in disputes, claims,
unrecoverable costs, and reputational harm, regardless of the ultimate outcome.
In addition to trade-related risks, our international operations and independent manufacturers are subject to
regulatory, operational, and reputational risks. Although we require compliance with environmental, labor, ethical,
health, safety, and other business standards and conduct periodic audits, we do not directly control the practices of
our independent manufacturers or suppliers. As we continue to diversify within Southeast Asia, monitoring
compliance across a broader supplier base may be more complex. Any noncompliance could result in product
recalls, regulatory penalties, seizure or forfeiture of goods, reputational harm, termination of supplier relationships,
violations of US or international trade laws, increased costs, supply chain disruption, or the loss of import privileges.
Our international operations and independent manufacturers are also exposed to additional risks, including:
- logistics, infrastructure, transportation, and distribution constraints, including raw material
availability, and cost volatility related to fuel costs, labor disputes, inflation, port congestion, or
geopolitical or climate‑related disruptions;
-
restrictions on fund repatriation or foreign currency volatility;
-
local labor practices, workforce availability, or holidays;
-
counterfeit, unauthorized or misclassified materials, or product integrity or compliance risks;
-
health-related disruptions, including disease outbreaks; and
-
adverse consumer perceptions of goods sourced from certain countries, including as a result of
geopolitical or social conditions.
Although we pursue mitigation strategies, including selective pricing actions and cost-sharing arrangements with
independent manufacturers, these measures may not fully offset trade-related and regulatory cost increases. If such
strategies are ineffective, it could materially and adversely affect our business, financial condition, and results of
operations.
Our sales in international markets are subject to a variety of legal, regulatory, political, cultural, and
economic risks that may adversely affect our results of operations.
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our
existing international markets is subject to risks associated with international operations that could adversely affect
our results of operations. These risks include:
- foreign currency exchange rate fluctuations between the US dollar and primarily the currencies of
Europe, Asia, Canada, and Latin America affect the prices at which products are sold to
international consumers and our reported results;
-
limitations on our ability to move currency out of international markets or repatriate earnings;
-
burdens of complying with a variety of international laws and regulations, which may change
unexpectedly, and the interpretation and application of such laws and regulations;
-
legal costs related to defending allegations of non-compliance with international laws;
-
inability to import products into a foreign country;
-
difficulties associated with promoting and marketing products in unfamiliar markets and cultures;
-
political or economic uncertainty or instability, which may disrupt the global economy and reduce
consumer spending, which could have a material adverse effect on our business, particularly for our
HOKA and UGG brands;
-
anti-American sentiment in international markets in which we operate;
-
changes in diplomatic and trade relationships between the US and other countries;
-
general economic fluctuations in international markets; and
-
challenges associated with local laws, regulations, and business practices, including employment,
tax, and data privacy requirements.
Global geopolitical developments, including armed conflicts, escalating global tensions, and related disruptions,
have resulted in, and could continue to result in, instability and heightened volatility in global markets.
We conduct business outside the US**, which exposes us to foreign currency exchange rate risk, and could**
have a negative effect on our results of operations.
We operate on a global basis, with 41.7% of our total net sales for the year ended March 31, 2026, generated from
operations outside the US. As we continue to expand our international operations, our sales and expenditures in
foreign currencies are expected to become increasingly material and subject to foreign currency exchange rate
fluctuations. A significant portion of our international operating expenses are paid in local currencies, and our
international distributors typically sell our products in local currency, which affects the price to international
consumers. Many of our subsidiaries operate with their local currency as their functional currency. Foreign currency
fluctuations, which can be exacerbated by volatility in global credit markets, may change the US dollar value of our
purchases or sales and, when converted to US dollars, could materially affect our net sales, gross margin, and
results of operations. When the US dollar strengthens relative to foreign currencies, our sales and profits
denominated in foreign currencies are reduced when converted into US dollars and our margins may be negatively
affected. We routinely utilize foreign currency forward contracts or other derivative instruments for the amounts we
expect to purchase and sell in foreign currencies to mitigate exposure to foreign currency exchange rate
fluctuations. As we continue to expand international operations and increase purchases and sales in foreign
currencies, we may utilize additional derivative instruments to hedge our risk. Our hedging strategies depend on our
forecasts of sales, expenses, and cash flows, which are inherently subject to inaccuracies. Further, such strategies
may not fully offset the effects of exchange rate fluctuations and may introduce additional volatility into our results of
operations. Foreign currency exchange rate hedges, transactions, remeasurements, or translations could materially
affect our consolidated financial statements.
Risks Related to Technology, Data Security and Privacy
A security breach or disruption to our IT systems could materially harm our business, disrupt our
operations, or result in unauthorized disclosure of sensitive information, which could damage our
relationships, expose us to litigation or regulatory proceedings, or harm our reputation, any of which could
materially and adversely affect our business and results of operations.
We store and transmit sensitive information, including personal information of customers, consumers, and
employees, payment card information, and proprietary operational, financial, and strategic data. Unauthorized
access to, loss, misuse, or disclosure of such information could result in reputational harm, litigation, regulatory
investigations, significant remediation costs and substantial losses. Our operations also depend on the continued
performance of internal information systems and third-party technology providers, including systems utilizing data
analytics and AI, to prevent unauthorized access and to respond quickly and effectively to data security incidents.
Cybersecurity threats continue to evolve in frequency and sophistication, and our reliance on interconnected
systems, cloud-based platforms, and third-party service providers increases the risk that a security incident affecting
us or these parties could disrupt our operations. Although we invest in security controls and monitoring, these
measures may not prevent all incidents or ensure timely detection.
A cyber-attack, data security incident, or system disruption could materially and adversely affect our business if:
-
critical systems become inoperable or require significant time or cost to restore;
-
employees are unable to perform their duties or communicate effectively with third parties;
-
sensitive or confidential information is lost, misused, or disclosed without authorization;
-
business operations, including order placement, fulfillment, or reporting, are disrupted;
-
significant, unplanned investments in technology, security remediation, or recovery are required; or
-
we incur additional liabilities, costs, claims, or regulatory exposure.
Any such event could result in reputational harm, loss of customer trust, strained relationships with partners and
suppliers, litigation, fines, penalties, or regulatory actions under domestic and international data protection and
privacy laws and could materially and adversely affect our business, financial condition, or results of operations.
If we are found to have violated laws concerning the privacy and security of consumers’ or other
individuals’ personal information, we could be subject to civil or criminal penalties, which could increase
our liabilities and harm our reputation or our business.
There are a number of laws protecting the privacy and security of personal information, as well as increased
scrutiny by regulators, such as the Federal Trade Commission, and state attorneys general focused on our industry.
Such laws include the California Consumer Privacy Act and California Privacy Rights Act, the EU’s General Data
Protection Regulation and member state directives, Canada’s Personal Information Protection and Electronic
Documents Act, and China’s Personal Information Protection Law, and limit how we may collect, use, share and
store personal information, and they impose obligations to protect that information. We may also be subject to new
or evolving data privacy and security laws and regulations. If we, or any of our service providers who have access to
the personal data for which we are responsible, are found to be in violation of the privacy or security requirements of
applicable data protection laws, we could be subject to civil or criminal penalties, which could increase our liabilities,
harm our reputation, and have a material adverse effect on our business, financial condition, and results of
operations. In addition, these laws may provide for private rights of action, statutory damages, or enhanced
regulatory enforcement, which could increase our exposure to litigation and liability. Although we utilize a variety of
measures to secure the data that we control, even compliant entities can experience security breaches or have
inadvertent failures despite employing reasonable practices and safeguards.
If the technology-based systems that give our customers the ability to shop or interact with us online do
not function effectively, our results of operations, as well as our ability to grow our e-commerce websites
globally or to retain our customer base, could be materially and adversely affected.
Many consumers shop with us through Company-owned e-commerce websites and third-party digital marketplaces,
where expectations and competitive pressures, including delivery speed, shipping costs, return policies, and mobile
functionality, continue to increase. Consumers increasingly use mobile platforms, social media, and digital channels
to shop, comparison shop, and engage with brands, and we rely on these channels to attract and retain customers.
Our success may depend on the continued effectiveness of third‑party digital platforms and marketplaces, which
may change algorithms, policies, fee structures, data access, or content moderation practices, including through
increased use of AI‑driven tools, in ways that reduce traffic, increase customer acquisition costs, or otherwise
diminish the effectiveness of our marketing and sales efforts. These platforms may also become subject to
regulatory actions that limit our ability to operate on them or require costly operational or technological changes.
Failure to provide effective, reliable, secure, and user-friendly digital platforms that offer competitive delivery options
and meet evolving consumer expectations or to scale our technical infrastructure to support increased demand,
could disrupt operations, reduce sales, harm our reputation, and adversely affect our results of operations.
Additional risks include channel conflict with Company-owned and third-party brick and mortar stores, challenges in
replicating the in-store experience online, and liability for online content.
If we are unsuccessful at improving our operational and IT systems and our efforts do not result in the
anticipated benefits to us or result in unanticipated disruption to our business, our results of operations
could be adversely affected.
We continually strive to improve and automate our operational and IT systems and processes to enhance the
efficiency and competitiveness of our business. Transitioning to these new or upgraded processes and systems
requires significant capital investments and personnel resources. Implementation is also highly dependent on the
coordination of numerous employees, contractors and software and system providers. While these efforts have
resulted in improvements to our operational systems, we expect to continue to incur expenses to implement
additional improvements and upgrades to our systems. Many of these expenditures have been and may continue to
be incurred in advance of realizing any direct benefits to our business. Moreover, our investments in operational and
IT systems may not generate the expected return on investment or may take longer than anticipated to deliver
benefits. We cannot guarantee that we will be successful in improving our operational systems, adapting to changes
in technology, including the effective use of data analytics, and other emerging technologies, or that these efforts will
result in anticipated benefits. We may also experience difficulties in implementing or operating our new or upgraded
operational or IT systems, including ineffective or inefficient operations, significant system failures, outages, delayed
implementation and loss of system availability, which could lead to increased implementation and operational costs,
loss or corruption of data, delayed shipments, excess inventory and interruptions of operations resulting in lost sales
or profits. If our operational or IT system upgrades, improvements and associated implementation efforts are not
successful, our financial condition and results of operations could be adversely affected, and our business may
become less competitive.
Risks related to our use of artificial intelligence technologies could adversely affect our business,
reputation, results of operations, or financial condition.
We and our third-party service providers are increasingly using AI, data analytics, and machine learning
technologies across our business, including operational and IT systems, digital platforms, and certain business
processes. While these technologies may improve efficiency and decision-making, they may not perform as
intended and may produce inaccurate, incomplete, or otherwise unreliable outputs, including due to deficiencies in
the data used to develop or operate such tools.
Our use of AI, and the use of AI by third parties on which we rely, may introduce additional risks related to the
integrity, security, and governance of data used by such technologies, including the potential for unauthorized use,
processing, or exposure of sensitive information in ways that may not be fully addressed by our existing data
protection controls, as well as operational disruptions resulting from reliance on AI-driven outputs or systems that do
not perform as intended. In addition, the use of AI technologies in the creation or development of content, designs,
or other intellectual property may present uncertainty regarding ownership, copyright-ability, or potential
infringement of third-party intellectual property rights. The legal and regulatory landscape governing AI is rapidly
evolving, and compliance with new or changing requirements may require additional resources or operational
changes. If we are unable to effectively manage these risks, our business and results of operations could be
materially and adversely affected.
Risks Related to Our Legal, Compliance, and Regulatory Environment
Failure to adequately protect our intellectual property rights could reduce sales and adversely affect the
value of our brands.
Our business could be significantly harmed if we are not able to protect our intellectual property rights. We believe
our competitive position is attributable to the value of our trademarks, patents, trade dress, trade names, trade
secrets, copyrights, and other intellectual property rights. As a result of the success of our brands, we have become
a target of counterfeiting and product imitation. Although we actively pursue legal and other actions against those
who infringe on our intellectual property rights, we cannot guarantee that these actions will be adequate to protect
our brands in the future, particularly because some countries’ laws do not protect these rights to the same extent as
US laws. If we fail to adequately protect our intellectual property rights, it may allow competitors to sell products that
are similar to and directly competitive with our products, or we could lose opportunities to sell our products to
consumers who instead purchase counterfeit or imitation products, which could reduce sales of our products and
adversely affect the value of our brands. In addition, any intellectual property lawsuits in which we are involved
could require significant time and expense and distract management’s attention from operating our business, which
may negatively affect our business and results of operations. In addition to enforcing our intellectual property rights,
we may need to defend claims against us related to our intellectual property rights. For example, we have faced
claims that the word “ugg” is a generic term. Such a claim was successful in Australia, but similar claims have been
rejected by courts in the US, China, the Republic of Türkiye, and the Netherlands. Any court decision or settlement
that invalidates or limits trademark protection of our brands, which allows a third-party to continue to sell products
similar to our products or to sell counterfeit products, could lead to intensified competition and a reduction in our
sales and adversely affect the value of our brands.
Our revolving credit facility agreements expose us to certain risks.
From time to time, we have financed our liquidity needs in part through borrowings under revolving credit facilities.
We may be unable to renew, extend, or replace our revolving credit facilities on acceptable terms, or at all, when
they mature, which could reduce our available liquidity. Our ability to borrow under our revolving credit facilities may
be limited if the lenders believe there has been a material adverse change to our business. In addition, our revolving
credit facility agreements contain a number of customary financial covenants and restrictions, which may limit our
ability to engage in transactions that would otherwise be in our best interests, or otherwise respond to changing
business and economic conditions, and may therefore have a material effect on our business. Failure to comply with
any of these covenants could result in a default, allowing our lenders to accelerate the timing of payments, which
could have a material adverse effect on our business, operations, financial condition, and liquidity. In addition, in
some cases, a default under one revolving credit facility could result in a cross-default under other facilities. Certain
of our revolving credit facility agreements bear interest at a rate that varies by currency. Any increases in interest
rates applicable to our borrowings would increase our cost of borrowing, which would reduce our net income and
liquidity.
The tax laws applicable to our business are complex, and changes in tax laws or audits by taxing
authorities could increase our worldwide tax rate and may subject us to additional tax liabilities, which may
materially affect our financial position and results of operations**.**
Changes in global tax laws, regulations, and treaties could materially affect our business. These tax laws require
significant judgment and specialized expertise to evaluate and estimate our worldwide provision for income taxes.
Changes in these tax laws (and our interpretation thereof), could result in a materially higher tax expense or a
higher effective tax rate on our worldwide earnings. For example, global tax authorities may take differing positions
in interpreting the Organization for Economic Co-operation and Development’s (commonly known as OECD)
guidance, including with respect to Pillar Two model rules, which could modify existing tax principles and increase
our tax liabilities; in addition, the enactment of H.R. 1, also known as the One Big Beautiful Bill Act, or similar future
legislation, may also affect applicable tax rules and interpretations. These changes and potential other tax law
changes could increase our income tax liability or adversely affect our long-term effective tax rates and net income.
Refer to Note 5, “Income Taxes,” of our consolidated financial statements in Part IV within this Annual Report for
further information regarding tax law changes.
Additionally, we are subject to tax audits, which may result in the assessment of additional taxes. Although we
believe our tax estimates are reasonable and our tax filings are prepared in accordance with all applicable tax laws,
the final determination with respect to any tax audits, and related litigation, could be materially different from our
estimates or from our historical tax provisions and accruals, especially as there is continued economic and political
pressure to increase tax revenue in jurisdictions in which we operate. The results of a tax audit or other tax
proceeding could have a material adverse effect on our results of operations or cash flows during the periods for
which that determination is made and may require a restatement of prior financial reports. In addition, changes in
our estimates related to uncertain tax positions could result in adjustments to our tax expense and effective tax rate
in future periods.
Risks Related to Our Common Stock
Our common stock price has been volatile, which could result in losses for stockholders.
The trading price of our common stock has been and may continue to be volatile. The trading price of our common
stock could be affected by a number of factors, including:
-
changes in expectations regarding our future financial performance and results of operations;
-
changes in estimates and opinions of our performance by securities analysts and other market
participants, or our failure to meet such estimates;
-
changes in our stockholder base or public actions taken by investors, including activism;
-
market research and opinions published by securities analysts and other market participants, and
the response to such publications;
-
third-party data sources estimating our intra-quarter financial performance;
-
quarterly fluctuations in our sales, margins, expenses, financial condition, and results of operations;
-
the financial stability of our customers, manufacturers, suppliers, and competitors;
-
announcements made by us or our competitors regarding product launches or developments;
-
announcements by our competitors, or other companies in our industry, regarding changes in
financial condition, results of operations or financial outlook;
- legal proceedings, regulatory actions, and legislative changes impacting us, our competitors, or the
industry in which we operate;
-
the declaration of stock or cash dividends, stock repurchases, or stock or reverse stock splits;
-
consumer confidence and discretionary spending levels;
-
broad market fluctuations in trading volume and market price of publicly traded securities;
-
general market, geopolitical, and macroeconomic conditions, including evolving international trade
dynamics and recessionary conditions; and
- trading activity in our stock by short-term or technical investors, including algorithmic trading, index
funds, or other market participants whose investment decisions are not based on our fundamentals.
In addition, the stock market in general has experienced extreme price and volume fluctuations. Accordingly, the
price of our common stock is volatile and any investment in our stock is subject to risk of loss. These broad market
and industry factors and other general macroeconomic conditions unrelated to our financial performance may also
affect our common stock price, including in ways that are disproportionate to or not directly related to our operating
performance.
Anti-takeover provisions contained in our Amended and Restated Certificate of Incorporation (Certificate)
and Amended and Restated Bylaws (Bylaws), as well as provisions of Delaware law, could impair or delay a
takeover attempt.
Our Certificate and Bylaws contain provisions that could have the effect of rendering more difficult hostile takeovers,
change-in-control transactions, or changes in our Board or management. As a Delaware corporation, we are also
subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which may
delay, deter, or prevent a change-in-control transaction. Any provision of Delaware law, our Certificate, or our
Bylaws that has the effect of rendering more difficult, delaying, deterring, or preventing a change-in-control
transaction could limit the opportunity for stockholders to receive a premium for their shares of our common stock,
and could affect the price that investors are willing to pay for our common stock.
| ITEM 1B. UNRESOLVED COMMENT LETTERS |
Unresolved Comment Letters
None.
| ITEM 1C. CYBERSECURITY |
Cybersecurity Risk Management and Strategy
We maintain a comprehensive cybersecurity program, recognizing the critical importance of safeguarding our
operations, employees, customers, and other business partners from cybersecurity risks, which continue to evolve
in frequency and sophistication. These risks include, among others, operational, financial, reputational, legal, and
regulatory risks.
As a part of this program, we have developed an incident response plan (IRP) designed to quickly respond to,
mitigate, and recover from cybersecurity incidents. The IRP includes procedures for incident detection and
reporting, initial assessment, containment, eradication, recovery, post-incident activities, and continuous
improvement.
We also integrate cybersecurity risk management into our overall risk management framework to ensure that
cybersecurity risks are considered in all aspects of our business. Our management team works closely with our
Chief Digital & Data Officer (CDDO) and Chief Information Security Officer (CISO), and is designed to align our
cybersecurity efforts with our business objectives and operational needs. Key components of our cybersecurity
approach include, among other things:
- establishing a dedicated action team, led by our CDDO and CISO, to oversee and manage
cybersecurity risks;
- implementing a comprehensive cybersecurity risk assessment process and strategy based on
industry standards and established frameworks such as the National Institute of Standards and
Technology (NIST);
- implementing a third-party and vendor risk management program, which includes evaluating risk
levels such that third parties and vendors with access to our systems or data are subject to
cybersecurity onboarding and review, along with cybersecurity and data privacy audits and ongoing
risk monitoring and mitigation efforts;
-
conducting penetration tests and security maturity assessments throughout the year;
-
periodically engaging independent third-party assessors to audit our cybersecurity and information
system programs to evaluate their effectiveness;
- implementing industry-standard technologies and processes to protect our system and data and to
help detect potential unauthorized activity;
-
maintaining access controls to safeguard data and systems;
-
providing annual trainings to employees on responsible information security, data security and
cybersecurity practices including appropriate action to take against cybersecurity threats;
-
conducting periodic phishing simulations to our employees;
-
engaging in cybersecurity incident tabletop exercises and scenario planning exercises;
-
maintaining a cybersecurity and information security risk insurance policy, which insures for data
incidents or breaches and other technology related exposures; and
- periodically reviewing and updating our IRP, privacy policy, and other relevant policies/procedures.
We continuously evaluate and enhance our cybersecurity risk management practices in response to evolving
threats and business needs.
In the three-year period ended March 31, 2026, our business, results of operations and financial condition have not
been materially affected by risks from cybersecurity threats, including as a result of any prior cybersecurity incidents
experienced by either us or third parties, but we cannot provide assurance that they will not be materially affected in
the future by such risks or any future material incidents. Refer to Part I, Item 1A, “Risk Factors - Risks Related to
Technology, Data Security and Privacy” within this Annual Report for further information.
Cybersecurity Governance
Our Board has delegated to the Audit Committee primary responsibility for oversight of enterprise risk assessment
and risk management, including risks related to cybersecurity and information security. Our CDDO and CISO, who
head our cybersecurity and information security initiatives, provide quarterly updates to the Audit Committee, and
annual updates to the full Board. These updates cover various topics, such as efforts to enhance our cybersecurity
posture, operational and incident metrics, mitigation actions, and key performance indicators such as cybersecurity
maturity, program health, and audit and compliance activities. The Audit Committee reviews and monitors these
updates as part of its oversight of our cybersecurity risk management program. The Audit Committee also engages
in regular dialogue with management, including our CDDO and CISO, regarding cybersecurity and technology risks
and related initiatives. In addition, the Audit Committee reviews relevant internal audit findings and key metrics used
to assess our capabilities to manage cybersecurity, information security, and technology risks.
In addition to these regular updates, significant cybersecurity incidents and updates are escalated on an as-needed
basis in accordance with our IRP, and the Audit Committee discusses with management the nature and potential
impact of material cybersecurity incidents on our business, financial condition, and results of operations.
Our CDDO and CISO have extensive experience in cybersecurity. Our CDDO has served in his role since
September 2024. He has over 15 years of experience in digital transformations, enterprise technology, artificial
intelligence, and data management. Our CISO has served in various roles in information technology for over 25
years, including 15 years in information security. He holds a B.S. in Cybersecurity and Information Assurance, along
with industry certifications including ISACA’s Certified in Risk and Information Systems Control, ISACA’s Certified
Information Security Manager, and ISC2’s Certified Information Systems Security Professional certifications.
| ITEM 2. PROPERTIES |
Corporate Headquarters. We own our 14-acre corporate headquarters located in Goleta, California.
Warehouses and DC****s. We have a warehouse and DC located in Moreno Valley, California, which began
operations during the fourth quarter of fiscal year 2015. In October 2021, we began operations in a second US
warehouse and DC located in Mooresville, Indiana. In October 2023, we began operations in a third US warehouse
and DC located in Mooresville, Indiana. We continue to optimize and invest in our operations at these locations.
Regional Offices. We have offices in Austria, Belgium, Canada, China, France, Germany, Hong Kong, Indonesia,
Italy, Japan, Macau, the Netherlands, Switzerland, the UK, the US, and Vietnam, to perform a variety of functions,
which include supervising and overseeing the quality and manufacturing standards of our products, design, product
development, distribution, customer service, regional sales, operations, marketing, IT, administration, and logistics.
Retail Stores. As of March 31, 2026, we have 49 US retail stores and 154 international retail stores, including in
Austria, Belgium, Canada, China, France, Germany, Italy, Japan, the Netherlands, Switzerland, and the UK.
Other than our corporate headquarters, we lease our warehouses and DCs, retail stores and regional offices from
unrelated parties. With the exception of retail stores in our DTC channel, costs associated with our warehouses and
DCs and regional offices are attributable to multiple reportable operating segments and are not allocated; but
instead reflected in unallocated enterprise and shared brand expenses in our results of operations. Refer to Part II,
Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for further
discussion and results of operations for our reportable operating segments and Note 13, “Reportable Operating
Segments,” of our consolidated financial statements in Part IV within this Annual Report for further information on
unallocated enterprise and shared brand expenses.
We believe our properties are adequate for our current needs and that suitable additional or substitute space will be
available to accommodate the foreseeable expansion of our business and operations.
Significant Properties**.** The following table provides details regarding our significant physical properties that are
operational as of March 31, 2026:
| Facility Location | Description | Lease or Own | Facility Size (Square Footage) | |||
| Moreno Valley, California | Warehouse and Distribution Center | Lease | 1,530,944 | |||
| Mooresville, Indiana (1st location) | Warehouse and Distribution Center | Lease | 507,600 | |||
| Mooresville, Indiana (2nd location) | Warehouse and Distribution Center | Lease | 1,015,902 | |||
| Goleta, California | Corporate Headquarters | Own | 185,094 |
| ITEM 3. LEGAL PROCEEDINGS |
As part of our global policing program to protect our intellectual property rights, from time to time, we file lawsuits in
various jurisdictions asserting claims for alleged acts of trademark counterfeiting, trademark infringement, patent
infringement, trade dress infringement, and trademark dilution. We generally have multiple actions such as these
pending at any given point in time. These actions may result in seizure of counterfeit merchandise, out-of-court
settlements with defendants, or other outcomes. In addition, from time to time, we are subject to claims in which
opposing parties will raise, either as affirmative defenses or as counterclaims, the invalidity or unenforceability of
certain of our intellectual property rights, including allegations that the UGG brand trademark registrations and
design patents are invalid or unenforceable. Furthermore, we are aware of many instances throughout the world in
which a third-party is using our brand trademarks within its internet domain name.
From time to time, we are involved in various legal proceedings, disputes, and other claims arising in the ordinary
course of business, including employment, intellectual property, product liability, and breach of contract claims.
Although the results of these ordinary course matters cannot be predicted with certainty, we currently believe that
the final outcome of these ordinary course matters will not, individually or in the aggregate, have a material adverse
effect on our business, results of operations, financial condition, or cash flows. However, regardless of the merit of
the claims raised or the outcome, these ordinary course matters can have an adverse impact on us as a result of
legal costs, diversion of management’s time and resources, and other factors.
PART II
| ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market Information. Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol
“DECK”.
Holders of Record. As of May 1, 2026, we had 27 stockholders of record based 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.
Unregistered Sales of Equity Securities. We did not sell any equity securities that were not registered under the
Securities Act during the year ended March 31, 2026.
Stock Performance Graph
Below is a graph comparing the percentage change in the cumulative total return on our common stock against the
cumulative total return of the Standard & Poor’s 500 Stock Index (S&P 500 Index) and the S&P 500 Apparel,
Accessories & Luxury Goods Index for the five fiscal-year periods commencing March 31, 2021, and ended
March 31, 2026. We use the S&P 500 Index as we believe it is the benchmark most relevant to measure our
performance. Total return assumes reinvestment of dividends, although we have not declared or paid any cash
dividends on our common stock since our inception. The data represented in the graph assumes one hundred
dollars invested in our common stock and in each of the referenced indices on March 31, 2021. The stock
performance shown on the below graph is not necessarily indicative of future performance. In providing the
information in the graph, we are not intending to make or endorse any prediction as to our future stock performance.
| Years Ended March 31, | |||||||||||
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | ||||||
| Deckers Outdoor Corporation | $100.00 | $82.86 | $136.04 | $284.80 | $202.96 | $181.66 | |||||
| S&P 500 Index | 100.00 | 115.65 | 106.71 | 138.59 | 150.03 | 176.74 | |||||
| S&P 500 Apparel, Accessories & Luxury Goods Index | 100.00 | 79.08 | 54.79 | 46.60 | 42.58 | 46.98 |
Dividend Policy
We have not declared or paid any cash dividends on our common stock since our inception. Any future decision to
declare cash dividends will be at the discretion of our Board and will depend on a number of factors, including our
financial condition, operating results, liquidity position, capital allocation strategy, and other factors our Board
considers to be relevant at the time. Our current revolving credit agreements allow us to declare and pay cash
dividends, as long as we do not exceed certain leverage ratios, and no event of default has occurred. We are in
compliance with these leverage ratios as of March 31, 2026, and no event of default has occurred. We currently do
not anticipate declaring or paying any cash dividends in the foreseeable future.
Stock Repurchase Program
Our Board has approved a stock repurchase program which authorizes us to repurchase shares of our common
stock in the open market or in privately negotiated transactions, subject to market conditions, applicable legal
requirements, and other factors (collectively, the stock repurchase program). Our Board last approved an
authorization of $2,250,000 on May 21, 2025, to repurchase shares of our common stock under the same
conditions as the prior stock repurchase program.
Our stock repurchase program does not obligate us to acquire any amount of common stock and may be
suspended at any time at our discretion.
Stock repurchase activity under our stock repurchase program during the three months ended March 31, 2026, was
as follows:
| Total Number of Shares Repurchased (1) (2) | Weighted Average Price per Share | Dollar Value of Shares Repurchased (2) (3) | Dollar Value of Shares Remaining for Repurchase (2) | |||||
| January 1 - January 31, 2026 | 928,296 | $102.34 | $94,999 | $1,716,214 | ||||
| February 1 - February 28, 2026 | 584,036 | 116.43 | 67,999 | 1,648,215 | ||||
| March 1 - March 31, 2026 | 964,893 | 102.20 | 98,613 | 1,549,602 | ||||
| Total | 2,477,225 | 105.61 | $261,612 | 1,549,602 |
(1) All share repurchases were made pursuant to our stock repurchase program in open-market transactions.
(2) May not calculate on rounded amounts.
(3) The dollar value of shares repurchased excludes the cost of broker commissions, excise taxes, and other costs.
Subsequent to March 31, 2026, through May 1, 2026, we repurchased 1,096,908 shares of our common stock at a
weighted average price of $105.75 per share for $115,999. As of May 1, 2026, we had $1,433,603 remaining
authorized for repurchases under the stock repurchase program.
On May 20, 2026, our Board approved an additional authorization of $3,500,000 to repurchase shares of our
common stock under the same conditions as the prior stock repurchase program, resulting in an aggregate
remaining authorization of approximately $4,840,000 as of that date.
Refer to the section titled “Liquidity” under Part II, Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and Note 11, “Stockholders’ Equity,” of our consolidated financial statements
in Part IV, within this Annual Report, for further information on our stock repurchase program.
| ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion of our financial condition and results of operations should be read together with our
consolidated financial statements in Part IV within this Annual Report*. This discussion includes an analysis of our*
financial condition and results of operations for the years ended March 31, 2026*, and* 2025 and year-over-year
comparisons between those periods. For an analysis of our financial condition and results of operations for the
years ended March 31, 2025*, and* 2024 and year-over-year comparisons between those periods, refer to Part II,
Previous: Item 16. Form 10-K Summary · Next: Item 7. , “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual