filings.toolsItem 1. FINANCIAL STATEMENTS
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Item 1. FINANCIAL STATEMENTS
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollar and share data amounts in thousands, except par value)
| December 31, 2024 | March 31, 2024 | ||||||||||
| ASSETS | (AUDITED) | ||||||||||
| Cash and cash equivalents | $ | 2,240,923 | $ | 1,502,051 | |||||||
| Trade accounts receivable, net of allowances ($41,837 and $27,331 as of December 31, 2024, and March 31, 2024, respectively) | 303,079 | 296,565 | |||||||||
| Inventories | 576,669 | 474,311 | |||||||||
| Prepaid expenses | 47,005 | 34,284 | |||||||||
| Other current assets | 79,242 | 92,713 | |||||||||
| Income tax receivable | 27,194 | 43,559 | |||||||||
| Total current assets | 3,274,112 | 2,443,483 | |||||||||
| Property and equipment, net of accumulated depreciation ($391,945 and $349,138 as of December 31, 2024, and March 31, 2024, respectively) (Note 11) | 323,413 | 302,122 | |||||||||
| Operating lease assets | 218,876 | 225,669 | |||||||||
| Goodwill | 13,990 | 13,990 | |||||||||
| Other intangible assets, net of accumulated amortization ($24,417 and $91,314 as of December 31, 2024, and March 31, 2024, respectively) | 15,798 | 27,083 | |||||||||
| Deferred tax assets, net | 65,377 | 72,584 | |||||||||
| Other assets | 52,787 | 50,648 | |||||||||
| Total assets | $ | 3,964,353 | $ | 3,135,579 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Trade accounts payable | $ | 586,371 | $ | 378,503 | |||||||
| Accrued payroll | 97,336 | 123,653 | |||||||||
| Operating lease liabilities | 46,014 | 53,581 | |||||||||
| Other accrued expenses | 192,276 | 106,785 | |||||||||
| Income tax payable | 99,119 | 52,338 | |||||||||
| Value added tax payable | 11,766 | 5,133 | |||||||||
| Total current liabilities | 1,032,882 | 719,993 | |||||||||
| Long-term operating lease liabilities | 211,015 | 213,298 | |||||||||
| Income tax liability | 37,499 | 52,470 | |||||||||
| Other long-term liabilities | 52,038 | 42,350 | |||||||||
| Total long-term liabilities | 300,552 | 308,118 | |||||||||
| Commitments and contingencies (Note 5) | |||||||||||
| Stockholders’ equity | |||||||||||
| Common stock (par value $0.01 per share; 750,000 shares authorized; shares issued and outstanding of 151,770 and 153,554 as of December 31, 2024, and March 31, 2024, respectively) | 1,518 | 1,536 | |||||||||
| Additional paid-in capital | 259,947 | 243,050 | |||||||||
| Retained earnings | 2,424,898 | 1,913,615 | |||||||||
| Accumulated other comprehensive loss (Note 8) | (55,444) | (50,733) | |||||||||
| Total stockholders’ equity | 2,630,919 | 2,107,468 | |||||||||
| Total liabilities and stockholders’ equity | $ | 3,964,353 | $ | 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 December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net sales (Note 2, Note 10, and Note 11) | $ | 1,827,165 | $ | 1,560,307 | $ | 3,963,832 | $ | 3,328,005 | |||||||||||||||
| Cost of sales | 724,542 | 643,738 | 1,657,937 | 1,481,993 | |||||||||||||||||||
| Gross profit | 1,102,623 | 916,569 | 2,305,895 | 1,846,012 | |||||||||||||||||||
| Selling, general, and administrative expenses | 535,349 | 428,670 | 1,300,728 | 1,062,760 | |||||||||||||||||||
| Income from operations (Note 10) | 567,274 | 487,899 | 1,005,167 | 783,252 | |||||||||||||||||||
| Interest income | (15,978) | (11,895) | (48,027) | (33,271) | |||||||||||||||||||
| Interest expense | 610 | 911 | 2,792 | 2,927 | |||||||||||||||||||
| Other income, net | (1,300) | (170) | (1,605) | (1,138) | |||||||||||||||||||
| Total other income, net | (16,668) | (11,154) | (46,840) | (31,482) | |||||||||||||||||||
| Income before income taxes | 583,942 | 499,053 | 1,052,007 | 814,734 | |||||||||||||||||||
| Income tax expense (Note 4) | 127,208 | 109,134 | 237,327 | 182,716 | |||||||||||||||||||
| Net income | 456,734 | 389,919 | 814,680 | 632,018 | |||||||||||||||||||
| Other comprehensive (loss) income, net of tax | |||||||||||||||||||||||
| Unrealized gain (loss) on cash flow hedges | 6,021 | (3,645) | 2,555 | 110 | |||||||||||||||||||
| Foreign currency translation (loss) gain | (17,707) | 10,722 | (7,266) | (3,449) | |||||||||||||||||||
| Total other comprehensive (loss) income, net of tax | (11,686) | 7,077 | (4,711) | (3,339) | |||||||||||||||||||
| Comprehensive income | $ | 445,048 | $ | 396,996 | $ | 809,969 | $ | 628,679 | |||||||||||||||
| Net income per share | |||||||||||||||||||||||
| Basic | $ | 3.01 | $ | 2.53 | $ | 5.35 | $ | 4.06 | |||||||||||||||
| Diluted | $ | 3.00 | $ | 2.52 | $ | 5.33 | $ | 4.03 | |||||||||||||||
| Weighted-average common shares outstanding (Note 9) | |||||||||||||||||||||||
| Basic | 151,820 | 153,985 | 152,307 | 155,716 | |||||||||||||||||||
| Diluted | 152,386 | 154,865 | 152,924 | 156,670 |
See accompanying notes to the condensed consolidated financial statements.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(amounts in thousands)
| Nine Months Ended December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | 153,554 | $ | 1,536 | $ | 243,050 | $ | 1,913,615 | $ | (50,733) | $ | 2,107,468 | ||||||||||||||||||||||||
| Stock-based compensation | 2 | — | 8,231 | — | — | 8,231 | |||||||||||||||||||||||||||||
| Shares issued upon vesting | 6 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Exercise of stock options | 54 | 1 | 600 | — | — | 601 | |||||||||||||||||||||||||||||
| Shares withheld for taxes | — | — | (495) | — | — | (495) | |||||||||||||||||||||||||||||
| Repurchases of common stock (Note 8) | (1,062) | (11) | — | (151,956) | — | (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 | 152,554 | 1,526 | 251,386 | 1,876,103 | (54,533) | 2,074,482 | |||||||||||||||||||||||||||||
| Stock-based compensation | 2 | — | 11,657 | — | — | 11,657 | |||||||||||||||||||||||||||||
| Shares issued upon vesting | 129 | 1 | 1,637 | — | — | 1,638 | |||||||||||||||||||||||||||||
| Exercise of stock options | 9 | — | 93 | — | — | 93 | |||||||||||||||||||||||||||||
| Shares withheld for taxes | — | — | (12,561) | — | — | (12,561) | |||||||||||||||||||||||||||||
| Repurchases of common stock (Note 8) | (686) | (7) | — | (104,316) | — | (104,323) | |||||||||||||||||||||||||||||
| Excise taxes related to repurchases of common stock | — | — | — | (843) | — | (843) | |||||||||||||||||||||||||||||
| Net income | — | — | — | 242,321 | — | 242,321 | |||||||||||||||||||||||||||||
| Total other comprehensive income | — | — | — | — | 10,775 | 10,775 | |||||||||||||||||||||||||||||
| Balance, September 30, 2024 | 152,008 | 1,520 | 252,212 | 2,013,265 | (43,758) | 2,223,239 | |||||||||||||||||||||||||||||
| Stock-based compensation | 2 | — | 8,653 | — | — | 8,653 | |||||||||||||||||||||||||||||
| Shares issued upon vesting | 8 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Exercise of stock options | 27 | — | 274 | — | — | 274 | |||||||||||||||||||||||||||||
| Shares withheld for taxes | — | — | (1,192) | — | — | (1,192) | |||||||||||||||||||||||||||||
| Repurchases of common stock (Note 8) | (275) | (2) | — | (44,719) | — | (44,721) | |||||||||||||||||||||||||||||
| Excise taxes related to repurchases of common stock | — | — | — | (382) | — | (382) | |||||||||||||||||||||||||||||
| Net income | — | — | — | 456,734 | — | 456,734 | |||||||||||||||||||||||||||||
| Total other comprehensive loss | — | — | — | — | (11,686) | (11,686) | |||||||||||||||||||||||||||||
| Balance, December 31, 2024 | 151,770 | $ | 1,518 | $ | 259,947 | $ | 2,424,898 | $ | (55,444) | $ | 2,630,919 |
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(amounts in thousands)
(continued)
| Nine Months Ended December 31, 2023 | |||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | 157,054 | $ | 1,571 | $ | 230,841 | $ | 1,572,356 | $ | (39,035) | $ | 1,765,733 | ||||||||||||||||||||||||
| Stock-based compensation | 4 | — | 6,877 | — | — | 6,877 | |||||||||||||||||||||||||||||
| Shares issued upon vesting | 16 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Exercise of stock options | 47 | — | 548 | — | — | 548 | |||||||||||||||||||||||||||||
| Shares withheld for taxes | — | — | (698) | — | — | (698) | |||||||||||||||||||||||||||||
| Repurchases of common stock (Note 8) | (314) | (3) | — | (25,466) | — | (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 | 156,807 | 1,568 | 237,568 | 1,610,319 | (47,334) | 1,802,121 | |||||||||||||||||||||||||||||
| Stock-based compensation | 3 | — | 9,802 | — | — | 9,802 | |||||||||||||||||||||||||||||
| Shares issued upon vesting | 144 | 1 | 1,164 | — | — | 1,165 | |||||||||||||||||||||||||||||
| Exercise of stock options | 46 | — | 533 | — | — | 533 | |||||||||||||||||||||||||||||
| Shares withheld for taxes | — | — | (7,759) | — | — | (7,759) | |||||||||||||||||||||||||||||
| Repurchases of common stock (Note 8) | (2,082) | (21) | — | (185,448) | — | (185,469) | |||||||||||||||||||||||||||||
| Excise taxes related to repurchases of common stock | — | — | — | (1,693) | — | (1,693) | |||||||||||||||||||||||||||||
| Net income | — | — | — | 178,547 | — | 178,547 | |||||||||||||||||||||||||||||
| Total other comprehensive loss | — | — | — | — | (2,117) | (2,117) | |||||||||||||||||||||||||||||
| Balance, September 30, 2023 | 154,918 | 1,548 | 241,308 | 1,601,725 | (49,451) | 1,795,130 | |||||||||||||||||||||||||||||
| Stock-based compensation | 3 | 1 | 11,845 | — | — | 11,846 | |||||||||||||||||||||||||||||
| Shares issued upon vesting | 14 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Exercise of stock options | 135 | 2 | 1,442 | — | — | 1,444 | |||||||||||||||||||||||||||||
| Shares withheld for taxes | — | — | (696) | — | — | (696) | |||||||||||||||||||||||||||||
| Repurchases of common stock (Note 8) | (1,178) | (12) | — | (99,685) | — | (99,697) | |||||||||||||||||||||||||||||
| Excise taxes related to repurchases of common stock | — | — | — | (833) | — | (833) | |||||||||||||||||||||||||||||
| Net income | — | — | — | 389,919 | — | 389,919 | |||||||||||||||||||||||||||||
| Total other comprehensive income | — | — | — | — | 7,077 | 7,077 | |||||||||||||||||||||||||||||
| Balance, December 31, 2023 | 153,892 | $ | 1,539 | $ | 253,899 | $ | 1,891,126 | $ | (42,374) | $ | 2,104,190 |
See accompanying notes to the condensed consolidated financial statements.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(amounts in thousands)
| Nine Months Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 814,680 | $ | 632,018 | |||||||
| Reconciliation of net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation, amortization, and accretion | 50,911 | 40,901 | |||||||||
| Amortization on cloud computing arrangements | 1,858 | 1,651 | |||||||||
| Bad debt expense | 5,294 | 2,212 | |||||||||
| Deferred tax expense | 5,791 | 2,850 | |||||||||
| Stock-based compensation | 28,774 | 28,687 | |||||||||
| Loss on disposal of assets | 3,022 | 235 | |||||||||
| Impairment of cloud computing arrangements, operating lease, and other long-lived assets | 3,699 | 1,129 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Trade accounts receivable, net | (11,809) | (32,379) | |||||||||
| Inventories | (105,787) | (6,111) | |||||||||
| Prepaid expenses and other current assets | 2,502 | (22,498) | |||||||||
| Income tax receivable | 16,364 | (10,585) | |||||||||
| Net operating lease assets and lease liabilities | (2,791) | 8,188 | |||||||||
| Other assets | (6,161) | (6,595) | |||||||||
| Trade accounts payable | 206,893 | 242,496 | |||||||||
| Other accrued expenses | 64,307 | 92,042 | |||||||||
| Income tax payable | 46,781 | 92,028 | |||||||||
| Other long-term liabilities | (6,813) | (4,411) | |||||||||
| Net cash provided by operating activities | 1,117,515 | 1,061,858 | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Purchases of property and equipment | (69,729) | (74,078) | |||||||||
| Proceeds from sale of assets | 11,168 | 34 | |||||||||
| Net cash used in investing activities | (58,561) | (74,044) | |||||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from issuance of stock | 1,638 | 1,165 | |||||||||
| Proceeds from exercise of stock options | 968 | 2,525 | |||||||||
| Repurchases of common stock | (301,011) | (310,635) | |||||||||
| Cash paid for excise taxes related to repurchases of common stock | (3,985) | — | |||||||||
| Cash paid for shares withheld for taxes | (14,248) | (9,153) | |||||||||
| Net cash used in financing activities | (316,638) | (316,098) | |||||||||
| Effect of foreign currency exchange rates on cash and cash equivalents | (3,444) | (2,709) | |||||||||
| Net change in cash and cash equivalents | 738,872 | 669,007 | |||||||||
| Cash and cash equivalents at beginning of period | 1,502,051 | 981,795 | |||||||||
| Cash and cash equivalents at end of period | $ | 2,240,923 | $ | 1,650,802 | |||||||
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(amounts in thousands)
(continued)
| Nine Months Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| SUPPLEMENTAL CASH FLOW DISCLOSURE | |||||||||||
| Cash paid during the period | |||||||||||
| Income taxes | $ | 182,282 | $ | 108,439 | |||||||
| Interest | 1,246 | 1,358 | |||||||||
| Operating leases | 52,165 | 49,283 | |||||||||
| Non-cash investing activities | |||||||||||
| Changes in trade accounts payable and other accrued expenses for purchases of property and equipment | 979 | (10,162) | |||||||||
| Accrued for asset retirement obligation assets related to leasehold improvements | 1,399 | 1,094 | |||||||||
| Leasehold improvements acquired through tenant allowances | — | 8,127 | |||||||||
| Non-cash financing activities | |||||||||||
| Accrued excise taxes related to repurchases of common stock | 2,406 | 2,649 |
See accompanying notes to the condensed consolidated financial statements.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 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 five proprietary brands include the UGG, HOKA, Teva, Koolaburra, and AHNU brands. Refer to the section titled “Reportable Operating Segments,” below within this Note 1, “General,” for information on the sale of the Sanuk brand during the three months ended September 30, 2024 (prior quarter) and the Company’s plans to phase out standalone operations for the Koolaburra brand.
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 December 31, 2024, and for the three and nine months ended December 31, 2024 (current period), and 2023 (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).
Forward Stock Split and Authorized Share Increase. On September 13, 2024, the Company (i) effected a six-for-one forward stock split of its common stock and preferred stock (the stock split), and (ii) increased the number of authorized shares of its common stock from 125,000,000 to 750,000,000, and the number of authorized shares of its capital stock from 130,000,000 to 755,000,000 (the authorized share increase). The stock split and the authorized share increase were effected through the filing of an amendment to the Company’s Amended and Restated Certificate of Incorporation (Charter Amendment) with the Secretary of State of the State of Delaware, which was approved by the Company’s stockholders at the Annual Meeting of Stockholders held on September 9, 2024 (Annual Meeting). The Charter Amendment did not provide for any increase in the number of authorized shares of preferred stock, which remains at 5,000,000 shares. There are no shares of preferred stock outstanding as of December 31, 2024, and March 31, 2024. As a result of the stock split, every one share of common stock outstanding on September 6, 2024, the record date for the stock split, was automatically split into six shares of common stock. The common stock commenced trading on a post-stock split adjusted basis on September 17, 2024.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
All prior period results included in the condensed consolidated financial statements and the related notes within this Quarterly Report have been retroactively adjusted to reflect the effectiveness of the stock split and the authorized share increase. Specifically, all share and per share amounts have been adjusted, including: (i) the number of shares authorized and outstanding on the condensed consolidated balance sheets, (ii) the weighted-average common shares outstanding and the associated earnings per share amounts in the condensed consolidated statements of comprehensive income, as well as the weighted average common shares outstanding disaggregated in Note 9, “Basic and Diluted Shares,” (iii) the number of shares underlying stock awards and the weighted-average grant date fair value of annual stock awards in Note 6, “Stock-Based Compensation,” and (iv) the total number of shares repurchased and the weighted average price per share paid in Note 8, “Stockholders’ Equity.” Further, as there was no change to par value, an amount equal to the par value of the increased shares resulting from the stock split for shares issued was reclassified to common stock from additional paid-in capital, and for share repurchases was reclassified to retained earnings from common stock, in the condensed consolidated balance sheets and the condensed consolidated statements of stockholders’ equity.
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.
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. As of December 31, 2024, the Company’s five reportable operating segments include the worldwide wholesale operations of the UGG brand, HOKA brand, Teva brand, and Other brands (primarily consisting of the Koolaburra brand, as well as the recently launched AHNU brand), as well as DTC (collectively, the Company’s reportable operating segments).
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
Sanuk Brand. During the prior quarter, the Company entered into an agreement pursuant to which the buyer agreed to purchase the Sanuk brand and certain related assets which was completed on August 15, 2024 (Sanuk Brand Sale Date). The Company determined that the divestiture of the Sanuk brand did not represent a strategic shift that had or will have a major effect on the condensed consolidated results of operations, and therefore results of this business were not classified as discontinued operations. The Company’s financial results for its reportable operating segments present the former Sanuk brand through the Sanuk Brand Sale Date for all channels, and the former Sanuk brand wholesale reportable operating segment financial results has been reclassified into the Other brands wholesale reportable operating segment for all periods presented. Refer to Note 10, “Reportable Operating Segments,” for further information on the Company’s reportable operating segments.
Koolaburra Brand. During the three months ended December 31, 2024, the Company began taking steps to phase out its standalone operations for the Koolaburra brand in order to maintain focus on the Company’s most significant organic opportunities. As part of this change, the Company expects to sunset Koolaburra.com at the close of this current fiscal year and wind down the Koolaburra brand in the wholesale channel throughout calendar year 2025. As of December 31, 2024, the Company has not incurred, nor expects to incur, material exit costs or obligations associated with this plan.
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 an ASU adopted by and its 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 prospective 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 SFPs 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 consolidated financial statements. | ||||||||||||||||||
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 | Other than additional disclosures, the Company does not expect a material change to its annual and interim consolidated financial statements. |
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
| Standard | Description | Planned Period of Adoption | Expected Impact on Adoption | |||||||||||||||||
| 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 disclosures in its annual and interim consolidated financial statements. | |||||||||||||||||
| ASU 2024-03 - Disaggregation of Income Statement Expenses (as amended by ASU 2025-01) | The ASU requires disaggregated disclosure of relevant statement of comprehensive income expense captions including tabular presentation of prescribed expense categories such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and other specific expense, gains, and losses required by existing US GAAP. The ASU is effective on a prospective basis, with retrospective application permitted, for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. | Q4 FY 2028 and Q1 FY 2029 | The Company is currently evaluating the impact of the adoption of this ASU on its disclosures in its annual and interim consolidated financial statements. | |||||||||||||||||
NOTE 2. REVENUE RECOGNITION
Disaggregated Revenue. Refer to Note 10, “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) | 63,580 | (266,277) | |||||||||
| Actual returns | (47,842) | 216,359 | |||||||||
| Balance, December 31, 2024 | $ | 29,604 | $ | (105,245) |
| Recovery Asset | Refund Liability | ||||||||||
| Balance, March 31, 2023 | $ | 15,685 | $ | (45,322) | |||||||
| Net additions to sales return liability (1) | 52,700 | (221,702) | |||||||||
| Actual returns | (43,081) | 180,736 | |||||||||
| Balance, December 31, 2023 | $ | 25,304 | $ | (86,288) |
(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.
Contract Liabilities. Contract liabilities are recorded in other accrued expenses in the condensed consolidated balance sheets and include loyalty programs and other deferred revenue.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
Loyalty Programs. Activity related to loyalty programs was as follows:
| Nine Months Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Beginning balance | $ | (17,586) | $ | (13,144) | |||||||
| Redemptions and expirations for loyalty certificates and points recognized in net sales | 45,884 | 35,518 | |||||||||
| Deferred revenue for loyalty points and certificates issued | (56,363) | (45,002) | |||||||||
| Ending balance | $ | (28,065) | $ | (22,628) |
Deferred Revenue. Activity related to deferred revenue was as follows:
| Nine Months Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Beginning balance | $ | (9,591) | $ | (13,448) | |||||||
| Additions of customer cash payments | (69,422) | (53,615) | |||||||||
| Revenue recognized | 60,217 | 45,739 | |||||||||
| Ending balance | $ | (18,796) | $ | (21,324) |
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 | ||||||||||||||||||||||
| December 31, 2024 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money-market funds | $ | 1,704,902 | $ | 1,704,902 | $ | — | $ | — | |||||||||||||||
| Other current assets: | |||||||||||||||||||||||
| Designated Derivative Contracts asset | 3,380 | — | 3,380 | — | |||||||||||||||||||
| Other assets: | |||||||||||||||||||||||
| Non-qualified deferred compensation asset | 16,824 | 16,824 | — | — | |||||||||||||||||||
| Total assets measured at fair value | $ | 1,725,106 | $ | 1,721,726 | $ | 3,380 | $ | — | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Other accrued expenses: | |||||||||||||||||||||||
| Non-qualified deferred compensation liability | $ | (1,192) | $ | (1,192) | $ | — | $ | — | |||||||||||||||
| Other long-term liabilities: | |||||||||||||||||||||||
| Non-qualified deferred compensation liability | (24,731) | (24,731) | — | — | |||||||||||||||||||
| Total liabilities measured at fair value | $ | (25,923) | $ | (25,923) | $ | — | $ | — |
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
| 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 7, “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 December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Income tax expense | $ | 127,208 | $ | 109,134 | $ | 237,327 | $ | 182,716 | |||||||||||||||
| Effective income tax rate | 21.8 | % | 21.9 | % | 22.6 | % | 22.4 | % |
The tax provisions during the three and nine months ended December 31, 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 current period, the net change in the effective income tax rate, compared to the prior period, was primarily due to changes in jurisdictional mix of worldwide income before income taxes, partially offset by a lower benefit from net discrete items, including a change in return-to-provision adjustments and tax benefits for stock-based compensation. In addition, the net change in the effective income tax rate due to net discrete items during the nine months ended December 31, 2024 included a change in valuation allowance on tax attributes.
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 in which the Company operates 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 current period. 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.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
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 nine months ended December 31, 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 December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Non-cash operating activities (1) | |||||||||||||||||||||||
| Operating lease assets obtained in exchange for lease liabilities | $ | 23,814 | $ | 32,929 | $ | 39,912 | $ | 67,668 | |||||||||||||||
| Reductions to operating lease assets for reductions to lease liabilities | (229) | (79) | (1,350) | (7,750) |
(1) Amounts disclosed include non-cash additions or reductions resulting from lease remeasurements, as well as reductions for tenant improvement allowances.
Purchase Obligations. There were no material changes outside the ordinary course of business during the nine months ended December 31, 2024, to purchase obligations disclosed in the 2024 Annual Report.
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.
NOTE 6. STOCK-BASED COMPENSATION
Stock Incentive Plans. In September 2015, the Company’s stockholders approved the 2015 Stock Incentive Plan (2015 SIP), which initially reserved 7,650,000 shares of the Company’s common stock for issuance to employees, directors, consultants, independent contractors, and advisors. The 2015 SIP provided for the issuance of a variety of stock-based compensation awards, including time-based restricted stock units (RSUs), performance-based restricted stock units (PSUs), long-term incentive plan PSUs (LTIP PSUs), stock appreciation rights, stock bonuses, incentive stock options (ISOs), and non-qualified stock options (NQSOs). Refer to Note 8, “Stock-Based Compensation,” in the Company’s consolidated financial statements in Part IV of the 2024 Annual Report for additional information about the terms of the 2015 SIP.
In September 2024, the Company’s stockholders approved the 2024 Stock Incentive Plan (2024 SIP), which is intended to replace the 2015 SIP. Consistent with the 2015 SIP, the primary purpose of the 2024 SIP is to encourage ownership in the Company by key personnel, whose long-term service is considered essential to the Company’s continued success. As a result of the stock split, the number of shares of common stock reserved for issuance under the 2024 SIP and the number of shares underlying outstanding equity awards and the exercise price of stock options were adjusted proportionately.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
The 2024 SIP initially reserves 7,800,000 shares of the Company’s common stock for issuance to employees, directors, consultants, and independent contractors, less one share for every one share granted under the 2015 SIP after March 31, 2024 and prior to September 9, 2024, the effective date of the 2024 SIP, subject to an increase from the return of shares under the 2015 SIP as described below. The terms of the 2024 SIP are substantially similar to the terms of the 2015 SIP. The 2024 SIP provides for the issuance of a variety of stock-based compensation awards, including RSUs, PSUs, LTIP PSUs, stock appreciation rights, stock bonuses, ISOs, and NQSOs. The maximum aggregate number of shares that may be issued to employees under the 2024 SIP through the exercise of ISOs is 4,500,000.
The Company will not grant any further equity awards under the 2015 SIP. Outstanding awards under the 2015 SIP will remain outstanding, unchanged and subject to the terms of the 2015 SIP and their respective award agreements. Shares subject to awards that are forfeited, expire or are otherwise terminated without shares being issued, or shares withheld to pay the exercise price of an award or to satisfy tax withholding obligations, including shares subject to awards granted under the 2015 SIP that are outstanding after March 31, 2024, will be returned to the pool of shares available for grant and issuance under the 2024 SIP. As of December 31, 2024, 7,783,829 shares of common stock remained available for future issuance under the 2024 SIP, subject to adjustment for future stock splits, stock dividends, and similar changes in capitalization.
Annual Stock Awards. The Company granted the following awards during the periods presented:
| Nine Months Ended December 31, | ||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||
| Award Type | Number of Shares | Weighted-Average Grant Date Fair Value | Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||||||||
| RSUs | 159,891 | $ | 159.73 | 220,044 | $ | 92.12 | ||||||||||||||||||||
| LTIP PSUs (1) | 72,213 | 173.09 | 125,076 | 105.65 | ||||||||||||||||||||||
(1) The amounts granted are at the target performance level under the terms of the applicable LTIP PSUs.
During the nine months ended December 31, 2024, with the exception of the RSU and LTIP PSU awards summarized above, additional material awards were not granted under the 2015 SIP or 2024 SIP.
For the LTIP PSUs granted during fiscal years ending March 31, 2025, 2024, and 2023, the Company expects to exceed the minimum threshold target performance criteria based on the Company’s current long-range forecast as of December 31, 2024. 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 prior grants, including terms of each grant under the 2015 SIP.
Employee Stock Purchase Plans. In September 2015, the Company’s stockholders approved the 2015 Employee Stock Purchase Plan (2015 ESPP), which authorized 6,000,000 shares of the Company’s common stock for sale to eligible employees using after-tax payroll deductions. Following the issuance of shares under the 2015 ESPP to employees who are participating in the offering period ending February 28, 2025, the 2015 ESPP will be terminated, and no new offering periods under the 2015 ESPP will commence thereafter. Refer to Note 8, “Stock-Based Compensation,” in the Company’s consolidated financial statements in Part IV of the 2024 Annual Report for additional information related to the terms of the 2015 ESPP.
In September 2024, the Company’s stockholders approved the 2024 Employee Stock Purchase Plan (2024 ESPP), which is intended to replace the 2015 ESPP. The 2024 ESPP reserves 6,000,000 shares of the Company’s common stock for sale to eligible employees. The terms of the 2024 ESPP are substantially similar to the terms of the 2015 ESPP. Each offering period under the 2024 ESPP is anticipated to run for approximately six months with purchases occurring on the last day of each offering period at a 15% discount to the closing price on that date. The first offering period is expected to commence on March 1, 2025.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
Unrecognized Stock-Based Compensation. Total remaining unrecognized stock-based compensation as of December 31, 2024, related to non-vested awards that the Company considers probable to vest and the weighted-average period over which the cost is expected to be recognized in future periods, is as follows:
| Award Type | Unrecognized Stock-Based Compensation | Weighted-Average Remaining Vesting Period (Years) | ||||||||||||
| RSUs | $ | 26,790 | 1.2 | |||||||||||
| LTIP PSUs | 23,585 | 1.0 | ||||||||||||
| Total | $ | 50,375 |
NOTE 7. 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). Refer to Note 1, “General,” in the Company’s consolidated financial statements in Part IV of the 2024 Annual Report for further information related to accounting policies on the Company’s derivative contracts.
As of December 31, 2024, the Company has the following derivative contracts recorded at fair value in the condensed consolidated balance sheets:
| Notional value | $ | 66,620 | |||||||||||||||
| Fair value recorded in other current assets | 3,380 | ||||||||||||||||
As of December 31, 2024, three counterparties hold the Company’s outstanding derivative contracts, all of which are expected to mature in the next three 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 accumulated other comprehensive loss (AOCL):
| Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Gain (loss) recorded in OCI | $ | 6,575 | $ | (1,318) | $ | 2,219 | $ | 3,798 | |||||||||||||||
| Reclassifications from AOCL into net sales | 1,389 | (3,503) | 1,161 | (3,652) | |||||||||||||||||||
| Income tax (expense) benefit in OCI | (1,943) | 1,176 | (825) | (36) | |||||||||||||||||||
| Total | $ | 6,021 | $ | (3,645) | $ | 2,555 | $ | 110 |
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 December 31, 2024, the amount of unrealized gains on derivative contracts recorded in AOCL is expected to be reclassified into net sales within the next three months. Refer to Note 8, “Stockholders’ Equity,” for further information on the components of AOCL.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
NOTE 8. 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 December 31, 2024, the aggregate remaining approved amount under the stock repurchase program is $640,692. 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.
Stock repurchase activity under the Company’s stock repurchase program was as follows:
| Nine Months Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Total number of shares repurchased (1) | 2,022,299 | 3,573,960 | |||||||||
| Weighted average price per share paid | $ | 148.85 | $ | 86.92 | |||||||
| Dollar value of shares repurchased (2) (3) | $ | 301,011 | $ | 310,635 |
(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.
Accumulated Other Comprehensive Loss. The components within AOCL, net of tax, recorded in the condensed consolidated balance sheets, are as follows:
| December 31, 2024 | March 31, 2024 | ||||||||||
| Unrealized gain on cash flow hedges | $ | 2,555 | $ | — | |||||||
| Cumulative foreign currency translation loss | (57,999) | (50,733) | |||||||||
| Total | $ | (55,444) | $ | (50,733) |
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
NOTE 9. BASIC AND DILUTED SHARES
The reconciliation of basic to diluted weighted-average common shares outstanding was as follows:
| Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Basic | 151,820,000 | 153,985,000 | 152,307,000 | 155,716,000 | |||||||||||||||||||
| Dilutive effect of equity awards | 566,000 | 880,000 | 617,000 | 954,000 | |||||||||||||||||||
| Diluted | 152,386,000 | 154,865,000 | 152,924,000 | 156,670,000 | |||||||||||||||||||
| Excluded | |||||||||||||||||||||||
| RSUs | — | 5,000 | 16,000 | 8,000 | |||||||||||||||||||
| LTIP PSUs | 272,000 | 551,000 | 292,000 | 551,000 | |||||||||||||||||||
| Deferred Non-Employee Director Equity Awards | 1,000 | 2,000 | 1,000 | 2,000 | |||||||||||||||||||
| Employee Stock Purchase Plan | 3,000 | 3,000 | — | 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 6, “Stock-Based Compensation,” within this Quarterly Report and 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.
NOTE 10. 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 five 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.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
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 December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net sales | |||||||||||||||||||||||
| UGG brand wholesale | $ | 467,998 | $ | 402,876 | $ | 1,122,952 | $ | 976,262 | |||||||||||||||
| HOKA brand wholesale | 305,241 | 252,222 | 1,000,317 | 776,042 | |||||||||||||||||||
| Teva brand wholesale | 18,853 | 20,449 | 62,344 | 67,731 | |||||||||||||||||||
| Other brands wholesale (1) | 23,736 | 26,614 | 58,650 | 67,721 | |||||||||||||||||||
| Direct-to-Consumer (1) | 1,011,337 | 858,146 | 1,719,569 | 1,440,249 | |||||||||||||||||||
| Total | $ | 1,827,165 | $ | 1,560,307 | $ | 3,963,832 | $ | 3,328,005 |
| Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Income (loss) from operations | |||||||||||||||||||||||
| UGG brand wholesale | $ | 190,888 | $ | 153,653 | $ | 424,812 | $ | 336,421 | |||||||||||||||
| HOKA brand wholesale | 84,052 | 83,654 | 324,687 | 252,051 | |||||||||||||||||||
| Teva brand wholesale | (738) | 2,047 | 4,835 | 10,637 | |||||||||||||||||||
| Other brands wholesale (1) | 5,350 | (1,365) | 4,161 | 3,509 | |||||||||||||||||||
| Direct-to-Consumer (1) | 481,021 | 401,075 | 730,878 | 588,792 | |||||||||||||||||||
| Unallocated overhead costs | (193,299) | (151,165) | (484,206) | (408,158) | |||||||||||||||||||
| Total | $ | 567,274 | $ | 487,899 | $ | 1,005,167 | $ | 783,252 |
(1) Includes current period partial financial results through the Sanuk Brand Sale Date and full financial results to date for the three and nine months ended December 31, 2023. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” for further information on the sale of the Sanuk brand completed in the prior quarter and the reclassification of financial results of the former Sanuk brand wholesale reportable operating segment into the Other brands wholesale reportable operating segment for all periods presented.
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.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 2024, and 2023
(dollar amounts in thousands, except per share or share data)
Assets allocated to each reportable operating segment, with a reconciliation to the condensed consolidated balance sheets, are as follows:
| December 31, 2024 | March 31, 2024 | ||||||||||
| Assets | |||||||||||
| UGG brand wholesale | $ | 357,634 | $ | 247,136 | |||||||
| HOKA brand wholesale | 464,046 | 436,147 | |||||||||
| Teva brand wholesale | 54,354 | 81,703 | |||||||||
| Other brands wholesale (1) | 12,224 | 27,905 | |||||||||
| Direct-to-Consumer | 307,008 | 263,840 | |||||||||
| Total assets from reportable operating segments | 1,195,266 | 1,056,731 | |||||||||
| Unallocated cash and cash equivalents | 2,240,923 | 1,502,051 | |||||||||
| Unallocated deferred tax assets, net | 65,377 | 72,584 | |||||||||
| Unallocated other corporate assets | 462,787 | 504,213 | |||||||||
| Total | $ | 3,964,353 | $ | 3,135,579 |
(1) Effective on the Sanuk Brand Sale Date, the Sanuk brand and certain related assets were sold, all within the former Sanuk brand wholesale reportable operating segment. The assets for the former Sanuk brand wholesale reportable operating segment as of March 31, 2024 are presented within the Other brands wholesale reportable operating segment. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” for further information.
NOTE 11. 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 December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| International net sales | $ | 657,874 | $ | 511,918 | $ | 1,424,775 | $ | 1,112,048 | |||||||||||||||
| % of net sales | 36.0 | % | 32.8 | % | 35.9 | % | 33.4 | % | |||||||||||||||
| Net sales in foreign currencies | $ | 517,992 | $ | 415,505 | $ | 1,070,798 | $ | 856,820 | |||||||||||||||
| % of net sales | 28.3 | % | 26.6 | % | 27.0 | % | 25.7 | % | |||||||||||||||
| Ten largest global customers as % of net sales | 21.1 | % | 22.5 | % | 24.3 | % | 25.2 | % |
For the three and nine months ended December 31, 2024, and 2023, no single foreign country and no single global customer comprised 10.0% or more of the Company’s total net sales.
As of December 31, 2024, the Company has no customers that represent 10.0% of trade accounts receivable, net, compared to two customers that in total represented 31.2% of trade accounts receivable, net as of March 31, 2024. 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.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Three and Nine Months Ended December 31, 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:
| December 31, 2024 | March 31, 2024 | ||||||||||
| United States | $ | 288,845 | $ | 270,561 | |||||||
| Foreign (1) | 34,568 | 31,561 | |||||||||
| Total | $ | 323,413 | $ | 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 December 31, 2024, and March 31, 2024.
NOTE 12. 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 December 31, 2024, and March 31, 2024, the Company had $3,411 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.
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