Item 1. FINANCIAL STATEMENTS

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(dollar and share data amounts in thousands, except par value)

			June 30, 2024						March 31, 2024
ASSETS									(AUDITED)
Cash and cash equivalents			$	1,438,397					$	1,502,051
Trade accounts receivable, net of allowances ($22,621 and $27,331 as of June 30, 2024, and March 31, 2024, respectively)			303,128						296,565
Inventories			753,282						474,311
Prepaid expenses			45,221						34,284
Other current assets			43,323						92,713
Income tax receivable			29,479						43,559
Total current assets			2,612,830						2,443,483
Property and equipment, net of accumulated depreciation ($362,180 and $349,138 as of June 30, 2024, and March 31, 2024, respectively) (Note 10)			305,585						302,122
Operating lease assets			221,207						225,669
Goodwill			13,990						13,990
Other intangible assets, net of accumulated amortization ($91,609 and $91,314 as of June 30, 2024, and March 31, 2024, respectively)			26,701						27,083
Deferred tax assets, net			71,613						72,584
Other assets			54,293						50,648
Total assets			$	3,306,219					$	3,135,579
LIABILITIES AND STOCKHOLDERS’ EQUITY
Trade accounts payable			$	642,595					$	378,503
Accrued payroll			61,531						123,653
Operating lease liabilities			46,362						53,581
Other accrued expenses			104,640						106,785
Income tax payable			56,678						52,338
Value added tax payable			664						5,133
Total current liabilities			912,470						719,993
Long-term operating lease liabilities			216,006						213,298
Income tax liability			52,961						52,470
Other long-term liabilities			50,300						42,350
Total long-term liabilities			319,267						308,118
Commitments and contingencies (Note 5)
Stockholders’ equity
Common stock (par value $0.01 per share; 125,000 shares authorized; shares issued and outstanding of 25,426 and 25,593 as of June 30, 2024, and March 31, 2024, respectively)			254						255
Additional paid-in capital			253,486						245,149
Retained earnings			1,875,275						1,912,797
Accumulated other comprehensive loss (Note 7)			(54,533)						(50,733)
Total stockholders’ equity			2,074,482						2,107,468
Total liabilities and stockholders’ equity			$	3,306,219					$	3,135,579

See accompanying notes to the condensed consolidated financial statements.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(dollar and share data amounts in thousands, except per share data)

									Three Months Ended June 30,
															2024						2023
Net sales (Note 2, Note 9, and Note 10)															$	825,347					$	675,791
Cost of sales															355,347						329,367
Gross profit															470,000						346,424
Selling, general, and administrative expenses															337,193						275,688
Income from operations (Note 9)															132,807						70,736
Interest income															(17,252)						(11,287)
Interest expense															1,031						1,005
Other income, net															(125)						(346)
Total other income, net															(16,346)						(10,628)
Income before income taxes															149,153						81,364
Income tax expense (Note 4)															33,528						17,812
Net income															115,625						63,552
Other comprehensive loss, net of tax
Unrealized gain on cash flow hedges															856						352
Foreign currency translation loss															(4,656)						(8,651)
Total other comprehensive loss, net of tax															(3,800)						(8,299)
Comprehensive income															$	111,825					$	55,253
Net income per share
Basic															$	4.54					$	2.43
Diluted															$	4.52					$	2.41
Weighted-average common shares outstanding (Note 8)
Basic															25,478						26,165
Diluted															25,581						26,321

See accompanying notes to the condensed consolidated financial statements.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(amounts in thousands)

			Three Months Ended June 30, 2024
															Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Loss						Total Stockholders’ Equity
			Common Stock
			Shares						Amount
Balance, March 31, 2024			25,593						$	255					$	245,149					$	1,912,797					$	(50,733)					$	2,107,468
Stock-based compensation			—						—						8,231						—						—						8,231
Shares issued upon vesting			1						—						—						—						—						—
Exercise of stock options			9						—						601						—						—						601
Shares withheld for taxes			—						—						(495)						—						—						(495)
Repurchases of common stock (Note 7)			(177)						(1)						—						(151,966)						—						(151,967)
Excise taxes related to repurchases of common stock			—						—						—						(1,181)						—						(1,181)
Net income			—						—						—						115,625						—						115,625
Total other comprehensive loss			—						—						—						—						(3,800)						(3,800)
Balance, June 30, 2024			25,426						$	254					$	253,486					$	1,875,275					$	(54,533)					$	2,074,482

			Three Months Ended June 30, 2023
															Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Loss						Total Stockholders’ Equity
			Common Stock
			Shares						Amount
Balance, March 31, 2023			26,176						$	262					$	232,932					$	1,571,574					$	(39,035)					$	1,765,733
Stock-based compensation			1						—						6,877						—						—						6,877
Shares issued upon vesting			3						—						—						—						—						—
Exercise of stock options			8						—						548						—						—						548
Shares withheld for taxes			—						—						(698)						—						—						(698)
Repurchases of common stock (Note 7)			(52)						(1)						—						(25,468)						—						(25,469)
Excise taxes related to repurchases of common stock			—						—						—						(123)						—						(123)
Net income			—						—						—						63,552						—						63,552
Total other comprehensive loss			—						—						—						—						(8,299)						(8,299)
Balance, June 30, 2023			26,136						$	261					$	239,659					$	1,609,535					$	(47,334)					$	1,802,121

See accompanying notes to the condensed consolidated financial statements.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)

			Three Months Ended June 30,
			2024						2023
OPERATING ACTIVITIES
Net income			$	115,625					$	63,552
Reconciliation of net income to net cash provided by (used in) operating activities:
Depreciation, amortization, and accretion			17,061						12,353
Amortization on cloud computing arrangements			465						558
Bad debt benefit			(3,291)						(2,974)
Deferred tax expense			170						478
Stock-based compensation			8,346						6,989
Loss on disposal of long-lived assets			79						—
Changes in operating assets and liabilities:
Trade accounts receivable, net			(3,272)						33,282
Inventories			(278,972)						(207,701)
Prepaid expenses and other current assets			39,816						(8,472)
Income tax receivable			14,079						(13,529)
Net operating lease assets and lease liabilities			(486)						7,657
Other assets			(4,073)						(1,933)
Trade accounts payable			266,679						254,063
Other accrued expenses			(71,398)						(33,247)
Income tax payable			4,340						10,691
Other long-term liabilities			7,482						3,495
Net cash provided by operating activities			112,650						125,262
INVESTING ACTIVITIES
Purchases of property and equipment			(22,521)						(30,732)
Net cash used in investing activities			(22,521)						(30,732)
FINANCING ACTIVITIES
Proceeds from exercise of stock options			601						548
Repurchases of common stock			(151,967)						(25,469)
Cash paid for shares withheld for taxes			(495)						(698)
Net cash used in financing activities			(151,861)						(25,619)
Effect of foreign currency exchange rates on cash and cash equivalents			(1,922)						(3,817)
Net change in cash and cash equivalents			(63,654)						65,094
Cash and cash equivalents at beginning of period			1,502,051						981,795
Cash and cash equivalents at end of period			$	1,438,397					$	1,046,889

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)

(continued)

			Three Months Ended June 30,
			2024						2023
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid during the period
Income taxes			$	14,998					$	19,716
Interest			414						473
Operating leases			16,339						14,974
Non-cash investing activities
Changes in trade accounts payable and other accrued expenses for purchases of property and equipment			(2,582)						(5,024)
Accrued for asset retirement obligation assets related to leasehold improvements			975						242
Leasehold improvements acquired through tenant allowances			—						8,127
Non-cash financing activities
Accrued excise taxes related to repurchases of common stock			1,181						123

See accompanying notes to the condensed consolidated financial statements.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

NOTE 1. GENERAL

The Company. Deckers Outdoor Corporation and its wholly owned subsidiaries (collectively, the Company) is a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities. The Company’s six proprietary brands include the UGG, HOKA, Teva, Sanuk, Koolaburra, and AHNU brands.

The Company sells its products through quality domestic and international retailers, international distributors, and directly to its global consumers through its DTC business, which is comprised of its e-commerce business and retail stores. Independent third-party contractors manufacture all of the Company’s products.

Seasonality. A significant part of the UGG brand’s business has historically been seasonal, requiring the Company to build inventory levels during certain quarters in its fiscal year to support higher selling seasons, which has contributed to variation in its results from quarter to quarter. However, as the Company continues to take steps to diversify and expand its product offerings by creating more year-round styles, and as net sales of the HOKA brand, which generally occur more evenly throughout the year, continue to increase as a percentage of the Company’s aggregate net sales, the Company expects to continue to see the impact from seasonality decrease over time.

Basis of Presentation. The unaudited condensed consolidated financial statements and accompanying notes thereto (referred to herein as condensed consolidated financial statements) as of June 30, 2024, and for the three months ended June 30, 2024 (the current period), and 2023 (the prior period) are prepared in accordance with generally accepted accounting principles in the US (US GAAP) for interim financial information pursuant to Rule 10-01 of Regulation S-X issued by the SEC. Accordingly, the condensed consolidated financial statements do not include all the information and disclosures required by US GAAP for annual financial statements and accompanying notes thereto. The condensed consolidated balance sheet as of March 31, 2024, is derived from the Company’s audited consolidated financial statements. In the opinion of management, the condensed consolidated financial statements include all normal and recurring entries necessary to fairly present the results of the interim periods presented but are not necessarily indicative of actual results to be achieved for full fiscal years or other interim periods. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (prior fiscal year), which was filed with the SEC on May 24, 2024 (2024 Annual Report).

Consolidation. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of the Company’s condensed consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the amounts reported. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. In addition, the Company has considered the potential impact of macroeconomic factors, including inflation, foreign currency exchange rate volatility, changes in interest rates, changes in commodity pricing, changes in discretionary spending and recessionary concerns, on its business and operations. Although the full impact of these factors is unknown, the Company believes it has made appropriate accounting estimates and assumptions based on the facts and circumstances available as of the reporting date. However, actual results could differ materially from these estimates and assumptions, which may result in material effects on the Company’s financial condition, results of operations, and liquidity. To the extent there are differences between these estimates and actual results, the Company’s condensed consolidated financial statements may be materially affected.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

Significant areas requiring the use of management estimates and assumptions relate to inventory write-downs; trade accounts receivable allowances, including variable consideration for net sales provided to customers, such as the sales return asset and liability; contract assets and liabilities; stock-based compensation; impairment assessments, including goodwill, other intangible assets, and long-lived assets; depreciation and amortization; income tax receivables and liabilities; uncertain tax positions; the fair value of financial instruments; the reasonably certain lease term; lease classification; and the Company’s incremental borrowing rate utilized to measure its operating lease assets and lease liabilities.

Foreign Currency Translation. The Company considers the US dollar as its functional currency. The Company’s wholly owned foreign subsidiaries have various assets and liabilities, primarily cash, receivables, and payables, which are denominated in currencies other than its functional currency. The Company remeasures these monetary assets and liabilities using the exchange rate at the end of the reporting period, which results in gains and losses that are recorded in selling, general, and administrative (SG&A) expenses in the condensed consolidated statements of comprehensive income as incurred. In addition, the Company translates assets and liabilities of subsidiaries with reporting currencies other than US dollars into US dollars using the exchange rates at the end of the reporting period, which results in financial statement translation gains and losses recorded in other comprehensive income or loss (OCI) in the condensed consolidated statements of comprehensive income.

Reportable Operating Segments. The Company’s six reportable operating segments include the worldwide wholesale operations of the UGG brand, HOKA brand, Teva brand, Sanuk brand, and Other brands (primarily consisting of the Koolaburra and AHNU brands), as well as DTC (collectively, the Company’s reportable operating segments). Refer to Note 9, “Reportable Operating Segments,” for further information on the Company’s reportable operating segments as well as Note 12, “Subsequent Events,” for an update on the Company’s sale of the Sanuk brand and certain related assets.

Recent Accounting Pronouncements. The Financial Accounting Standards Board has issued Accounting Standards Updates (ASU) that have been adopted and not yet adopted by the Company as stated below.

Recently Adopted. The following is a summary of a recently adopted ASU and its expected impact on the Company:

Standard						Description						Impact Upon Adoption
ASU 2022-04 - Supplier Finance Program (SFP)						The ASU requires that a buyer in a SFP disclose qualitative and quantitative information about its program on an interim basis, including the nature of the SFP and key terms, outstanding amounts as of the end of the reporting period, and presentation in its financial statements. The interim portion of this ASU is effective on a retrospective basis for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted. The annual requirement that requires a buyer in a SFP disclose an activity roll forward of outstanding balances as of the end of the reporting period has not yet been adopted. This annual portion of this ASU is effective on a retrospective basis for fiscal years beginning after December 15, 2023. Early adoption is not permitted.						The Company retrospectively adopted this ASU beginning on April 1, 2023, except for the roll forward requirements. This ASU did not have a material impact on the recognition, measurement, or presentation of supplier finance programs in the Company’s annual and interim consolidated financial statements. However, it did result in additional disclosure. Refer to Note 11, “Supplier Finance Program,” for further information on the Company’s SFP key terms and outstanding balances recorded in the condensed consolidated balance sheets. The Company plans to adopt the annual roll forward requirement beginning with its fiscal year (FY) ending March 31, 2025, and does not expect the adoption to have a material impact on its annual and interim consolidated financial statements.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

Not Yet Adopted. The following is a summary of each ASU that has been issued and is applicable to the Company, but which has not yet been adopted, as well as the planned period of adoption, and the expected impact on the Company upon adoption:

Standard						Description						Planned Period of Adoption						Expected Impact on Adoption
ASU 2023-07 - Improvements to Reportable Segment Disclosures						The ASU requires annual and interim disclosures of significant segment expenses, including an amount and composition description for other segment items, and how reported measures of profit or loss are used by the chief operating decision maker (CODM) in assessing segment performance and deciding how to allocate resources. The ASU is effective on a retrospective basis for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted.						Q4 FY 2025 and Q1 FY 2026						The Company is currently evaluating the impact of the adoption of this ASU on its annual and interim consolidated financial statements.
ASU 2023-09 - Improvements to Income Tax Disclosures						The ASU requires annual disclosures of prescribed standard categories for the components of the effective tax rate reconciliation, disclosure of income taxes paid disaggregated by jurisdiction, and other income-tax related disclosures. The ASU is effective on a prospective basis, with retrospective application permitted, for fiscal years beginning after December 15, 2024. Early adoption is permitted.						Q4 FY 2026						The Company is currently evaluating the impact of the adoption of this ASU on its annual and interim consolidated financial statements.

NOTE 2. REVENUE RECOGNITION

Disaggregated Revenue. Refer to Note 9, “Reportable Operating Segments,” for further information on the Company’s disaggregation of revenue by reportable operating segment.

Sales Return Asset and Liability. Sales returns are a refund asset for the right to recover the inventory and a refund liability for the stand-ready right of return. The refund asset for the right to recover the inventory is recorded in other current assets and the related refund liability is recorded in other accrued expenses in the condensed consolidated balance sheets.

The following tables summarize changes in the estimated sales returns for the periods presented:

			Recovery Asset						Refund Liability
Balance, March 31, 2024			$	13,866					$	(55,327)
Net additions to sales return liability (1)			10,976						(40,741)
Actual returns			(14,077)						58,277
Balance, June 30, 2024			$	10,765					$	(37,791)

			Recovery Asset						Refund Liability
Balance, March 31, 2023			$	15,685					$	(45,322)
Net additions to sales return liability (1)			8,387						(40,609)
Actual returns			(12,867)						49,373
Balance, June 30, 2023			$	11,205					$	(36,558)

(1) Net additions to the sales return liability include a provision for anticipated sales returns, which consists of both contractual return rights and discretionary authorized returns.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

Contract Liabilities. Contract liabilities are recorded in other accrued expenses in the condensed consolidated balance sheets and include loyalty programs and other deferred revenue.

Loyalty Programs. Activity related to loyalty programs was as follows:

			Three Months Ended June 30,
			2024						2023
Beginning balance			$	(17,586)					$	(13,144)
Redemptions and expirations for loyalty certificates and points recognized in net sales			5,060						4,728
Deferred revenue for loyalty points and certificates issued			(4,575)						(3,909)
Ending balance			$	(17,101)					$	(12,325)

Deferred Revenue. Activity related to deferred revenue was as follows:

			Three Months Ended June 30,
			2024						2023
Beginning balance			$	(9,591)					$	(13,448)
Additions of customer cash payments			(27,101)						(20,589)
Revenue recognized			9,254						13,401
Ending balance			$	(27,438)					$	(20,636)

Refer to Note 2, “Revenue Recognition,” in the Company’s consolidated financial statements in Part IV of the 2024 Annual Report for further information on the Company’s variable consideration accounting policies, including sales return asset and liability, as well as contract liabilities.

NOTE 3. FAIR VALUE MEASUREMENTS

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Refer to Note 4, “Fair Value Measurements,” in the Company’s consolidated financial statements in Part IV of the 2024 Annual Report for further information on the Company’s fair value accounting policies.

Assets and liabilities that are measured on a recurring basis at fair value in the condensed consolidated balance sheets are as follows:

			As of						Measured Using
			June 30, 2024			Level 1						Level 2						Level 3
Assets:
Cash equivalents:
Money-market funds			$	1,079,101					$	1,079,101					$	—					$	—
Other current assets:
Designated Derivative Contracts asset			1,399						—						1,399						—
Other assets:
Non-qualified deferred compensation asset			14,480						14,480						—						—
Total assets measured at fair value			$	1,094,980					$	1,093,581					$	1,399					$	—

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

			As of						Measured Using
			June 30, 2024			Level 1						Level 2						Level 3
Liabilities:
Other accrued expenses:
Non-qualified deferred compensation liability			$	(412)					$	(412)					$	—					$	—
Designated Derivative Contracts liability			(267)						—						(267)						—
Other long-term liabilities:
Non-qualified deferred compensation liability			(23,580)						(23,580)						—						—
Total liabilities measured at fair value			$	(24,259)					$	(23,992)					$	(267)					$	—

			As of						Measured Using
			March 31, 2024			Level 1						Level 2						Level 3
Assets:
Cash equivalents:
Money-market funds			$	1,152,083					$	1,152,083					$	—					$	—
Other assets:
Non-qualified deferred compensation asset			13,553						13,553						—						—
Total assets measured at fair value			$	1,165,636					$	1,165,636					$	—					$	—
Liabilities:
Other accrued expenses:
Non-qualified deferred compensation liability			$	(408)					$	(408)					$	—					$	—
Other long-term liabilities:
Non-qualified deferred compensation liability			(16,229)						(16,229)						—						—
Total liabilities measured at fair value			$	(16,637)					$	(16,637)					$	—					$	—

The fair value of Designated Derivative Contracts is determined using quoted forward spot rates at the end of the applicable reporting period from counterparties, which are corroborated by market-based pricing (Level 2), with related assets and liabilities recorded in other current assets and other accrued expenses, respectively, in the condensed consolidated balance sheets. Refer to Note 6, “Derivative Instruments,” for further information, including the definition of the term Designated Derivative Contracts.

NOTE 4. INCOME TAXES

Income tax expense and the effective income tax rate were as follows:

									Three Months Ended June 30,
															2024						2023
Income tax expense															$	33,528					$	17,812
Effective income tax rate															22.5		%				21.9		%

The tax provisions during the three months ended June 30, 2024, and 2023, were computed using the estimated effective income tax rate applicable to each of the domestic and foreign taxable jurisdictions for the fiscal years ending March 31, 2025, and March 31, 2024, respectively, and were adjusted for discrete items that occurred within the periods presented above. During the three months ended June 30, 2024, the net increase in the effective income tax rate, compared to the prior period, was due to higher operating income, including changes in jurisdictional mix of worldwide income before income taxes, partially offset by net discrete tax benefits for stock-based compensation.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

Recent Tax Law Changes. The Organization for Economic Co-operation and Development (commonly known as OECD) has released Pillar Two model rules introducing a 15% global minimum tax rate for large multinational corporations to be effective starting with tax periods ending in 2024. Various jurisdictions the Company operates in have enacted or plan to enact legislation beginning in calendar year 2024 or in subsequent years. The enactment of Pillar Two legislation did not have a material effect on the Company’s condensed consolidated statements of comprehensive income during the three months ended June 30, 2024. The Company will continue to monitor and reflect the impact of such legislative changes in future periods, as each of the respective jurisdictions enact the legislation and the legislation becomes effective.

NOTE 5. COMMITMENTS AND CONTINGENCIES

Leases. The Company primarily leases retail stores, showrooms, offices, and distribution facilities under operating lease contracts. There were no material changes outside the ordinary course of business during the three months ended June 30, 2024, to the operating lease terms disclosed in the 2024 Annual Report.

Supplemental information for amounts presented in the condensed consolidated statements of cash flows related to operating leases, were as follows:

									Three Months Ended June 30,
															2024						2023
Non-cash operating activities
Operating lease assets obtained in exchange for lease liabilities (1)															$	12,336					$	21,587
Reductions to operating lease assets for reductions to lease liabilities (1)															(1,106)						(65)

(1) Amounts disclosed include non-cash additions or reductions resulting from lease remeasurements, as well as reductions for tenant improvement allowances.

Operating lease liabilities recorded in the condensed consolidated balance sheets exclude an aggregate of $15,289 of undiscounted minimum lease payments due pursuant to leases signed but not yet commenced during the three months ended June 30, 2024, and through July 11, 2024, primarily for a new HOKA brand retail store lease in Paris that will be operational during the quarter ending December 31, 2024.

Purchase Obligations. There were no material changes to purchase obligations last disclosed in the 2024 Annual Report outside the ordinary course of business during the three months ended June 30, 2024.

Litigation. From time to time, the Company is involved in various legal proceedings, disputes, and other claims arising in the ordinary course of business, including employment, intellectual property, and product liability claims. Although the results of these matters cannot be predicted with certainty, the Company believes it is not currently a party to any legal proceedings, disputes, or other claims for which a material loss is considered probable and for which the amount (or range) of loss is reasonably estimable. However, regardless of the merit of the claims raised or the outcome, these matters can have an adverse impact on the Company as a result of legal costs, diversion of management’s time and resources, and other factors.

Refer to Note 7, “Commitments and Contingencies,” in the Company’s consolidated financial statements in Part IV of the 2024 Annual Report for further information on the Company’s contractual obligations and commitments.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

NOTE 6. DERIVATIVE INSTRUMENTS

The Company enters into foreign currency forward or option contracts (derivative contracts) with maturities of 15 months or less to manage foreign currency risk and certain of these derivative contracts are designated as cash flow hedges of forecasted sales (Designated Derivative Contracts).

The after-tax unrealized gains or losses from changes in fair value of Designated Derivative Contracts are recorded as a component of accumulated other comprehensive loss (AOCL) in the condensed consolidated balance sheets and are reclassified to net sales in the condensed consolidated statements of comprehensive income in the same period or periods as the related sales are recognized. When it is probable that a forecasted transaction will not occur, the Company discontinues hedge accounting and the accumulated gains or losses in AOCL related to the hedging relationship are immediately recorded in OCI in the condensed consolidated statements of comprehensive income. Refer to Note 1, “General,” in the Company’s consolidated financial statements in Part IV of the 2024 Annual Report for further information regarding the Company’s derivative instruments accounting policy.

As of June 30, 2024, the Company has the following Designated Derivative Contracts recorded at fair value in the condensed consolidated balance sheets:

Notional value			$	158,842
Fair value recorded in other current assets			1,399
Fair value recorded in other accrued expenses			(267)

As of June 30, 2024, four counterparties hold the Company’s outstanding derivative contracts, all of which are expected to mature in the next nine months. As of March 31, 2024, the Company had no outstanding derivative contracts.

The following table summarizes the effect of Designated Derivative Contracts and the related income tax effects of unrealized gains or losses recorded in the condensed consolidated statements of comprehensive income for changes in AOCL:

									Three Months Ended June 30,
															2024						2023
Gain recorded in OCI															$	1,132					$	411
Reclassifications from AOCL into net sales															—						21
Income tax expense in OCI															(276)						(80)
Total															$	856					$	352

The non-performance risk of the Company and its counterparties did not have a material impact on the fair value of its derivative contracts. As of June 30, 2024, the amount of unrealized gains on derivative contracts recorded in AOCL is expected to be reclassified into net sales within the next nine months. Refer to Note 7, “Stockholders’ Equity,” for further information on the components of AOCL.

NOTE 7. STOCKHOLDERS’ EQUITY

Stock Repurchase Program. The Company’s Board of Directors (Board) has approved various authorizations under the Company’s stock repurchase program to repurchase shares of its 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). As of June 30, 2024, the aggregate remaining approved amount under the stock repurchase program is $789,737. The stock repurchase program does not obligate the Company to acquire any amount of common stock and may be suspended at any time at the Company’s discretion.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

Stock repurchase activity under the Company’s stock repurchase program was as follows:

			Three Months Ended June 30,
			2024						2023
Total number of shares repurchased (1)			176,956						52,410
Average price per share paid			$	858.79					$	485.95
Dollar value of shares repurchased (2) (3)			$	151,967					$	25,469

(1) All share repurchases were made pursuant to the Company’s stock repurchase program in open-market transactions.

(2) The dollar value of shares repurchased excludes the cost of broker commissions, excise taxes, and other costs.

(3) May not calculate on rounded dollars.

Subsequent to June 30, 2024, through July 11, 2024, the Company repurchased 17,307 shares at an average price of $924.11 per share for $15,994 and had $773,743 remaining authorized under the stock repurchase program.

Accumulated Other Comprehensive Loss. The components within AOCL, net of tax, recorded in the condensed consolidated balance sheets are as follows:

			June 30, 2024						March 31, 2024
Unrealized gain on cash flow hedges			$	856					$	—
Cumulative foreign currency translation loss			(55,389)						(50,733)
Total			$	(54,533)					$	(50,733)

NOTE 8. BASIC AND DILUTED SHARES

The reconciliation of basic to diluted weighted-average common shares outstanding was as follows:

									Three Months Ended June 30,
															2024						2023
Basic															25,478,000						26,165,000
Dilutive effect of equity awards															103,000						156,000
Diluted															25,581,000						26,321,000
Excluded
Long-Term Incentive Plan Performance-Based Restricted Stock Units															48,000						76,000
Employee Stock Purchase Plan															—						1,000

Excluded Awards. The equity awards excluded from the calculation of the dilutive effect have been excluded due to one of the following: (1) the shares were antidilutive; (2) the necessary conditions had not been satisfied for the shares to be deemed issuable based on the Company’s performance for the relevant performance period; or (3) the Company recorded a net loss during the period presented (such that inclusion of these equity awards in the calculation would have been antidilutive). The number of shares stated for each of these excluded awards is the maximum number of shares issuable pursuant to these awards. For those awards subject to the achievement of performance criteria, the actual number of shares to be issued pursuant to such awards will be based on Company performance in future periods, net of forfeitures, and may be materially lower than the number of shares presented, which could result in a lower dilutive effect. Refer to Note 8, “Stock-Based Compensation,” in the Company’s consolidated financial statements in Part IV of the 2024 Annual Report for further information on the Company’s equity incentive plans.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

NOTE 9. REPORTABLE OPERATING SEGMENTS

Information reported to the CODM, who is the Company’s Chief Executive Officer (CEO), President, and Principal Executive Officer (PEO), is organized into the Company’s six reportable operating segments and is consistent with how the CODM evaluates performance and allocates resources. The Company does not consider international operations to be a separate reportable operating segment, and the CODM reviews such operations in the aggregate with the reportable operating segments.

Segment Net Sales and Income from Operations. The Company evaluates reportable operating segment performance primarily based on net sales and income (loss) from operations. The wholesale operations of each brand are managed separately because each requires different marketing, research and development, design, sourcing, and sales strategies. The income (loss) from operations of each of the reportable operating segments includes only those costs which are specifically related to each reportable operating segment, which consist primarily of cost of sales, research and development, design, sales and marketing, depreciation, amortization, and the direct costs of employees within those reportable operating segments.

The Company does not allocate corporate overhead costs or non-operating income and expenses to reportable operating segments, which include unallocable overhead costs associated with the Company’s warehouses and DCs, certain executive and stock-based compensation, accounting, finance, legal, IT, human resources, and facilities, among others. Inter-segment sales from the Company’s wholesale reportable operating segments to the DTC reportable operating segment are at the Company’s cost, and there is no inter-segment profit on these inter-segment sales, nor are they reflected in income (loss) from operations of the wholesale reportable operating segments as these transactions are eliminated in consolidation.

Reportable operating segment information, with a reconciliation to the condensed consolidated statements of comprehensive income, was as follows:

									Three Months Ended June 30,
															2024						2023
Net sales
UGG brand wholesale															$	142,553					$	121,545
HOKA brand wholesale															332,732						260,847
Teva brand wholesale															31,359						35,132
Sanuk brand wholesale															4,433						6,470
Other brands wholesale															3,705						1,427
Direct-to-Consumer															310,565						250,370
Total															$	825,347					$	675,791

									Three Months Ended June 30,
															2024						2023
Income (loss) from operations
UGG brand wholesale															$	38,430					$	16,866
HOKA brand wholesale															124,694						86,524
Teva brand wholesale															6,789						9,237
Sanuk brand wholesale															1,603						759
Other brands wholesale															(1,557)						(2,041)
Direct-to-Consumer															106,410						75,462
Unallocated overhead costs															(143,562)						(116,071)
Total															$	132,807					$	70,736

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

Segment Assets. Assets allocated to each reportable operating segment include trade accounts receivable, net, inventories, property and equipment, net, operating lease assets, goodwill, other intangible assets, net, and certain other assets that are specifically identifiable for one of the Company’s reportable operating segments. Unallocated assets are those assets not directly related to a specific reportable operating segment and generally include cash and cash equivalents, deferred tax assets, net, and various other corporate assets shared by the Company’s reportable operating segments.

Assets allocated to each reportable operating segment, with a reconciliation to the condensed consolidated balance sheets, are as follows:

			June 30, 2024						March 31, 2024
Assets
UGG brand wholesale			$	509,965					$	247,136
HOKA brand wholesale			490,476						436,147
Teva brand wholesale			56,713						81,703
Sanuk brand wholesale			16,955						18,526
Other brands wholesale			24,973						9,379
Direct-to-Consumer			261,893						263,840
Total assets from reportable operating segments			1,360,975						1,056,731
Unallocated cash and cash equivalents			1,438,397						1,502,051
Unallocated deferred tax assets, net			71,613						72,584
Unallocated other corporate assets			435,234						504,213
Total			$	3,306,219					$	3,135,579

NOTE 10. CONCENTRATION OF BUSINESS

Regions and Customers. The Company sells its products globally to customers and consumers in various countries, with net sales concentrations as follows:

									Three Months Ended June 30,
															2024						2023
International net sales															$	309,491					$	256,256
% of net sales															37.5		%				37.9		%
Net sales in foreign currencies															$	177,624					$	148,971
% of net sales															21.5		%				22.0		%
Ten largest global customers as % of net sales															23.6		%				22.8		%

For the three months ended June 30, 2024, and 2023, no single foreign country comprised 10.0% or more of the Company’s total net sales. For the three months ended June 30, 2024, and 2023, no single global customer accounted for 10.0% or more of the Company’s total net sales.

The Company has two customers that represent 23.5% and 31.2% of trade accounts receivable, net, as of June 30, 2024, and March 31, 2024, respectively. Management performs regular evaluations concerning the ability of the Company’s customers to satisfy their obligations to the Company and recognizes an allowance for doubtful accounts based on these evaluations.

Cash and Cash Equivalents. The Company maintains a portion of its cash in Federal Deposit Insurance Corporation insured bank deposit accounts which, at times, may exceed federally insured limits. To date, the Company has not experienced any losses in such accounts. Based on the size and strength of the banking institutions used, the Company does not believe it is exposed to any significant credit risks in cash.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended June 30, 2024, and 2023

(dollar amounts in thousands, except per share or share data)

Long-Lived Assets. Long-lived assets, which consist of property and equipment, net, recorded in the condensed consolidated balance sheets, are as follows:

			June 30, 2024						March 31, 2024
United States			$	273,741					$	270,561
Foreign (1)			31,844						31,561
Total			$	305,585					$	302,122

(1) No single foreign country’s property and equipment, net, represents 10.0% or more of the Company’s total property and equipment, net, as of June 30, 2024, and March 31, 2024.

NOTE 11. SUPPLIER FINANCE PROGRAM

Supplier Finance Program. The Company has a voluntary SFP administered through a third-party platform that provides the Company’s independent manufacturers that supply its inventory (inventory suppliers) the opportunity to sell their receivables due from the Company to participating financial institutions in advance of the invoice due date, at the sole discretion of both inventory suppliers and the financial institutions. The Company is not party to the agreements between these third parties and has no economic interest in an inventory suppliers’ decision to sell a receivable.

The Company’s payment obligations, including the amounts due and payment terms, which generally do not exceed 90 days, are not impacted by the inventory suppliers’ election to participate in the SFP, and the Company provides no guarantees to any third parties under the SFP. Accordingly, amounts due to inventory suppliers that elected to participate in the SFP are presented in trade accounts payable in the condensed consolidated balance sheets.

As of June 30, 2024, and March 31, 2024, the Company had $8,571 and $3,483, respectively, of balances outstanding related to the SFP recorded in trade accounts payable in the condensed consolidated balance sheets. Payments made in connection with the SFP are reported as cash used in operating activities in the trade accounts payable line item of the condensed consolidated statements of cash flows.

NOTE 12. SUBSEQUENT EVENTS

Sanuk Brand Asset Sale. During October 2023, the Company announced that it intended to divest the Sanuk brand in alignment with effective resource allocation and the execution of its long-term objectives. Subsequent to June 30, 2024, the Company entered into an agreement pursuant to which the buyer agreed to purchase the Sanuk brand and certain related assets, which is expected to close in August 2024.