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. Our five proprietary brands include HOKA, UGG, Teva, Koolaburra, and AHNU. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report, for further information on the phase out of standalone operations of the Koolaburra and AHNU brands.

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.

FINANCIAL HIGHLIGHTS

Consolidated financial performance highlights for the nine months ended December 31, 2025, compared to the prior period, were as follows:

• Net sales increased 9.8% to $4,352,927.

**◦**Brand

▪HOKA brand net sales increased 16.3% to $1,916,087.

▪UGG brand net sales increased 8.0% to $2,330,154.

▪Other brands net sales decreased 33.3% to $106,686.

**◦**Channel

▪Wholesale channel net sales increased 13.8% to $2,553,163.

▪DTC channel net sales increased 4.7% to $1,799,764.

**◦**Geography

▪Domestic net sales increased 0.1% to $2,541,677.

▪International net sales increased 27.1% to $1,811,250.

• Gross margin decreased 50 basis points to 57.7%.

• SG&A expenses increased 8.2% to $1,406,914.

• Income from operations increased 10.0% to $1,106,174.

• Operating margin remained flat at 25.4%.

• Diluted earnings per share increased 13.3% to $6.04 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 December 31, 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, Koolaburra brand, and AHNU brand. The Teva brand’s products are built for a range of outdoor pursuits and include a variety of footwear options, from classic sandals and shoes to boots.

The Other brands reportable operating segment includes financial results of the Koolaburra and AHNU brands, for which the phase out of standalone operations were substantially completed during the current period, as well as financial results for the Sanuk brand during the prior period through the Sanuk Brand Sale Date. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report, for further information.

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 further information regarding the impacts of seasonality on our business.

RESULTS OF OPERATIONS

Three Months Ended December 31, 2025, Compared to Three Months Ended December 31, 2024. Results of operations were as follows:

			Three Months Ended December 31,
			2025												2024												Change
			Amount						% (1)						Amount						% (1)						Amount						%
Net sales			$	1,957,549					100.0		%				$	1,827,165					100.0		%				$	130,384					7.1		%
Cost of sales			786,189						40.2						724,542						39.7						(61,647)						(8.5)
Gross profit			1,171,360						59.8						1,102,623						60.3						68,737						6.2
Selling, general, and administrative expenses			556,994						28.5						535,349						29.3						(21,645)						(4.0)
Income from operations			614,366						31.4						567,274						31.0						47,092						8.3
Total other income, net			(12,547)						(0.6)						(16,668)						(1.0)						(4,121)						(24.7)
Income before income taxes			626,913						32.0						583,942						32.0						42,971						7.4
Income tax expense			145,768						7.4						127,208						7.0						(18,560)						(14.6)
Net income			481,145						24.6						456,734						25.0						24,411						5.3
Total other comprehensive income (loss), net of tax			3,043						0.1						(11,686)						(0.6)						14,729						126.0
Comprehensive income			$	484,188					24.7		%				$	445,048					24.4		%				$	39,140					8.8		%
Net income per share
Basic			$	3.34											$	3.01											$	0.33					11.0		%
Diluted			$	3.33											$	3.00											$	0.33					11.0		%

(1) May not calculate on rounded amounts.

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

			Three Months Ended December 31,
			2025						2024						Change
			Amount						Amount						Amount						%
Net sales by brand
HOKA brand
Wholesale			$	359,560					$	305,241					$	54,319					17.8		%
Direct-to-Consumer			269,322						225,667						43,655						19.3
Total			628,882						530,908						97,974						18.5
UGG brand
Wholesale			486,650						467,998						18,652						4.0
Direct-to-Consumer			818,825						776,191						42,634						5.5
Total			1,305,475						1,244,189						61,286						4.9
Other brands (1)
Wholesale			18,360						42,589						(24,229)						(56.9)
Direct-to-Consumer			4,832						9,479						(4,647)						(49.0)
Total			23,192						52,068						(28,876)						(55.5)
Total (1)			$	1,957,549					$	1,827,165					$	130,384					7.1		%
Net sales by channel
Total Wholesale			$	864,570					$	815,828					$	48,742					6.0		%
Total Direct-to-Consumer			1,092,979						1,011,337						81,642						8.1
Total (1)			$	1,957,549					$	1,827,165					$	130,384					7.1		%
Net sales by geography
Domestic			$	1,200,889					$	1,169,291					$	31,598					2.7		%
International			756,660						657,874						98,786						15.0
Total (1)			$	1,957,549					$	1,827,165					$	130,384					7.1		%

(1) The Other brands reportable operating segment for the three months ended December 31, 2025 includes financial results for the Koolaburra and AHNU brands through their respective phase out dates. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report, for further information regarding the phase out of standalone operations of the Koolaburra and AHNU brands.

Total net sales increased primarily due to higher net sales for the HOKA and UGG brands across all channels, 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 balanced growth across all channels. Growth was led by international sales, as well as higher domestic sales; collectively driven by our continued marketplace management strategy to meet increased global demand, with consumers adopting key franchises.

• Net sales of the UGG brand increased primarily due to balanced growth across channels and geographies, driven by our continued marketplace management strategy to meet increased global demand for key franchises, including growth within the DTC channel across all regions, in addition to an increase in wholesale channel domestic sales.

• Net sales of the Other brands decreased primarily due to lower US net sales in the wholesale channel driven by the phase out of standalone operations of the Koolaburra brand.

Supplemental Disclosure

• On a constant currency basis, net sales increased by 6.8%, compared to the prior period.

• Comparable DTC channel net sales for the 13 weeks ended December 28, 2025, increased by 7.3%, compared to the prior period.

• We experienced an increase of 4.8% in the total volume of units sold to 26,100 from 24,900, compared to the prior period. Units sold include all categories such as footwear, apparel, accessories, home goods, and care kits. Percentages may not calculate on rounded units.

Gross Profit. Gross margin decreased to 59.8% from 60.3%, compared to the prior period, primarily due to incremental tariffs on US goods net of cost sharing arrangements and higher promotional activity compared to exceptionally low levels in the prior period; partially offset by benefits from strategic price increases, product mix shifts, and lower freight-related costs.

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

• Increased advertising, marketing, and promotion expenses of approximately $18,300, primarily due to higher promotional marketing expenses for the UGG and HOKA brands of approximately $22,100 to drive global brand awareness and market share gains, highlight new product categories, and provide localized marketing; partially offset by lower promotional marketing expenses for Other brands of approximately $3,800 driven by the phase out of standalone operations of the Koolaburra brand.

• Increased other SG&A expenses of approximately $14,500, primarily due to higher sales commissions, IT expenses, 3PL service fees, credit card fees, and other miscellaneous expenses; partially offset by lower bad debt expenses. The increase in other SG&A expenses was comprised of approximately $7,500 of unallocated enterprise and shared brand expenses and approximately $7,000 of expenses specific to our brands, primarily for the HOKA and UGG brands.

• Increased rent and occupancy of approximately $6,300, primarily due to higher rent expenses for investments in our global retail store footprint.

• Decreased net foreign currency-related remeasurement losses of approximately $16,100, primarily due to more favorable changes in European, Asian, and Canadian exchange rates against the US dollar.

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

			Three Months Ended December 31,
			2025						2024						Change
			Amount						Amount						Amount						%
Income (loss) from operations
HOKA brand			$	216,094					$	186,933					$	29,161					15.6		%
UGG brand			589,929						588,862						1,067						0.2
Other brands (1)			4,075						7,364						(3,289)						(44.7)
Unallocated enterprise and shared brand expenses (2)			(195,732)						(215,885)						20,153						9.3
Total			$	614,366					$	567,274					$	47,092					8.3		%

(1) The Other brands reportable operating segment for the three months ended December 31, 2025 includes financial results for the Koolaburra and AHNU brands through their respective phase out dates. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report, for further information regarding the phase out of standalone operations of the Koolaburra and AHNU brands.

(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 slightly 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 HOKA brand was due to higher net sales at slightly higher gross margins, partially offset by higher SG&A expenses as a percentage of net sales driven by payroll and related costs, rent and occupancy, and other SG&A expenses, as well as advertising, marketing, and promotion expenses.

• The decrease in unallocated enterprise and shared brand expenses was primarily due to higher net foreign currency-related remeasurement gains and payroll efficiencies for our owned warehouses and DCs, partially offset by higher other SG&A expenses primarily due to legal expenses, IT expenses, 3PL service fees, and other miscellaneous expenses.

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

			Three Months Ended December 31,
			2025						2024
Income tax expense			$	145,768					$	127,208
Effective income tax rate			23.3		%				21.8		%

The net increase in our effective income tax rate, compared to the prior period, was primarily due to jurisdictional mix of worldwide income before income taxes, as well as non-recurring tax benefits for audit settlements in the prior period and reduced tax benefits from net discrete items, including a change in return-to-provision adjustments and stock-based compensation; partially offset by changes in valuation allowances on tax attributes.

Net Income. The increase in net income, compared to the prior period, was due to higher net sales and lower SG&A expenses as a percentage of net sales, partially offset by lower gross 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.

Total Other Comprehensive Income (Loss), Net of Tax. The increase in total other comprehensive income, net of tax, compared to the prior period, was primarily due to higher foreign currency translation gains relating to changes in the net asset position against Asian and European foreign currency exchange rates, partially offset by higher unrealized losses on derivative contracts.

Nine Months Ended December 31, 2025, Compared to Nine Months Ended December 31, 2024. Results of operations were as follows:

			Nine Months Ended December 31,
			2025												2024												Change
			Amount						% (1)						Amount						% (1)						Amount						%
Net sales			$	4,352,927					100.0		%				$	3,963,832					100.0		%				$	389,095					9.8		%
Cost of sales			1,839,839						42.3						1,657,937						41.8						(181,902)						(11.0)
Gross profit			2,513,088						57.7						2,305,895						58.2						207,193						9.0
Selling, general, and administrative expenses			1,406,914						32.3						1,300,728						32.8						(106,186)						(8.2)
Income from operations			1,106,174						25.4						1,005,167						25.4						101,007						10.0
Total other income, net			(46,161)						(1.1)						(46,840)						(1.1)						(679)						(1.4)
Income before income taxes			1,152,335						26.5						1,052,007						26.5						100,328						9.5
Income tax expense			263,835						6.1						237,327						5.9						(26,508)						(11.2)
Net income			888,500						20.4						814,680						20.6						73,820						9.1
Total other comprehensive income (loss), net of tax			3,586						0.1						(4,711)						(0.2)						8,297						176.1
Comprehensive income			$	892,086					20.5		%				$	809,969					20.4		%				$	82,117					10.1		%
Net income per share
Basic			$	6.05											$	5.35											$	0.70					13.1		%
Diluted			$	6.04											$	5.33											$	0.71					13.3		%

(1) May not calculate on rounded amounts.

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

			Nine Months Ended December 31,
			2025						2024						Change
			Amount						Amount						Amount						%
Net sales by brand
HOKA brand
Wholesale			$	1,202,657					$	1,000,317					$	202,340					20.2		%
Direct-to-Consumer			713,430						646,665						66,765						10.3
Total			1,916,087						1,646,982						269,105						16.3
UGG brand
Wholesale			1,273,071						1,122,952						150,119						13.4
Direct-to-Consumer			1,057,083						1,034,053						23,030						2.2
Total			2,330,154						2,157,005						173,149						8.0
Other brands (1)
Wholesale			77,435						120,994						(43,559)						(36.0)
Direct-to-Consumer			29,251						38,851						(9,600)						(24.7)
Total			106,686						159,845						(53,159)						(33.3)
Total (1)			$	4,352,927					$	3,963,832					$	389,095					9.8		%

			Nine Months Ended December 31,
			2025						2024						Change
			Amount						Amount						Amount						%
Net sales by channel
Total Wholesale			$	2,553,163					$	2,244,263					$	308,900					13.8		%
Total Direct-to-Consumer			1,799,764						1,719,569						80,195						4.7
Total (1)			$	4,352,927					$	3,963,832					$	389,095					9.8		%
Net sales by geography
Domestic			$	2,541,677					$	2,539,057					$	2,620					0.1		%
International			1,811,250						1,424,775						386,475						27.1
Total (1)			$	4,352,927					$	3,963,832					$	389,095					9.8		%

(1) The Other brands reportable operating segment for the nine months ended December 31, 2025 includes financial results for the Koolaburra and AHNU brands through their respective phase out dates. The Other brands reportable operating segment for the nine months ended December 31, 2024 includes financial results for the Sanuk brand through the Sanuk Brand Sale Date. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report, for further information regarding the phase out of standalone operations of the Koolaburra and AHNU brands, and the prior sale of the Sanuk brand.

Total net sales increased primarily due to higher net sales for the HOKA and UGG brands across all channels, 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 international sales growth across all channels, driven by our continued marketplace management strategy to meet increased global demand, with consumers adopting key franchises.

• Net sales of the UGG brand increased primarily due to higher global net sales growth across all channels. Growth was led by international sales as a result of increased demand for key franchises, in addition to an increase in wholesale channel domestic sales.

• Net sales of the Other brands decreased primarily due to lower US net sales in the wholesale channel driven by the phase out of standalone operations of the Koolaburra brand and the sale of the Sanuk brand in August 2024.

Supplemental Disclosure

• On a constant currency basis, net sales increased by 9.3% compared to the prior period.

• Comparable DTC channel net sales for the 39 weeks ended December 28, 2025, increased by 3.5%, compared to the prior period.

• We experienced an increase of 7.6% in the total volume of units sold to 63,400 from 58,900, compared to the prior period. Units sold include all categories such as footwear, apparel, accessories, home goods, and care kits. Percentages may not calculate on rounded units.

• As of December 31, 2025, we have a total of 205 global Company-owned retail stores (including 144 UGG brand retail stores and 61 HOKA brand retail stores).

Gross Profit. Gross margin decreased to 57.7% from 58.2% compared to the prior period, primarily due to incremental tariffs on US goods net of cost‑sharing arrangements, higher promotional activity compared to exceptionally low levels in the prior period, and slightly unfavorable channel mix; partially offset by benefits from strategic price increases, product mix shifts, and lower freight-related costs.

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

• Increased advertising, marketing, and promotion expenses of approximately $42,800, primarily due to higher promotional marketing expenses for the UGG and HOKA brands of approximately $49,700 to drive global brand awareness and market share gains, highlight new product categories, and provide localized marketing; partially offset by lower promotional marketing expenses for Other brands of approximately $6,900 driven by the phase-out of standalone operations of the Koolaburra brand.

• Increased other SG&A expenses of approximately $39,100, primarily due to higher sales commissions, IT expenses, 3PL service fees, project-related expenses, and other miscellaneous expenses. The increase in other SG&A expenses was comprised of approximately $35,200 of expenses specific to our brands, primarily for the HOKA and UGG brands, and approximately $3,900 of unallocated enterprise and shared brand expenses.

• Increased rent and occupancy of approximately $24,600, primarily due to higher rent expenses for investments in our global retail store footprint, as well as higher operating expenses for our owned warehouses and DCs. The increase in rent and occupancy was comprised of approximately $16,400 of expenses specific to our brands, and approximately $8,200 for unallocated enterprise and shared brand expenses.

• Increased payroll and related costs of approximately $15,900, primarily due to higher headcount investments in talent in the HOKA and UGG brands along with unallocated enterprise and shared brand expenses, partially offset by payroll efficiencies in our owned warehouses and DCs. The increase in payroll and related costs was comprised of approximately $32,700 of expenses specific to our brands, partially offset by approximately $16,800 of lower unallocated enterprise and shared brand expenses.

• Increased net foreign currency-related remeasurement gains of approximately $15,200, primarily due to more favorable changes in European and Canadian exchange rates against the US dollar.

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

			Nine Months Ended December 31,
			2025						2024						Change
			Amount						Amount						Amount						%
Income (loss) from operations
HOKA brand			$	690,919					$	632,412					$	58,507					9.3		%
UGG brand			916,185						887,095						29,090						3.3
Other brands (1)			14,531						20,884						(6,353)						(30.4)
Unallocated enterprise and shared brand expenses (2)			(515,461)						(535,224)						19,763						3.7
Total			$	1,106,174					$	1,005,167					$	101,007					10.0		%

(1) The Other brands reportable operating segment for the nine months ended December 31, 2025 includes financial results for the Koolaburra and AHNU brands through their respective phase out dates. The Other brands reportable operating segment for the nine months ended December 31, 2024 includes financial results for the Sanuk brand through the Sanuk Brand Sale Date. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report, for further information regarding the phase out of standalone operations of the Koolaburra and AHNU brands, and the prior sale of the Sanuk brand.

(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 slightly 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, as well as higher SG&A expenses as a percentage of net sales driven by other SG&A expenses, payroll and related costs, and rent and occupancy, as well as advertising, marketing and promotional expenses.

• The increase in income from operations of the UGG brand was due to higher net sales, partially offset by lower gross margins, as well as higher SG&A expenses as a percentage of net sales primarily driven by advertising, marketing, and promotion expenses as well as other SG&A expenses.

• The decrease in unallocated enterprise and shared brand expenses was primarily due to payroll efficiencies for our owned warehouses and DCs and higher net foreign currency-related remeasurement gains, partially offset by higher rent and occupancy for our owned warehouses and DCs, as well as higher other SG&A expenses primarily due to 3PL service fees, IT expenses, and other miscellaneous expenses.

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

			Nine Months Ended December 31,
			2025						2024
Income tax expense			$	263,835					$	237,327
Effective income tax rate			22.9		%				22.6		%

The net increase in our effective income tax rate, compared to the prior period, was primarily due to jurisdictional mix of worldwide income before income taxes, as well as reduced tax benefits from net discrete items, including for stock-based compensation and reserve adjustments; partially offset by changes in valuation allowances on tax attributes.

Net Income. The increase in net income, compared to the prior period, was due to higher net sales and lower SG&A expenses as a percentage of net sales, partially offset by lower gross 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.

Total Other Comprehensive Income (Loss), Net of Tax. The increase in total other comprehensive income, net of tax, compared to the prior period, was primarily due to higher foreign currency translation gains relating to changes in the net asset position against European and Asian foreign currency exchange rates, partially offset by higher unrealized losses on derivative contracts.

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 December 31, 2025, and March 31, 2025, our cash and cash equivalents balance is $2,086,746 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 nine months ended December 31, 2025, and 2024, no cash and cash equivalents were repatriated from a foreign subsidiary that were subject to income taxes. As of December 31, 2025, and March 31, 2025, we have $562,748 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 December 31, 2025, is as follows:

*•*Primary Credit Facility. During the nine months ended December 31, 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 nine months ended December 31, 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 December 31, 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.

3PL Agreements. During the nine months ended December 31, 2025, we entered into a 3PL service agreement with a non-cancellable minimum commitment of approximately $93,611 payable through March 31, 2029, related to the transition of one of our international 3PLs to a new partner with an upgraded warehouse management system which we expect to be operational in the first quarter of our next fiscal year.

Operating Lease Obligations. During the nine months ended December 31, 2025, we entered into various operating leases agreements in the ordinary course of business to continue the investment in our global retail store footprint, which are recorded on a discounted basis in our condensed consolidated financial statements. Refer to Note 5, "Commitment and Contingencies," of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report for further information on our operating lease obligations.

Contractual Obligations and Capital Expenditures. Except for the above, as of December 31, 2025, 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 December 31, 2025, the aggregate remaining approved amount under our stock repurchase program is $1,811,214. 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 8, “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:

			Nine Months Ended December 31,
			2025						2024						Change
			Amount						Amount						Amount						%
Net cash provided by operating activities			$	1,086,113					$	1,117,515					$	(31,402)					(2.8)		%
Net cash used in investing activities			(67,530)						(58,561)						(8,969)						(15.3)
Net cash used in financing activities			(824,371)						(316,638)						(507,733)						(160.4)
Effect of foreign currency exchange rates on cash and cash equivalents			3,346						(3,444)						6,790						197.2
Net change in cash and cash equivalents			$	197,558					$	738,872					$	(541,314)					(73.3)		%

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 nine months ended December 31, 2025, compared to the prior period, was due to $87,605 of unfavorable changes in operating assets and liabilities partially offset by $56,203 of favorable net income after non-cash adjustments. Changes in operating assets and liabilities were primarily due to unfavorable impacts from (1) timing of derivative contract cash settlements recorded to prepaid expenses and other current assets; (2) higher cost and earlier purchases of inventory to support elevated demand for our products, particularly in international regions, as well as the transition to our European 3PL; (3) net trade accounts payable from timing of receipts of goods and services and related disbursements, including freight; and (4) deposits for new retail stores recorded in other assets; partially offset by favorable impacts from (5) timing of tax payments and receipts.

Investing Activities. The change in net cash used in investing activities during the nine months ended December 31, 2025, compared to the prior period, was primarily due to cash proceeds from the sale of assets during the prior period.

Financing Activities. The increase in net cash used in financing activities during the nine months ended December 31, 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 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 further 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.