Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read together with our condensed consolidated financial statements and the related notes included in Part I, Item 1, “Financial Statements,” within this Quarterly Report, and the audited consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of our 2025 Annual Report, filed with the SEC on May 23, 2025, which is available free of charge on the SEC’s website at www.sec.gov and our website at ir.deckers.com*.*

Certain statements made in this section constitute “forward-looking statements,” which are subject to numerous risks and uncertainties. Our actual results of operations may differ materially from those expressed or implied by these forward-looking statements as a result of many factors, including those set forth in the section titled “Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A, “Risk Factors,” within this Quarterly Report.

OVERVIEW

We are a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities. We market our products primarily under five proprietary brands: HOKA, UGG, Teva, AHNU, and Koolaburra. Our brands compete across the fashion and casual lifestyle, performance, running, and outdoor markets. We believe our products are distinctive and appeal to a broad demographic. Our brands sell our products through quality domestic and international retailers and international distributors in our wholesale channel, and directly to global consumers through our DTC channel, which is comprised of an e-commerce and retail store presence. We seek to differentiate our brands and products by offering diverse lines that emphasize fashion, authenticity, functionality, quality, and comfort, and products tailored to a variety of activities, seasons, and demographic groups. Independent third-party contractors manufacture all of our products.

Refer to the section below entitled “Reportable Operating Segments Overview” for information on recent developments with the Koolaburra brand and Sanuk brand.

FINANCIAL HIGHLIGHTS

Consolidated financial performance highlights for the three months ended June 30, 2025, compared to the prior period, were as follows:

• Net sales increased 16.9% to $964,538.

**◦**Brand

▪HOKA brand net sales increased 19.8% to $653,119.

▪UGG brand net sales increased 18.9% to $265,092.

▪Other brands net sales decreased 19.0% to $46,327.

**◦**Channel

▪Wholesale channel net sales increased 26.7% to $652,364.

▪DTC channel net sales increased 0.5% to $312,174.

**◦**Geography

▪Domestic net sales decreased 2.8% to $501,258.

▪International net sales increased 49.7% to $463,280.

• Gross margin decreased 110 basis points to 55.8%.

• SG&A expenses increased 10.5% to $372,619.

• Income from operations increased 24.5% to $165,287.

• Operating margin increased 110 basis points to 17.1%.

• Diluted earnings per share increased 24.0% to $0.93 per share.

TRENDS AND UNCERTAINTIES IMPACTING OUR BUSINESS AND INDUSTRY

We expect our business and industry will continue to be impacted by several important trends and uncertainties, which have not materially changed from those described in our 2025 Annual Report. Refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2025 Annual Report for further discussion. Refer to Part I, Item 1A, “Risk Factors,” of our 2025 Annual Report for detailed information on the risks and uncertainties that may cause our actual results to differ materially from our expectations.

REPORTABLE OPERATING SEGMENTS OVERVIEW

As of June 30, 2025, our three reportable operating segments include the worldwide operations of the HOKA brand, UGG brand, and Other brands.

HOKA Brand**.** The HOKA brand is an authentic premium line of year-round performance footwear, which offers enhanced cushioning and inherent stability with minimal weight. Originally designed for ultra-runners, the brand now appeals to world champions, taste makers, and everyday athletes. Expanded marketing and strategic marketplace presence have fueled both domestic and international sales growth of the HOKA brand, which has quickly become a leading brand within run and outdoor specialty wholesale accounts and is growing across its global marketplace. The HOKA brand’s product line includes running, trail, hiking, fitness, and lifestyle footwear offerings, as well as select apparel and accessories.

UGG Brand. The UGG brand is one of the most iconic and recognized footwear brands in our industry, which highlights our successful track record of building niche brands into lifestyle and fashion market leaders. With loyal consumers around the world, the UGG brand has proven to be a highly resilient consumer-focused line of premium footwear, apparel, and accessories with year-round product offerings that appeal to a growing global audience and a broad demographic.

Other Brands. Other brands consist primarily of the Teva brand, AHNU brand, and Koolaburra brand. The Teva brand’s products are built for a range of outdoor pursuits and include a variety of footwear options, from classic sandals and shoes to boots. The AHNU brand’s footwear products fuse high-performance technology with timeless style crafted for everyday wear. The Koolaburra brand, for which we are phasing out standalone operations by the end of calendar year 2025, is a casual footwear brand that uses plush materials to target value-oriented consumers.

During the third quarter of fiscal year 2025, we began taking steps to phase out the standalone operations for the Koolaburra brand in order to maintain focus on our most significant organic opportunities. We closed Koolaburra.com as of March 31, 2025, and plan to wind down the Koolaburra brand in the wholesale channel by the end of calendar year 2025.

In addition, we completed the sale of the Sanuk brand during the second quarter of our prior fiscal year. The financial results for our reportable operating segments present the former Sanuk brand within the Other brands reportable operating segment through the brand’s sale date, August 15, 2024.

Refer to the section titled “Reportable Operating Segment Overview,” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2025 Annual Report for further discussion of our reportable operating segments.

USE OF NON-GAAP FINANCIAL MEASURES

We disclose supplemental financial measures calculated and presented in accordance with US GAAP; however, throughout this Quarterly Report we provide certain financial information on a non-GAAP basis (non-GAAP financial measures). We provide non-GAAP financial measures to provide information that may assist investors in understanding our results of operations and assessing our prospects for future performance, which consist of constant currency measures. We believe evaluating certain financial and operating measures on a constant currency basis is important as it excludes the impact of foreign currency exchange rate fluctuations that are not indicative of our core results of operations and are largely outside of our control. However, our non-GAAP financial measures are not intended to represent and should not be considered more meaningful measures than, or alternatives to, measures of financial or operating performance as determined in accordance with US GAAP.

We calculate our constant currency non-GAAP financial measures for current period financial information, such as total net sales using the foreign currency exchange rates that were in effect during the previous comparable period, excluding the effects of foreign currency exchange rate hedges and remeasurements in the condensed consolidated financial statements. We also report comparable DTC sales on a constant currency basis for DTC operations that were open throughout the current and prior reporting periods, and we may adjust prior reporting periods to conform to current year accounting policies. The information presented on a constant currency basis, as we present such information, may not necessarily be comparable to similarly titled information presented by other companies, and may not be appropriate measures for comparing our performance relative to other companies. Constant currency measures should not be considered in isolation as an alternative to US dollar measures that reflect current period foreign currency exchange rates or to other financial or operating measures presented in accordance with US GAAP.

SEASONALITY

Refer to Note 1, “General,” of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report and to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2025 Annual Report for detailed information regarding the impacts of seasonality on our business.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024. Results of operations were as follows:

			Three Months Ended June 30,
			2025												2024												Change
			Amount						% (1)						Amount						% (1)						Amount						%
Net sales			$	964,538					100.0		%				$	825,347					100.0		%				$	139,191					16.9		%
Cost of sales			426,632						44.2						355,347						43.1						(71,285)						(20.1)
Gross profit			537,906						55.8						470,000						56.9						67,906						14.4
Selling, general, and administrative expenses			372,619						38.7						337,193						40.9						(35,426)						(10.5)
Income from operations			165,287						17.1						132,807						16.0						32,480						24.5
Total other income, net			(17,779)						(1.9)						(16,346)						(2.1)						1,433						8.8
Income before income taxes			183,066						19.0						149,153						18.1						33,913						22.7
Income tax expense			43,863						4.6						33,528						4.1						(10,335)						(30.8)
Net income			139,203						14.4						115,625						14.0						23,578						20.4
Total other comprehensive loss, net of tax			(8,435)						(0.8)						(3,800)						(0.5)						(4,635)						(122.0)
Comprehensive income			$	130,768					13.6		%				$	111,825					13.5		%				$	18,943					16.9		%
Net income per share
Basic			$	0.93											$	0.76											$	0.17					22.4		%
Diluted			$	0.93											$	0.75											$	0.18					24.0		%

(1) May not calculate on rounded amounts.

Net Sales. Net sales by brand, channel, and geography were as follows:

			Three Months Ended June 30,
			2025						2024						Change
			Amount						Amount						Amount						%
Net sales by brand
HOKA brand
Wholesale			$	434,206					$	332,732					$	101,474					30.5		%
Direct-to-Consumer			218,913						212,446						6,467						3.0

			Three Months Ended June 30,
			2025						2024						Change
			Amount						Amount						Amount						%
Total			653,119						545,178						107,941						19.8
UGG brand
Wholesale			185,817						142,553						43,264						30.3
Direct-to-Consumer			79,275						80,398						(1,123)						(1.4)
Total			265,092						222,951						42,141						18.9
Other brands (1)
Wholesale			32,341						39,497						(7,156)						(18.1)
Direct-to-Consumer			13,986						17,721						(3,735)						(21.1)
Total			46,327						57,218						(10,891)						(19.0)
Total (1)			$	964,538					$	825,347					$	139,191					16.9		%
Net sales by channel
Total Wholesale			$	652,364					$	514,782					$	137,582					26.7		%
Total Direct-to-Consumer			312,174						310,565						1,609						0.5
Total (1)			$	964,538					$	825,347					$	139,191					16.9		%
Net sales by geography
Domestic			$	501,258					$	515,856					$	(14,598)					(2.8)		%
International			463,280						309,491						153,789						49.7
Total (1)			$	964,538					$	825,347					$	139,191					16.9		%

(1) Includes Sanuk brand financial results for the three months ended June 30, 2024, which are presented in the Other brands reportable operating segment.

Total net sales increased primarily due to higher net sales for the HOKA and UGG brands, partially offset by lower net sales for Other brands. Drivers of significant changes in net sales, compared to the prior period, were as follows:

• Net sales of the HOKA brand increased primarily due to higher global net sales in the wholesale channel, especially internationally. Key global wholesale channel net sales drivers include higher sell-in and re-orders of key franchises, reflecting market share gains and benefits from select new points of distribution with key partners, as well as earlier shipments related to the transition of our European 3PL.

• Net sales of the UGG brand increased primarily due to higher global net sales in the wholesale channel, as a result of increased demand for year-round key product franchises, as well as benefits from the timing of sell-in for fall franchises.

• Net sales of the Other brands decreased primarily due to the sale of the Sanuk brand in August 2024.

Supplemental Disclosure

• On a constant currency basis, net sales increased by 16.3% compared to the prior period.

• Comparable DTC channel net sales for the 13 weeks ended June 29, 2025, decreased by 2.2%, compared to the prior period.

• We experienced an increase of 15.7% in the total volume of units sold to 14,700 from 12,700, compared to the prior period. Units sold include all categories such as footwear, apparel, accessories, home goods, and care kits.

• As of June 30, 2025, we have a total of 191 global Company-owned retail stores (including 143 UGG brand retail stores and 48 HOKA brand retail stores).

Gross Profit. Gross margin decreased to 55.8% from 56.9% compared to the prior period, primarily due to unfavorable channel mix as wholesale revenue growth outpaced DTC revenue growth, higher promotional activity for the UGG and HOKA brands, and unfavorable changes in freight costs, partially offset by favorable product mix shifts, as well as favorable foreign currency exchange rate fluctuations.

Selling, General, and Administrative Expenses. Drivers of significant net changes in SG&A expenses, compared to the prior period, were as follows:

• Increased other SG&A expenses of approximately $15,000, primarily due to higher HOKA brand expenses of approximately $8,500 primarily for other variable operating expenses, and higher unallocated enterprise and shared brand expenses of approximately $4,500 primarily for variable 3PL service fees related to sales growth.

• Increased advertising, marketing, and promotion expenses of approximately $13,300, primarily due to higher promotional marketing expenses for the HOKA and UGG brands to drive global brand awareness and market share gains, highlight new product categories, and provide localized marketing.

• Increased payroll and related costs of approximately $8,900, primarily due to higher headcount from talent investment for the HOKA and UGG brands, including for retail stores, partially offset by lower unallocated shared brand payroll and related costs, including for our owned warehouses.

• Increased rent and occupancy of approximately $5,100, primarily due to higher rent expenses resulting from retail store footprint expansion for the HOKA and UGG brands.

• Increased net foreign currency-related remeasurement gains of approximately $9,100, primarily due to favorable changes in European and Asian exchange rates against the US dollar.

Income from Operations. Income (loss) from operations by reportable operating segment was as follows:

			Three Months Ended June 30,
			2025						2024						Change
			Amount						Amount						Amount						%
Income (loss) from operations
HOKA brand			$	253,528					$	230,918					$	22,610					9.8		%
UGG brand			53,983						45,886						8,097						17.6
Other brands (1)			7,753						12,686						(4,933)						(38.9)
Unallocated enterprise and shared brand expenses (2)			(149,977)						(156,683)						6,706						4.3
Total			$	165,287					$	132,807					$	32,480					24.5		%

(1) Includes Sanuk brand financial results for the three months ended June 30, 2024, which are presented in the Other brands reportable operating segment.

(2) The change in reportable operating segments had an impact on segment income from operations, a measure of segment profitability, and a clarification was made that certain prior unallocated overhead costs are defined as unallocated enterprise and shared brand expenses and are excluded from the measure of segment profitability.

The increase in total income from operations, compared to the prior period, was primarily due to higher net sales and lower SG&A expenses as a percentage of net sales, partially offset by lower gross margins. Drivers of significant net changes in total income from operations, compared to the prior period, were as follows:

• The increase in income from operations of the HOKA brand was due to higher net sales, partially offset by lower gross margins and higher SG&A expenses as a percentage of net sales, primarily reflecting increased headcount, rent and occupancy, and marketing to support brand growth initiatives.

• The increase in income from operations of the UGG brand was due to higher net sales and lower SG&A expenses as a percentage of net sales, primarily related to payroll and related costs, rent and occupancy, and other SG&A expenses, partially offset by lower gross margins.

• The decrease in unallocated enterprise and shared brand expenses was primarily due to higher net foreign currency-related remeasurement gains and lower payroll and related costs, partially offset by higher other SG&A expenses for variable 3PL service fees related to sales growth.

Income Tax Expense. Income tax expense and our effective income tax rate were as follows:

			Three Months Ended June 30,
			2025						2024
Income tax expense			$	43,863					$	33,528
Effective income tax rate			24.0		%				22.5		%

The net increase in our effective income tax rate, compared to the prior period, was primarily due to discrete tax expense for reserve adjustments and a reduced benefit for stock-based compensation, partially offset by net discrete tax benefits for audit settlements and changes in jurisdictional mix of worldwide income before income taxes.

Net Income. The increase in net income, compared to the prior period, was due to higher net sales and higher operating margins. Net income per share increased, compared to the prior period, due to higher net income and lower weighted-average common shares outstanding driven by stock repurchases.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity may be impacted by a number of factors, risks and uncertainties described in the section titled “Liquidity” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in Part I, Item 1A, “Risk Factors,” of our 2025 Annual Report.

Sources of Liquidity. We finance our working capital and operating requirements using a combination of cash and cash equivalents balances, including cash from our repatriation strategy, and cash provided from ongoing operating activities. We also have available borrowing capacity under our revolving credit facilities. Refer to the section titled “Cash Flows” below for further discussion on cash flows from ongoing operating activities.

Cash and Cash Equivalents. As of June 30, 2025 and March 31, 2025, our cash and cash equivalents balance is $1,720,416 and $1,889,188, respectively, the majority of which is held in highly rated money market funds and interest-bearing bank deposit accounts with established national and global financial institutions. We believe our cash and cash equivalents balances, cash provided by operating activities, and available borrowing capacity under our revolving credit facilities, will provide sufficient liquidity to enable us to meet our working capital requirements and contractual obligations for at least the next 12 months and will be sufficient to allow us to pursue our business strategies and plans. However, there can be no assurance that sufficient capital will continue to be available or that it will be available on terms acceptable to us.

Repatriation of Cash. Our cash repatriation strategy, and by extension, our liquidity, may be impacted by several additional considerations, which include future changes to or interpretations of global tax law and regulations, and our actual earnings in future periods. During the three months ended June 30, 2025, and 2024, no cash and cash equivalents were repatriated from a foreign subsidiary that were subject to income taxes. As of June 30, 2025, and March 31, 2025, we have $470,987 and $481,836, respectively, of cash and cash equivalents held by foreign subsidiaries, a portion of which may be subject to additional foreign withholding taxes if it were to be repatriated. We continue to evaluate our cash repatriation strategy and currently anticipate repatriating current and future unremitted earnings of non-US subsidiaries to the extent they have been subject to US income tax if such cash is not required to fund ongoing foreign operations. Refer to Note 5, “Income Taxes,” of our consolidated financial statements in Part IV of our 2025 Annual Report for further information regarding our cash repatriation strategy.

Revolving Credit Facilities. Information about our revolving credit facilities available as of June 30, 2025, is as follows:

• Primary Credit Facility. During the three months ended June 30, 2025, we made no borrowings or repayments and there were no material changes to the terms, to the outstanding letters of credit, or to the borrowing availability under our unsecured revolving credit facility disclosed in our 2025 Annual Report.

• China Credit Facility. During the three months ended June 30, 2025, we made no borrowings or repayments and there were no material changes to the terms or to the outstanding bank guarantees under our credit facility in China disclosed in our 2025 Annual Report.

• Debt Covenants. As of June 30, 2025, we are in compliance with all financial covenants under our revolving credit facilities.

Refer to Note 6, “Revolving Credit Facilities,” of our consolidated financial statements in Part IV of our 2025 Annual Report for further information regarding the terms of our revolving credit facilities.

Material Cash Requirements. Our material cash requirements include working capital, payments to fulfill contractual obligations, capital expenditures, and stock repurchases. Our working capital requirements begin when we purchase raw and other materials and inventories and continue until we ultimately collect the resulting trade accounts receivable. Given the historical seasonality of the UGG brand, our working capital requirements fluctuate significantly throughout our fiscal year, and we utilize available cash to build inventory levels during certain quarters to support higher selling seasons. While the impact of seasonality has been mitigated to some extent, we expect our working capital requirements will continue to fluctuate from period to period.

Contractual Obligations and Capital Expenditures. There were no material changes outside the ordinary course of business to the contractual obligations or capital expenditures as disclosed in the sections titled “Contractual Obligations” and “Capital Expenditures” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2025 Annual Report.

Stock Repurchase Program. As of June 30, 2025, the aggregate remaining approved amount under our stock repurchase program is $2,441,711. Our stock repurchase program does not obligate us to acquire any amount of common stock and may be suspended at any time at our discretion.

Refer to Note 7, “Stockholders’ Equity,” of our condensed consolidated financial statements in Part I, Item 1 and to Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds,” within this Quarterly Report for further information regarding our stock repurchase program and capital allocation strategy.

CASH FLOWS

The following table summarizes the major components of our condensed consolidated statements of cash flows for the periods presented:

			Three Months Ended June 30,
			2025						2024						Change
			Amount						Amount						Amount						%
Net cash provided by operating activities			$	36,146					$	112,650					$	(76,504)					(67.9)		%
Net cash used in investing activities			(23,929)						(22,521)						(1,408)						(6.3)
Net cash used in financing activities			(183,228)						(151,861)						(31,367)						(20.7)
Effect of foreign currency exchange rates on cash and cash equivalents			2,239						(1,922)						4,161						216.5
Net change in cash and cash equivalents			$	(168,772)					$	(63,654)					$	(105,118)					(165.1)		%

Operating Activities. Our primary source of liquidity was net cash provided by operating activities, which was driven by our net income after non-cash adjustments and changes in operating assets and liabilities.

The decrease in net cash provided by operating activities during the three months ended June 30, 2025, compared to the prior period, was due to $105,877 of unfavorable changes in operating assets and liabilities partially offset by $29,373 of favorable net income after non-cash adjustments. Changes in operating assets and liabilities were primarily due to unfavorable impacts from (1) higher purchases of inventory to support elevated demand for our products and the transition of our European 3PL, (2) timing of derivative cash settlements recorded in prepaid expenses and other current assets, and (3) higher net trade accounts receivable on higher net sales; partially offset by favorable impacts from higher net trade accounts payable from timing of receipts of goods and services and respective disbursements.

Investing Activities. Net cash used in investing activities remained relatively unchanged during the three months ended June 30, 2025, compared to the prior period.

Financing Activities. The increase in net cash used in financing activities during the three months ended June 30, 2025, compared to the prior period, was due to a higher dollar value of stock repurchases, inclusive of excise taxes.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Preparation of our 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 it believes to be reasonable. In addition, management has considered the potential impact of macroeconomic factors, including changes in tariff rates, inflation, foreign currency exchange rate volatility, changes in interest rates, changes in commodity pricing, changes in consumer discretionary spending, and recessionary concerns, on our business and operations. Although the full impact of these factors is unknown, management 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 our financial condition, results of operations and liquidity. Refer to the sections titled “Use of Estimates” and “Recent Accounting Pronouncements” within Note 1, “General,” of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report, for additional information regarding applicable key estimates and assumptions, as well as the expected impact of recent accounting pronouncements.

There have been no material changes to the critical accounting policies or to the key estimates and assumptions, disclosed in the section titled “Critical Accounting Policies and Estimates” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” within our 2025 Annual Report.