DECK Deckers Outdoor Corp - 10-K

ITEM 1A. RISK FACTORS

Our short and long -term success is subject to numerous risks and uncertainties, many of which involve factors that

are difficult to predict or beyond our control. As a result, investing in our common stock involves substantial risk.

Before deciding to purchase, hold or sell our common stock, stockholders and potential stockholders should

carefully consider the risks and uncertainties described below, in addition to the other information contained in or

incorporated by reference into this Annual Report , as well as the other information we file with the SEC . If any of

these risks are realized, our business, financial condition, results of operations, and prospects could be materially

and adversely affected. In that case, the value of our common stock could decline, and stockholders may lose all or

part of their investment. Furthermore, additional risks and uncertainties of which we are currently unaware, or which

we currently consider to be immaterial, could have a material adverse effect on our business.

Certain statements made in this section constitute “forward-looking statements,” which are subject to numerous

risks and uncertainties including those described in this section. Refer to the section entitled “Cautionary Note

Regarding Forward-Looking Statements” within this Annual Report for further information.

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Risks Related to Our Business and Industry

The footwear, apparel, and accessories industry is subject to rapid changes in consumer preferences, and

if we do not accurately anticipate and promptly respond to consumer demand and spending patterns, we

could lose sales, our relationships with customers could be harmed, and our brand loyalty could be

diminished.

The footwear, apparel, and accessories industry is subject to rapid changes in consumer preferences and fashion

tastes, which makes it difficult to anticipate demand for our products and forecast our results of operations. Our

success depends, in part, on brand loyalty, and there can be no assurance that consumers will continue to prefer

our brands. Consumer demand for our products relies on the continued strength of our brands, which in turn

depends on our ability to anticipate, understand, and respond promptly to evolving preferences, fashion trends, and

consumer spending patterns with appealing merchandise and effective brand-building initiatives. As our brands and

product offerings evolve, our products must appeal to a broader and more diverse range of consumers whose

preferences cannot be predicted with certainty. New products may not achieve market acceptance, including due to

pricing that consumers are unwilling to bear, or our brands may fall out of favor, which could impede our ability to

maintain or grow sales, adversely affect brand perception, and negatively impact our results of operations. If we do

not effectively respond to these changes, we could experience reduced sales and pressure on our gross profit as a

percentage of net sales ( gross margin ), including as a result of reduced pricing power and increased reliance on

promotional activity .

The value of our brands is also driven by evolving consumer perceptions, including shifting ethical, political, or

social standards. Concerns related to product pricing, quality, design, technical performance, components or

materials (including sustainability), customer service, or the effectiveness of our brand loyalty initiatives, including

loyalty programs, could result in negative perceptions, diminished consumer engagement, and a loss of brand

loyalty or value. These risks may be amplified by adverse publicity concerning us or our products, brands, marketing

campaigns, partners, or endorsers, particularly where social media and digital marketing channels accelerate the

dissemination, amplification, or persistence of negative claims, regardless of their accuracy, which could harm our

reputation and sales and have a material adverse effect on our business. In addition, actions or statements by

third‑party partners, collaborators, or organizations with which we are associated, including in connection with social

or political issues, could lead to consumer backlash, operational disruptions, or reputational harm. If our brand-

related initiatives, including loyalty programs, fail to drive sustained consumer engagement or incremental demand,

or involve increased costs or operational complexity that negatively affect customer perceptions, we could

experience reduced sales and pressure on our gross margin , adversely affecting our results of operations.

Changes to economic conditions may adversely affect our financial condition and results of operations.

Volatile economic conditions and changes in the market have affected, and may continue to affect, consumer

confidence and discretionary spending. A significant portion of our HOKA brand and UGG brand products are

premium, discretionary purchases, and demand for these products is sensitive to macroeconomic factors, including

inflation , wages and employment, consumer debt, declines in net worth driven by market conditions, interest rates,

tariffs, and public health issues such as a pandemic. During periods of economic uncertainty, consumers may

reduce discretionary purchases, trade down to lower-priced alternatives, or delay buying decisions, which could

require us to increase promotional activity or reduce prices, adversely affecting our sales and profitability .

We sell a significant portion of our products through higher-end specialty and department store retailers and online

marketplaces . These customers may be adversely affected by economic conditions, geopolitical instability, foreign

currency fluctuations, reduced demand for premium products, limited access to credit, and increased competition.

Financial difficulties among our customers could negatively affect our credit exposure, reserves, and relationships

with key customers, and could reduce orders or increase the risk of delayed payments or defaults.

We face intense competition from both established companies and newer entrants into the market, and our

failure to compete effectively could cause our market share to decline, which could harm our reputation and

have a material adverse effect on our financial condition and results of operations.

The footwear, apparel, and accessories industry is highly competitive and subject to rapidly changing consumer

preferences. If we are unable to compete effectively, we could experience a decline in market share, reduced

demand for our products, pricing pressure, or damage to our reputation, which could have a material adverse effect

on our financial condition and results of operations. Competition in our markets is influenced by factors such as

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brand recognition, product innovation and performance, pricing, speed‑to‑market, marketing effectiveness, use of

data analytics and AI , access to manufacturing capacity, and control of distribution channels.

Our competitors include both established global brands and newer market entrants, including competitors whose

broader product assortments and higher sales volumes may be more important to certain customers. We believe

that the growth and visibility of our HOKA brand and UGG brand have attracted competitors specifically targeting

the categories in which we operate. Barriers to entry have been reduced by access to offshore manufacturing and

evolving technologies, allowing competitors to develop and scale products more quickly and at lower cost.

Some of our competitors also have substantially greater financial, technological, manufacturing, marketing, and

distribution resources than we do, as well as broader brand awareness, which may enable them to compete more

effectively on price, accelerate product development, leverage advanced data analytics or AI , adapt to technological

changes, and withstand periods of excess inventory or reduced consumer demand. As a result, we face ongoing

competition for customer relationships and distribution channels, including competition for preferred access to key

retail accounts, shelf space, and digital visibility.

Consistent with these dynamics, we have experienced, and expect to continue to experience, pricing and

promotional pressure across our brands and channels, particularly during periods of elevated industry inventory

levels or inflationary pressure. Increased discounting or promotional activity by competitors may require us to

reduce prices or increase promotions to remain competitive, negatively affecting our gross margin and results of

operations, and could cause consumers to shift purchases to competing products. In addition, many of our key

wholesale customers face intense competitive pressures, and deterioration in their financial condition could

adversely affect their ability to do business with us.

I f we are unsuccessful at managing inventory planning, forecasting, and global supply chain execution, we

may be unable to accurately forecast our inventory and working capital requirements, which may have a

material adverse effect on our financial condition and results of operations.

Like other companies in our industry, we have an extended design and manufacturing process, which involves

product design, material purchases, inventory accumulation and the subsequent sale of the inventories, and

accounts receivable collection. This cycle requires us to incur significant expenses relating to the design,

manufacturing, and marketing of our products in advance of the realization of sales, and results in significant

liquidity requirements and working capital fluctuations throughout our fiscal year, which may be amplified by supplier

performance issues and broader supply chain constraints. As a result , these liquidity and working capital demands

may limit our ability to adjust inventory levels and respond efficiently to changes in consumer demand, particularly

during periods of macroeconomic uncertainty. Our forecasting processes rely on assumptions, data, and systems

that may not accurately reflect future consumer or customer demand, or supply chain conditions, including

manufacturing capacity, raw material availability, and logistics constraints. Further, variability and constraints within

our global supply chain may drive higher inventory procurement positions that could negatively affect our working

capital and gross margin as a result of selling excess quantities through close out channels. As a result, our

inventory levels, working capital requirements, and results of operations may be adversely affected by a number of

factors, including:

• constraints or inefficiencies in transportation capacity, delivery timing, inventory flow, or production

scheduling, which may contribute to uneven inventory receipts, elevated inventory levels, or delays

in fulfilling de mand;

• unfavorable or unexpected weather patterns that affect consumer demand for seasonally-driven

products, particularly within our UGG brand, which may be intensified by the effects of climate

change;

• changes in consumer preferences, discretionary spending patterns, prevailing fashion trends, and

pricing pressure that may require increased promotional activity to sell inventory;

• macroeconomic conditions, including inflation, interest rate volatility, or global economic uncertainty,

that may affect consumer purchasing behavior, supplier capacity, or logistics costs; and

• market acceptance of our products and competing offerings, and variability in product availability.

The evolution and expansion of our brands and product offerings have made our inventory management activities

more challenging. For example, if we overestimate demand for any products or styles, we may be forced to increase

promotional activity or adjust pricing to sell excess inventories, which would result in lower sales and reduced gross

margin , and we may not be able to recover our investment in the development of new styles and product lines. On

the other hand, if we underestimate demand, or if our independent manufacturing facilities are unable to supply

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products in sufficient quantities or on a timely basis, we may experience inventory shortages that may prevent us

from fulfilling customer orders or result in delays in shipments to customers. If that occurred, we could lose sales,

our relationships with customers could be harmed, and our brand loyalty could be diminished. In either event, these

factors could have a material adverse effect on our results of operations.

We rely upon a number of warehouse and distribution facilities to operate our business, and any damage to

one of these facilities, or any disruptions caused by incorporating new facilities into our operations, could

have a material adverse effect on our business.

We rely upon a broad network of warehouses and distribution facilities to store, sort, package and distribute our

products. Our distribution operations depend on the effective functioning of global transportation and logistics

networks, including ports, carriers, and third-party service providers. Disruptions to these networks, including labor

shortages or disputes, capacity constraints, fuel and freight cost volatility, routing inefficiencies, or infrastructure

limitations could increase delivery times, delay inbound or outbound shipments, strain distribution capacity, increase

fulfillment and other costs, and impair our ability to efficiently receive, store, and distribute products.

In the US , we distribute products primarily through self-managed warehouses and DC s in Moreno Valley, California,

and in Mooresville, Indiana , which feature a complex warehouse management system that enables us to efficiently

pack products for direct shipment to our customers and consumers. We could face a significant disruption in our

domestic warehouse and DC operations if our warehouse management system does not perform as anticipated or

ceases to function for an extended period of time, which could occur due to damage to the facility, failure of software

or equipment, cyber-security incidents, power outages or similar problems. Any significant disruption to our

domestic warehouse or DC operations could a dversely affect our ability to fulfill customer orders . In addition,

increased reliance on automation, data analytics, and system integrations within our warehouse operations,

including to address outdated or no longer supported software, systems and equipment, may increase the risk of

system failures, data inaccuracies, or operational disruptions if such systems are not implemented or maintained

effectively, which could similarly have a material adverse effect on our business.

Internationally, we distribute our products through warehouses and DC s managed by 3PL s in certain international

locations. For example, we are currently transitioning certain international 3PL operations to a new partner. While

we conduct diligence prior to entering into service agreements with 3PL s, we depend on these providers to operate

their warehouses and DC s in a manner that meets our business and performance requirements, including with

respect to data security and compliance with applicable data protection and privacy laws, and the provision of

quality services on a timely basis at the prices we expect. If our 3PL s fail to manage these responsibilities, including

during or following an operational transition, system cutover, or data migration, or if their operations are disrupted as

a result of factors outside of their control, such as sanctions that could in the future be imposed by the US

government, or broader disruptions or inefficiencies in global logistics and transportation networks, our distribution

operations could face delays, reduced reliability, or increased costs. The loss of or disruption to the operations of

any one or more of these facilities could materially and adversely affect our sales, business performance, and

results of operations. Although we believe we possess adequate insurance to cover the potential effect of a

disruption to the operations of these facilities, such insurance may not be sufficient to cover all of our potential

losses and may not continue to be available to us on acceptable terms, or at all.

We rely upon independent manufacturers for all of our production needs, and the failure of these

manufacturers to manage these responsibilities would prevent us from filling customer orders, which

would result in loss of sales and harm our relationships with customers.

We rely upon independent manufacturers and their respective material suppliers for all of our production needs, the

majority of which are located in Southeast Asia, predominantly in Vietnam and Indonesia , which exposes us to

geographic concentration risk, including risks arising from regional economic, political, environmental, or operational

conditions, and we do not have direct control over these manufacturers or their suppliers. We expect our

independent manufacturers to finance the production of goods ordered, maintain manufacturing capacity, comply

with our policies, and store finished goods in a safe location pending shipment. The ability of our independent

manufacturers to meet these expectations may be adversely affected by liquidity constraints or limitations in their

access to third-party financing arrangements supporting their supply chains or working capital needs, which could

reduce available production capacity, delay shipments, or result in lost sales. Disruptions arising from these

geographic concentrations, our limited control over independent manufacturers and their suppliers, or our

manufacturers’ inability to meet these expectations could adversely affect our ability to manufacture products or

fulfill customer orders, which could negatively affect our results of operations.

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There can be no assurance of a long-term, uninterrupted supply of products from our independent manufacturers .

Our dependence on a limited number of key manufacturing partners may increase our exposure to disruptions,

pricing changes, or capacity constraints. While we have long-standing relationships with most of these

manufacturers, they could terminate our engagement, seek to increase their prices, or extract other concessions

from us, and we may not be able to timely engage a suitable alternative. If we are required to find alternative

manufacturers, we could experience manufacturing delays, increased manufacturing costs, and substantial

disruption to our business, any of which could negatively affect our results of operations.

Interruptions in the supply of our products can also result from adverse events that impair our manufacturers’

operations. For example, we keep proprietary materials necessary to produce our products, such as shoe molds

and other materials, in the custody of our independent manufacturers . If these independent manufacturers were to

lose or damage these proprietary materials, we cannot be assured that the manufacturers would have adequate

insurance to cover such loss or damage, and, in any event, the replacement of such materials would likely result in

significant delays in the production of our products, which could result in a loss of sales and earnings.

Our financial success is influenced by the success of our customers, and the loss of a key customer could

have a material adverse effect on our results of operations.

Much of our financial success is related to the ability of our customers in the wholesale channel, including

international distributors and retail partners, to effectively market and sell our brands to consumers. These

relationships are typically governed by contractual arrangements. If a customer fails to meet contractual obligations,

satisfy our expectations and standards , or experiences operational or financial difficulties, it may be challenging and

time-consuming to identify and transition to an acceptable alternative. In addition, disputes under these

arrangements could result in litigation, arbitration, settlement costs, or operational disruptions.

We may also be adversely affected by our customers’ actions or omissions, including failures to comply with

applicable laws, regulatory requirements, labor or employment standards, or our policies. Such conduct could harm

our reputation, subject us to regulatory scrutiny or liability, disrupt our relationships with other customers and

business partners, and adversely affect demand for our products. Transitioning away from an existing customer,

whether due to performance or compliance concerns, may result in lost sales, significant transition costs, and

operational disruption as we identify, onboard, and integrate replacement distribution or retail partners, and there

can be no assurance that a replacement will generate comparable or improved results.

We face the risk that key customers may not increase their business with us as anticipated, may significantly reduce

purchases, or may terminate their relationships with us. However, no single customer accounted for 10.0% or more

of our total net sales during fiscal year 2026 . The failure to increase sales to these customers could negatively affect

our growth prospects, and any reduction or loss of their business could materially and adversely affect our net sales

and results of operations, particularly if we are unable to offset such declines through our DTC channel. As of March

31, 2026 , one customer represents 18.5% of trade accounts receivable, net, which is generally unsecured and

exposes us to collection risk that could affect our results of operations and liquidity .

W e rely on customer purchase orders and delivery schedules for forecasting sales and results of operations. If

customers postpone, cancel, reduce, or discontinue orders, we may fail to meet our forecasts. These risks may be

exacerbated by structural changes in the retail industry including shifts in technology, consumer and wholesale

partner purchasing behavior, economic conditions, and a shrinking retail footprint. The loss of a key customer, or a

significant reduction in orders, could result in lower sales, excess inventory and related write-downs, and materially

and adversely affect our financial condition or results of operations. In addition, a key customer may liquidate

excess inventory through discounted channels, including unauthorized sellers, which could negatively impact brand

perception and divert demand from our authorized distribution channels.

We depend on qualified talent and, if we are unable to retain or hire executive officers, key employees, and

skilled talent, we may not be able to achieve our strategic objectives, which could adversely affect our

results of operations.

To execute our growth plan, we must continue to attract and retain highly qualified talent, including executive

officers and key employees. In addition, to develop new products and successfully operate and grow our key

business processes, we rely on employees with specialized expertise across design, marketing, merchandising,

sourcing, technology, operations, and support functions, including talent in areas such as data analytics, digital

commerce, and supply chain management. Competition for executive officers, key employees, and skilled talent is

intense within our industry, and we continue to experience upward pressure on compensation costs. Changes to our

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office environment or work models may not meet employees’ expectations, and many of the companies with which

we compete for talent have greater name recognition and financial resources than we have. Continued strength in

our results may also increase the risk that our employees are targeted by competitors. If our overall employment

proposition, including compensation, benefits, culture, work model, or career development opportunities, is not

perceived as favorable relative to other employers, our ability to attract, hire, and retain qualified personnel could be

adversely affected. We are committed to offering competitive compensation and benefits, which may increase our

selling, general, and administrative ( SG&A ) expenses. Further, our domestic headquarters are located in Goleta,

California, which may further limit our ability to attract qualified professionals.

If we hire employees from competitors, their former employers may assert that we or these employees have

breached legal obligations, resulting in a diversion of management time and resources. Prospective and existing

employees also often consider the value of stock-based compensation when deciding whether to accept or remain

in a position. Accordingly, volatility in our stock price may adversely affect our ability to recruit and retain qualified

talent. Any inability to attract, retain, or motivate executive officers, key employees, or other skilled personnel could

adversely affect our ability to achieve our long-term strategic objectives, harm our results of operations, and impair

our ability to compete effectively.

The continued service of our executive officers and key employees is particularly important, and the departure of

such talent may disrupt our business or result in the depletion of significant institutional knowledge. Our executive

officers and key employees are employed on an at-will basis, which means that they can terminate their

employment with us at any time. The loss of one or more of our executive officers or other key employees or

significant turnover in our senior management, and the often-extensive process of identifying and hiring other talent

to fill those key positions, could have a material adverse effect on our results of operations.

S heepskin and other raw materials are used to manufacture a significant portion of our products, and

disruptions in the availability, pricing, or quality standards of these inputs could have a material adverse

effect on our business.

We purchase raw materials and components that are subject to supplier and geographic concentration, most

significantly sheepskin, which is used in a substantial portion of our UGG brand products. Sh eepskin is in high

demand and sourced primarily from Australia and processed largely by two tanneries in China capable of meeting

our quality, volume, and animal welfare standards . This geographic and supplier concentration exposes us to supply

disruption risk. We also rely on designated suppliers for certain other specialized raw materials, including

sugarcane-derived EVA , used in certain components of our products.

If suppliers of sheepskin, including tanneries involved in its processing, sugarcane-derived EVA , or other materials

are unable to meet our quality, sustainability, or volume requirements, or if their operations are disrupted or cease,

we may not be able to obtain adequate quantities of these materials or suitable substitutes on acceptable terms, or

at all. Although alternative materials may be available for certain branded components, which may be limited, such

alternatives would not include the same trademarks. As a result, supply disruptions could require product redesign

or delayed production, increase costs, reduce inventory availability, result in loss of sales or increased returns, and

harm our reputation.

In addition, the raw materials used in the manufacturing of our products are subject to commodity price volatility,

most significantly sheepskin. Although sheepskin pricing has been relatively stable in recent years, prices and

availability may fluctuate due to changes in supply and demand, weather conditions, energy and logistics costs,

labor disruptions, regulatory developments, disease incidence, the effects of climate change, and broader market

dynamics. While we use contracts and other pricing arrangements to mitigate price volatility, prolonged increases in

sheepskin costs or other key inputs could increase manufacturing expenses and negatively impact our gross

margin , and we may be unable to offset such increases through pricing actions or changes in product mix.

Evolving fashion trends, social expectations, and ethical considerations, including increased opposition to the use of

animal-derived materials, as well as existing or potential legislation restricting the sale of such products in certain

jurisdictions, could also reduce consumer demand for sheepskin products or limit our ability to sell them in key

markets. Because sheepskin is integral to the UGG brand, adverse changes in consumer preferences, regulatory

requirements, or sourcing standards applicable to sheepskin could have a material adverse effect on our business,

financial condition, and results of operations.

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We rely on technical innovation to compete in the market for our products, and if we fail to innovate

effectively or in a timely manner, our competitive position and results of operations could be adversely

affected.

Our success relies in part on our continued innovation in both the materials we use and the design of our footwear.

In particular, our HOKA brand maintains its competitiveness through continuous product innovation and timely

introduction of new features and technologies that align with current and emerging consumer expectations,

including our ability to bring such innovations to market ahead of or in line with competitors. Also, we continue to

invest in research and development to increasingly incorporate recycled, renewable, regenerated, and certified/

natural materials ( preferred materials ) in our products as part of our sustainability efforts. We also increasingly use

preferred synthetics, regenerated or synthetic cellulosic fibers, and plant fibers. Although we continue to refine our

materials and develop new properties for specific applications, if we fail to introduce technical innovation in our

products in a timely or commercially successful manner, or experience issues with the quality of our products or

materials, consumer demand for our products could decline and we may experience reputational damage. In

addition, if our competitors introduce superior or more cost-effective innovations, we may lose market share or be

required to increase promotional activity to remain competitive. Further, as our brands transition to suppliers with

preferred materials , we may be subject to increased costs or supply constraints, which could reduce our sales and

profitability and have a material adverse effect on our financial condition and results of operations. Our investments

in research and development and new materials may not result in commercially successful products or may not

generate the expected return on investment, which could adversely affect our results of operations.

We may not succeed in implementing our growth strategies, in which case we may not be able to take

advantage of certain market opportunities and our competitive position and results of operations could be

adversely affected.

As part of our overall growth strategy, we seek to enhance the positioning of our brands, diversify our product

offerings, extend our brands into complementary product categories and markets, expand geographically, and

optimize our retail presence both in stores and online. Our future growth depends in part on our expansion efforts

outside of the United States ( international growth strategy ). For example, we have opened UGG brand and HOKA

brand retail locations in international markets through Company-owned stores and through third-party retailers . If we

are unable to identify new retail locations with consumer traffic sufficient to support a profitable sales level or elevate

our brand market positioning, our retail growth may be limited, and we may be unable to avoid losses or negative

cash flows from these locations. In addition, investments in new or expanded retail locations may not generate

expected returns and could result in impairments or reduced profitability. Furthermore, our future growth depends in

part on our ability to effectively manage the profitability of our existing retail locations. For example, our failure to

successfully identify and close underperforming stores in a timely manner could have a number of material adverse

effects, such as impairments and a negative impact on our financial condition and results of operations.

We also license the right to operate our brand retail stores to third parties through our partner retail program. All of

the partner retail stores are operated in international markets . We provide training to support these stores and set

and monitor operational standards. However, the quality of these store operations may decline due to the failure of

these third parties to operate the stores in a manner consistent with our standards or our failure to adequately

monitor these third parties, which could result in reduced sales and harm our brand image.

As part of our international growth strategy , we may transition certain brands in certain geographies from a third-

party distribution model to a direct distribution model or vice versa. Failure to effectively implement our growth

strategies, including transitioning between distribution models or developing our business in international markets,

or disappointing growth within existing markets, could negatively affect our sales growth rate. In addition, taking

steps to implement our growth strategies could have a number of negative effects, including increasing our working

capital needs, causing us to incur costs without corresponding benefits, and diverting management time and

resources away from our existing business. Our growth initiatives may not be successful, may take longer than

anticipated to achieve expected results, or may expose us to operational complexities that we are unable to

effectively manage.

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Increasing expectations from investors, regulators, and other key stakeholders with respect to our ESG

practices may impose additional costs on us or expose us to additional risks.

Investors, advocacy groups, customers, consumers, employees, regulators, and other stakeholders are increasingly

scrutinizing companies’ ESG practices and disclosures, including the social and environmental impacts of their

operations. We periodically communicate ESG initiatives, including through our annual Creating Change Report and

may face heightened scrutiny, regulatory inquiries, or litigation regarding the accuracy, completeness, or

consistency of such disclosures, including allegations of “greenwashing.” Our ESG disclosures address a broad

range of topics, including human rights, governance, environmental compliance, sustainability, human capital

management, supply chain practices, and diversity and inclusion.

Despite our efforts, our ESG practices, the pace at which we implement related initiatives, or our disclosures may

not meet evolving stakeholder expectations. Perceptions regarding our ESG priorities, whether viewed as over- or

under-emphasized, could adversely affect customer demand, employee recruitment and retention, or investor

relations, or lead to reputational harm, regulatory action, or litigation. In addition, developing ESG goals, metrics,

and data collection processes is complex, costly, and subject to evolving standards, internal controls, and regulatory

regimes, including ESG -related disclosure requirements of the SEC , European, and other regulators, such as those

in California. Failure, or perceived failure, to achieve or accurately report progress against our ESG initiatives or

adapt to changing regulatory requirements could increase compliance costs, damage our reputation, and negatively

affect our business and results of operations.

C limate change, natural disasters, public health issues, or other events beyond our control, as well as

related regulations, have adversely affected, and could in the future adversely affect, our business.

Natural disasters and other catastrophic events, including those associated with climate change and extreme

weather conditions, may disrupt our operations, supply chain, international markets, and the global economy. Our

business is subject to interruption from events such as extreme weather, power shortages, pandemic s, war, political

instability, terrorism, and failures of infrastructure or communications systems. Although we maintain disaster and

business continuity plans designed to support critical operations and information systems, these events could

disrupt our operations, impair employee availability, damage facilities, interrupt supply chains, or compromise the

integrity of our IT systems, which could materially increase costs, reduce sales, or otherwise adversely affect our

business continuity.

In addition, climate-related regulatory developments and evolving standards may require us to incur significant

capital expenditures or other costs to enhance the resiliency of our infrastructure, comply with legal requirements, or

implement mitigation measures. We may also experience increased costs for energy, transportation, raw materials,

production, and insurance, including higher premiums or deductibles. Our insurance coverage may not be sufficient

to cover all losses or may not remain available on acceptable terms. Further, severe weather events, health crises,

or other widespread disruptions may reduce consumer demand, impair the ability of our manufacturers, third-party

distributors, or other partners to operate effectively, or disrupt the supply of key raw materials, any of which could

adversely affect our results of operations.

We face risks associated with strategic acquisitions and divestitures, and our failure to successfully

integrate any acquired business could have a material adverse effect on our results of operations and

financial condition.

As part of our overall strategy, we may periodically consider strategic acquisitions to expand our brands into

complementary product categories and markets, or to acquire new brands, technologies, intellectual property, or

other assets. Our ability to do so depends on our ability to identify and successfully pursue suitable acquisition

opportunities. Such acquisitions involve numerous risks, challenges, and uncertainties, including the potential to:

• expose us to risks inherent in entering into new markets or geographic regions;

• lose significant customers or key personnel of the acquired business;

• encounter difficulties integrating and managing acquired assets;

• encounter difficulties marketing to new consumers or managing geographically dispersed

operations;

• divert management’s time and attention away from other aspects of our business operations; and

• incur costs relating to potential acquisitions that we fail to consummate, which we may not recover.

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Additionally, we may not be able to successfully integrate acquired businesses into our operations or achieve the

expected benefits of such acquisitions. We may also face cannibalization of existing product sales by newly

acquired products unless we successfully differentiate target consumers and increase our overall market share.

Further, we may be required to issue equity securities to finance an acquisition, which would be dilutive to our

stockholders, and equity securities may have rights or preferences senior to those of our existing stockholders. If we

incur indebtedness to finance an acquisition, it will result in debt service costs, and we may be subject to covenants

restricting our operations or liens encumbering our assets.

As part of our overall strategy to allocate resources that best align with our long-term objectives, we may seek to

sell one or more brands. For example, during fiscal year 2026 , we completed the phase out of the standalone

operations of the Koolaburra brand and AHNU brand. Further, during fiscal year 2025 , we completed the sale of the

Sanuk brand. These transactions involve financial and operational risks, including diverting management and

employee time and attention from other aspects of our business, separating personnel and financial and other

systems, impairments, and adversely affecting relationships with existing suppliers and customers.

The process of completing any acquisitions or divestitures may be time-consuming, involve significant costs and

expenses, and the expected benefits of such acquisitions or divestitures may not be realized. Our business, results

of operations, and financial condition could be negatively impacted. In addition, we may overestimate the value of

acquisition targets or fail to realize anticipated synergies, which could result in impairments or reduced returns on

our investments.

Risks Related to Our Global Business Strategy and Operations, and

International Commerce

Our reliance on independent manufacturers and suppliers located primarily in Southeast Asia exposes us

to risks associated with unpredictable and evolving international trade policies, regulatory environments,

and geopolitical conditions that could materially increase our costs, disrupt our global supply chain, and

adversely affect our results of operations.

The production of our finished goods is outsourced to independent manufacturers , the majority of which are in

Southeast Asia. During fiscal year 2026 , production of our finished goods was predominantly from Vietnam and

Indonesia, while less than 5% was from China or any other individual country. As a result, we are exposed to

geographic concentration risk arising from regional and global economic conditions, changes in diplomatic and trade

relationships (including the imposition of new or increased tariffs), political and social instability, armed conflict,

disease outbreaks, natural disasters, and other regulatory, environmental, and geopolitical developments.

The majority of raw materials and components used by our independent manufacturers are sourced from

designated suppliers , and tariffs, duties, or other trade restrictions may be imposed, modified, or expanded with

limited notice. These measures could require us or our independent manufacturers to seek alternative sourcing

options that may not be available in sufficient quantities, at acceptable quality levels, or in a timely manner. Evolving

international trade dynamics could materially increase our cost of goods sold, disrupt logistics or inventory flows,

adversely affect product pricing and demand, and reduce our gross margin . Customs authorities may also challenge

our tariff classifications or treatment of certain products, resulting in additional costs or penalties. In addition, certain

tariffs imposed under the International Emergency Economic Powers Act have been invalidated by a recent US

Supreme Court decision, and additional tariffs may be invalidated, modified, or refunded in the future. As a result,

we may face uncertainty regarding the treatment of tariff-related costs, including the potential recovery or refund of

tariff amounts previously paid or partially reflected in selective pricing actions or cost-sharing arrangements. These

and other judicial, regulatory, or trade policy developments could increase compliance complexity, create cost

volatility, impair our ability to plan sourcing, pricing, and inventory strategies, and result in disputes, claims,

unrecoverable costs, and reputational harm, regardless of the ultimate outcome.

In addition to trade-related risks, our international operations and independent manufacturers are subject to

regulatory, operational, and reputational risks. Although we require compliance with environmental, labor, ethical,

health, safety, and other business standards and conduct periodic audits, we do not directly control the practices of

our independent manufacturers or suppliers. A s we continue to diversify within Southeast Asia, monitoring

compliance across a broader supplier base may be more complex. Any n oncompliance could result in product

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recalls, regulatory penalties, seizure or forfeiture of goods, reputational harm, termination of supplier relationships,

violations of US or international trade laws, increased costs, supply chain disruption, or the loss of import privileges.

Our international operations and independent manufacturers are also exposed to additional risks, including:

• logistics, infrastructure, transportation, and distribution constraints, including raw material

availability, and cost volatility related to fuel costs, labor disputes, inflation, port congestion, or

geopolitical or climate‑related disruptions;

• restrictions on fund repatriation or foreign currency volatility;

• local labor practices, workforce availability, or holidays;

• counterfeit, unauthorized or misclassified materials, or product integrity or compliance risks;

• health-related disruptions, including disease outbreaks; and

• adverse consumer perceptions of goods sourced from certain countries, including as a result of

geopolitical or social conditions.

Although we pursue mitigation strategies, including selective pricing actions and cost-sharing arrangements with

independent manufacturers , these measures may not fully offset trade-related and regulatory cost increases. If such

strategies are ineffective, it could materially and adversely affect our business, financial condition, and results of

operations.

Our sales in international markets are subject to a variety of legal, regulatory, political, cultural, and

economic risks that may adversely affect our results of operations.

Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our

existing international markets is subject to risks associated with international operations that could adversely affect

our results of operations. These risks include:

• foreign currency exchange rate fluctuations between the US dollar and primarily the currencies of

Europe, Asia, Canada, and Latin America affect the prices at which products are sold to

international consumers and our reported results;

• limitations on our ability to move currency out of international markets or repatriate earnings;

• burdens of complying with a variety of international laws and regulations, which may change

unexpectedly, and the interpretation and application of such laws and regulations;

• legal costs related to defending allegations of non-compliance with international laws;

• inability to import products into a foreign country;

• difficulties associated with promoting and marketing products in unfamiliar markets and cultures;

• political or economic uncertainty or instability, which may disrupt the global economy and reduce

consumer spending, which could have a material adverse effect on our business, particularly for our

HOKA and UGG brands;

• anti-American sentiment in international markets in which we operate;

• changes in diplomatic and trade relationships between the US and other countries;

• general economic fluctuations in international markets; and

• challenges associated with local laws, regulations, and business practices, including employment,

tax, and data privacy requirements.

Global geopolitical developments, including armed conflicts, escalating global tensions, and related disruptions ,

have resulted in, and could continue to result in, instability and heightened volatility in global markets .

We conduct business outside the US , which exposes us to foreign currency exchange rate risk, and could

have a negative effect on our results of operations.

We operate on a global basis, with 41.7% of our total net sales for the year ended March 31, 2026 , generated from

operations outside the US . As we continue to expand our international operations, our sales and expenditures in

foreign currencies are expected to become increasingly material and subject to foreign currency exchange rate

fluctuations. A significant portion of our international operating expenses are paid in local currencies, and our

international distributors typically sell our products in local currency, which affects the price to international

consumers. Many of our subsidiaries operate with their local currency as their functional currency. Foreign currency

fluctuations, which can be exacerbated by volatility in global credit markets, may change the US dollar value of our

purchases or sales and, when converted to US dollars, could materially affect our net sales, gross margin , and

results of operations. When the US dollar strengthens relative to foreign currencies, our sales and profits

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denominated in foreign currencies are reduced when converted into US dollars and our margins may be negatively

affected. We routinely utilize foreign currency forward contracts or other derivative instruments for the amounts we

expect to purchase and sell in foreign currencies to mitigate exposure to foreign currency exchange rate

fluctuations. As we continue to expand international operations and increase purchases and sales in foreign

currencies, we may utilize additional derivative instruments to hedge our risk. Our hedging strategies depend on our

forecasts of sales, expenses, and cash flows, which are inherently subject to inaccuracies. Further, such strategies

may not fully offset the effects of exchange rate fluctuations and may introduce additional volatility into our results of

operations. Foreign currency exchange rate hedges, transactions, remeasurements, or translations could materially

affect our consolidated financial statements .

Risks Related to Technology, Data Security and Privacy

A security breach or disruption to our IT systems could materially harm our business, disrupt our

operations, or result in unauthorized disclosure of sensitive information, which could damage our

relationships, expose us to litigation or regulatory proceedings, or harm our reputation, any of which could

materially and adversely affect our business and results of operations.

We store and transmit sensitive information, including personal information of customers, consumers, and

employees, payment card information, and proprietary operational, financial, and strategic data. Unauthorized

access to, loss, misuse, or disclosure of such information could result in reputational harm, litigation, regulatory

investigations, significant remediation costs and substantial losses. Our operations also depend on the continued

performance of internal information systems and third-party technology providers, including systems utilizing data

analytics and AI , to prevent unauthorized access and to respond quickly and effectively to data security incidents.

Cybersecurity threats continue to evolve in frequency and sophistication, and our reliance on interconnected

systems, cloud-based platforms, and third-party service providers increases the risk that a security incident affecting

us or these parties could disrupt our operations. Although we invest in security controls and monitoring, these

measures may not prevent all incidents or ensure timely detection.

A cyber-attack, data security incident, or system disruption could materially and adversely affect our business if:

• critical systems become inoperable or require significant time or cost to restore;

• employees are unable to perform their duties or communicate effectively with third parties;

• sensitive or confidential information is lost, misused, or disclosed without authorization;

• business operations, including order placement, fulfillment, or reporting, are disrupted;

• significant, unplanned investments in technology, security remediation, or recovery are required; or

• we incur additional liabilities, costs, claims, or regulatory exposure.

Any such event could result in reputational harm, loss of customer trust, strained relationships with partners and

suppliers, litigation, fines, penalties, or regulatory actions under domestic and international data protection and

privacy laws and could materially and adversely affect our business, financial condition, or results of operations.

If we are found to have violated laws concerning the privacy and security of consumers’ or other

individuals’ personal information, we could be subject to civil or criminal penalties, which could increase

our liabilities and harm our reputation or our business.

There are a number of laws protecting the privacy and security of personal information, as well as increased

scrutiny by regulators, such as the Federal Trade Commission, and state attorneys general focused on our industry.

Such laws include the California Consumer Privacy Act and California Privacy Rights Act, the EU ’s General Data

Protection Regulation and member state directives, Canada’s Personal Information Protection and Electronic

Documents Act, and China’s Personal Information Protection Law, and limit how we may collect, use, share and

store personal information, and they impose obligations to protect that information. We may also be subject to new

or evolving data privacy and security laws and regulations. If we, or any of our service providers who have access to

the personal data for which we are responsible, are found to be in violation of the privacy or security requirements of

applicable data protection laws, we could be subject to civil or criminal penalties, which could increase our liabilities,

harm our reputation, and have a material adverse effect on our business, financial condition, and results of

operations. In addition, these laws may provide for private rights of action, statutory damages, or enhanced

regulatory enforcement, which could increase our exposure to litigation and liability. Although we utilize a variety of

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measures to secure the data that we control, even compliant entities can experience security breaches or have

inadvertent failures despite employing reasonable practices and safeguards.

If the technology-based systems that give our customers the ability to shop or interact with us online do

not function effectively, our results of operations, as well as our ability to grow our e-commerce websites

globally or to retain our customer base, could be materially and adversely affected.

Many consumers shop with us through Company-owned e-commerce websites and third-party digital marketplaces,

where expectations and competitive pressures, including delivery speed, shipping costs, return policies, and mobile

functionality, continue to increase. Consumers increasingly use mobile platforms, social media, and digital channels

to shop, comparison shop, and engage with brands, and we rely on these channels to attract and retain customers.

Our success may depend on the continued effectiveness of third‑party digital platforms and marketplaces, which

may change algorithms, policies, fee structures, data access, or content moderation practices, including through

increased use of AI ‑driven tools, in ways that reduce traffic, increase customer acquisition costs, or otherwise

diminish the effectiveness of our marketing and sales efforts. These platforms may also become subject to

regulatory actions that limit our ability to operate on them or require costly operational or technological changes.

Failure to provide effective, reliable, secure, and user-friendly digital platforms that offer competitive delivery options

and meet evolving consumer expectations or to scale our technical infrastructure to support increased demand,

could disrupt operations, reduce sales, harm our reputation, and adversely affect our results of operations.

Additional risks include channel conflict with Company-owned and third-party brick and mortar stores, challenges in

replicating the in-store experience online, and liability for online content.

If we are unsuccessful at improving our operational and IT systems and our efforts do not result in the

anticipated benefits to us or result in unanticipated disruption to our business, our results of operations

could be adversely affected.

We continually strive to improve and automate our operational and IT systems and processes to enhance the

efficiency and competitiveness of our business. Transitioning to these new or upgraded processes and systems

requires significant capital investments and personnel resources. Implementation is also highly dependent on the

coordination of numerous employees, contractors and software and system providers. While these efforts have

resulted in improvements to our operational systems, we expect to continue to incur expenses to implement

additional improvements and upgrades to our systems. Many of these expenditures have been and may continue to

be incurred in advance of realizing any direct benefits to our business. Moreover, our investments in operational and

IT systems may not generate the expected return on investment or may take longer than anticipated to deliver

benefits. We cannot guarantee that we will be successful in improving our operational systems, adapting to changes

in technology, including the effective use of data analytics, and other emerging technologies, or that these efforts will

result in anticipated benefits. We may also experience difficulties in implementing or operating our new or upgraded

operational or IT systems, including ineffective or inefficient operations, significant system failures, outages, delayed

implementation and loss of system availability, which could lead to increased implementation and operational costs,

loss or corruption of data, delayed shipments, excess inventory and interruptions of operations resulting in lost sales

or profits. If our operational or IT system upgrades, improvements and associated implementation efforts are not

successful, our financial condition and results of operations could be adversely affected, and our business may

become less competitive.

Risks related to our use of artificial intelligence technologies could adversely affect our business,

reputation, results of operations, or financial condition.

We and our third-party service providers are increasingly using AI , data analytics, and machine learning

technologies across our business, including operational and IT systems, digital platforms, and certain business

processes. While these technologies may improve efficiency and decision-making, they may not perform as

intended and may produce inaccurate, incomplete, or otherwise unreliable outputs, including due to deficiencies in

the data used to develop or operate such tools.

Our use of AI , and the use of AI by third parties on which we rely, may introduce additional risks related to the

integrity, security, and governance of data used by such technologies, including the potential for unauthorized use,

processing, or exposure of sensitive information in ways that may not be fully addressed by our existing data

protection controls, as well as operational disruptions resulting from reliance on AI -driven outputs or systems that do

not perform as intended. In addition, the use of AI technologies in the creation or development of content, designs,

or other intellectual property may present uncertainty regarding ownership, copyright-ability, or potential

infringement of third-party intellectual property rights. The legal and regulatory landscape governing AI is rapidly

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evolving, and compliance with new or changing requirements may require additional resources or operational

changes. If we are unable to effectively manage these risks, our business and results of operations could be

materially and adversely affected.

Risks Related to Our Legal, Compliance, and Regulatory Environment

Failure to adequately protect our intellectual property rights could reduce sales and adversely affect the

value of our brands.

Our business could be significantly harmed if we are not able to protect our intellectual property rights. We believe

our competitive position is attributable to the value of our trademarks, patents, trade dress, trade names, trade

secrets, copyrights, and other intellectual property rights. As a result of the success of our brands, we have become

a target of counterfeiting and product imitation. Although we actively pursue legal and other actions against those

who infringe on our intellectual property rights, we cannot guarantee that these actions will be adequate to protect

our brands in the future, particularly because some countries’ laws do not protect these rights to the same extent as

US laws. If we fail to adequately protect our intellectual property rights, it may allow competitors to sell products that

are similar to and directly competitive with our products, or we could lose opportunities to sell our products to

consumers who instead purchase counterfeit or imitation products, which could reduce sales of our products and

adversely affect the value of our brands. In addition, any intellectual property lawsuits in which we are involved

could require significant time and expense and distract management’s attention from operating our business, which

may negatively affect our business and results of operations. In addition to enforcing our intellectual property rights,

we may need to defend claims against us related to our intellectual property rights. For example, we have faced

claims that the word “ugg” is a generic term. Such a claim was successful in Australia, but similar claims have been

rejected by courts in the US , China, the Republic of Türkiye, and the Netherlands. Any court decision or settlement

that invalidates or limits trademark protection of our brands, which allows a third-party to continue to sell products

similar to our products or to sell counterfeit products, could lead to intensified competition and a reduction in our

sales and adversely affect the value of our brands.

Our revolving credit facility agreements expose us to certain risks.

From time to time, we have financed our liquidity needs in part through borrowings under revolving credit facilities.

We may be unable to renew, extend, or replace our revolving credit facilities on acceptable terms, or at all, when

they mature, which could reduce our available liquidity. Our ability to borrow under our revolving credit facilities may

be limited if the lenders believe there has been a material adverse change to our business. In addition, our revolving

credit facility agreements contain a number of customary financial covenants and restrictions, which may limit our

ability to engage in transactions that would otherwise be in our best interests, or otherwise respond to changing

business and economic conditions, and may therefore have a material effect on our business. Failure to comply with

any of these covenants could result in a default, allowing our lenders to accelerate the timing of payments, which

could have a material adverse effect on our business, operations, financial condition, and liquidity. In addition, in

some cases, a default under one revolving credit facility could result in a cross-default under other facilities. Certain

of our revolving credit facility agreements bear interest at a rate that varies by currency. Any increases in interest

rates applicable to our borrowings would increase our cost of borrowing, which would reduce our net income and

liquidity.

The tax laws applicable to our business are complex, and changes in tax laws or audits by taxing

authorities could increase our worldwide tax rate and may subject us to additional tax liabilities, which may

materially affect our financial position and results of operations .

Changes in global tax laws, regulations, and treaties could materially affect our business. These tax laws require

significant judgment and specialized expertise to evaluate and estimate our worldwide provision for income taxes.

Changes in these tax laws (and our interpretation thereof), could result in a materially higher tax expense or a

higher effective tax rate on our worldwide earnings. For example, global tax authorities may take differing positions

in interpreting the Organization for Economic Co-operation and Development’s (commonly known as OECD)

guidance, including with respect to Pillar Two model rules, which could modify existing tax principles and increase

our tax liabilities; in addition, the enactment of H.R. 1, also known as the One Big Beautiful Bill Act, or similar future

legislation, may also affect applicable tax rules and interpretations. These changes and potential other tax law

changes could increase our income tax liability or adversely affect our long-term effective tax rates and net income .

Refer to Note 5, “Income Taxes,” of our consolidated financial statements in Part IV within this Annual Report for

further information regarding tax law changes.

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Additionally, we are subject to tax audits, which may result in the assessment of additional taxes. Although we

believe our tax estimates are reasonable and our tax filings are prepared in accordance with all applicable tax laws,

the final determination with respect to any tax audits, and related litigation, could be materially different from our

estimates or from our historical tax provisions and accruals, especially as there is continued economic and political

pressure to increase tax revenue in jurisdictions in which we operate. The results of a tax audit or other tax

proceeding could have a material adverse effect on our results of operations or cash flows during the periods for

which that determination is made and may require a restatement of prior financial reports. In addition, changes in

our estimates related to uncertain tax positions could result in adjustments to our tax expense and effective tax rate

in future periods.

Risks Related to Our Common Stock

Our common stock price has been volatile, which could result in losses for stockholders.

The trading price of our common stock has been and may continue to be volatile. The trading price of our common

stock could be affected by a number of factors, including:

• changes in expectations regarding our future financial performance and results of operations;

• changes in estimates and opinions of our performance by securities analysts and other market

participants, or our failure to meet such estimates;

• changes in our stockholder base or public actions taken by investors, including activism;

• market research and opinions published by securities analysts and other market participants, and

the response to such publications;

• third-party data sources estimating our intra-quarter financial performance;

• quarterly fluctuations in our sales, margins, expenses, financial condition, and results of operations;

• the financial stability of our customers, manufacturers, suppliers, and competitors;

• announcements made by us or our competitors regarding product launches or developments;

• announcements by our competitors, or other companies in our industry, regarding changes in

financial condition, results of operations or financial outlook;

• legal proceedings, regulatory actions, and legislative changes impacting us, our competitors, or the

industry in which we operate;

• the declaration of stock or cash dividends, stock repurchases, or stock or reverse stock splits;

• consumer confidence and discretionary spending levels;

• broad market fluctuations in trading volume and market price of publicly traded securities;

• general market, geopolitical, and macroeconomic conditions, including evolving international trade

dynamics and recessionary conditions; and

• trading activity in our stock by short-term or technical investors, including algorithmic trading, index

funds, or other market participants whose investment decisions are not based on our fundamentals.

In addition, the stock market in general has experienced extreme price and volume fluctuations. Accordingly, the

price of our common stock is volatile and any investment in our stock is subject to risk of loss. These broad market

and industry factors and other general macroeconomic conditions unrelated to our financial performance may also

affect our common stock price, including in ways that are disproportionate to or not directly related to our operating

performance.

Anti-takeover provisions contained in our Amended and Restated Certificate of Incorporation (Certificate)

and Amended and Restated Bylaws ( Bylaws ), as well as provisions of Delaware law, could impair or delay a

takeover attempt.

Our C ertificate and Bylaws contain provisions that could have the effect of rendering more difficult hostile takeovers,

change-in-control transactions, or changes in our Board or management. As a Delaware corporation, we are also

subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which may

delay, deter, or prevent a change-in-control transaction. Any provision of Delaware law, our Certificate, or our

Bylaws that has the effect of rendering more difficult, delaying, deterring, or preventing a change-in-control

transaction could limit the opportunity for stockholders to receive a premium for their shares of our common stock,

and could affect the price that investors are willing to pay for our common stock.

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ITEM 1B. UNRESOLVED COMMENT LETTERS

Unresolved Comment Letters

None.

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ITEM 1C. CYBERSECURITY

Cybersecurity Risk Management and Strategy

We maintain a comprehensive cybersecurity program, recognizing the critical importance of safeguarding our

operations, employees, customers, and other business partners from cybersecurity risks, which continue to evolve

in frequency and sophistication. These risks include, among others, operational, financial, reputational, legal, and

regulatory risks.

As a part of this program, we have developed an incident response plan ( IRP ) designed to quickly respond to,

mitigate, and recover from cybersecurity incidents. The IRP includes procedures for incident detection and

reporting, initial assessment, containment, eradication, recovery, post-incident activities, and continuous

improvement.

We also integrate cybersecurity risk management into our overall risk management framework to ensure that

cybersecurity risks are considered in all aspects of our business . Our management team works closely with our

Chief Digital & Data Officer ( CDDO ) and Chief Information Security Officer ( CISO ) , and is designed to align our

cybersecurity efforts with our business objectives and operational needs. Key components of our cybersecurity

approach include, among other things:

• establishing a dedicated action team, led by our CDDO and CISO , to oversee and manage

cybersecurity risks;

• implementing a comprehensive cybersecurity risk assessment process and strategy based on

industry standards and established frameworks such as the National Institute of Standards and

Technology ( NIST );

• implementing a third-party and vendor risk management program, which includes evaluating risk

levels such that third parties and vendors with access to our systems or data are subject to

cybersecurity onboarding and review, along with cybersecurity and data privacy audits and ongoing

risk monitoring and mitigation efforts;

• conducting penetration tests and security maturity assessments throughout the year;

• periodically engaging independent third-party assessors to audit our cybersecurity and information

system programs to evaluate their effectiveness;

• implementing industry-standard technologies and processes to protect our system and data and to

help detect potential unauthorized activity;

• maintaining access controls to safeguard data and systems;

• providing annual trainings to employees on responsible information security, data security and

cybersecurity practices including appropriate action to take against cybersecurity threats;

• conducting periodic phishing simulations to our employees;

• engaging in cybersecurity incident tabletop exercises and scenario planning exercises;

• maintaining a cybersecurity and information security risk insurance policy, which insures for data

incidents or breaches and other technology related exposures; and

• periodically reviewing and updating our IRP , privacy policy, and other relevant policies/procedures.

We continuously evaluate and enhance our cybersecurity risk management practices in response to evolving

threats and business needs .

In the three-year period ended March 31, 2026 , our business, results of operations and financial condition have not

been materially affected by risks from cybersecurity threats, including as a result of any prior cybersecurity incidents

experienced by either us or third parties, but we cannot provide assurance that they will not be materially affected in

the future by such risks or any future material incidents. Refer to Part I, Item 1A, “Risk Factors - Risks Related to

Technology, Data Security and Privacy” within this Annual Report for further information.

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Cybersecurity Governance

Our Board has delegated to the Audit Committee primary responsibility for oversight of enterprise risk assessment

and risk management, including risks related to cybersecurity and information security. Our CDDO and CISO , who

head our cybersecurity and information security initiatives, provide quarterly updates to the Audit Committee , and

annual updates to the full Board . These updates cover various topics, such as efforts to enhance our cybersecurity

posture, operational and incident metrics, mitigation actions, and key performance indicators such as cybersecurity

maturity, program health, and audit and compliance activities. The Audit Committee reviews and monitors these

updates as part of its oversight of our cybersecurity risk management program. The Audit Committee also engages

in regular dialogue with management, including our CDDO and CISO , regarding cybersecurity and technology risks

and related initiatives. In addition, the Audit Committee reviews relevant internal audit findings and key metrics used

to assess our capabilities to manage cybersecurity, information security, and technology risks.

In addition to these regular updates, significant cybersecurity incidents and updates are escalated on an as-needed

basis in accordance with our IRP, and the Audit Committee discusses with management the nature and potential

impact of material cybersecurity incidents on our business, financial condition, and results of operations.

Our CDDO and CISO have extensive experience in cybersecurity. Our CDDO has served in his role since

September 2024. He has over 15 years of experience in digital transformations, enterprise technology, artificial

intelligence, and data management. Our CISO has served in various roles in information technology for over 25

years, including 15 years in information security. He holds a B.S. in Cybersecurity and Information Assurance, along

with industry certifications including ISACA’s Certified in Risk and Information Systems Control, ISACA’s Certified

Information Security Manager, and ISC2’s Certified Information Systems Security Professional certifications.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read together with our

consolidated financial statements in Part IV within this Annual Report . This discussion includes an analysis of our

financial condition and results of operations for the years ended March 31, 2026 , and 2025 and year-over-year

comparisons between those periods. For an analysis of our financial condition and results of operations for the

years ended March 31, 2025 , and 2024 and year-over-year comparisons between those periods, refer to Part II,

Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual

Report on Form 10-K for the fiscal year ended March 31, 2025 , filed with the SEC on May 23, 2025 .

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 I, Item 1A, “Risk Factors,” within this Annual

Report .

Unless otherwise indicated, all figures herein are expressed in thousands, except per share data . References to

“ domestic ” refer to the US .

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 three proprietary brands : HOKA , UGG , and Teva . Refer to the section below entitled “Reportable Operating

Segments Overview” for information regarding the phase out of standalone operations for the Koolaburra brand and

AHNU brand, and the prior sale of the Sanuk brand.

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, performance,

authenticity, functionality, quality, and comfort, and products tailored to a variety of activities, seasons, and

demographic groups. Independent third-party contractors manufacture all of our products.

Financial Highlights

Consolidated financial performance highlights for fiscal year 2026 ( current period ), compared to fiscal year 2025

( the prior period ), were as follows:

• Net sales increased 9.8% to $5,472,296 .

◦ Brand

▪ HOKA brand net sales increased 15.9% to $2,587,330 .

▪ UGG brand net sales increased 8.2% to $2,738,758 .

▪ Other brands net sales decreased 33.9% to $146,208 .

◦ Channel

▪ Wholesale channel net sales increased 12.3% to $3,208,107 .

▪ DTC channel net sales increased 6.3% to $2,264,189 .

◦ Geography

▪ Domestic net sales increased 0.2% to $3,191,518 .

▪ International net sales increased 26.8% to $2,280,778 .

• Gross profit as a percentage of net sales ( gross margin ) decreased 20 basis points to 57.7% .

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• SG&A expenses increased 11.0% to $1,894,823 .

• Income from operations increased 7.1% to $1,262,903 .

• Income from operations as a percentage of net sales ( operating margin ) decreased 50 basis points

• Diluted earnings per share increased 10.9% to $7.02 per share.

Trends And Uncertainties Impacting Our Business And Industry

Our business and industry are subject to several important trends and uncertainties, including the following:

Macroeconomic and Geopolitical Factors

• Macroeconomic factors, including inflationary pressures, increased tariffs, rising supply chain costs,

high interest rates, foreign currency exchange rate volatility, escalating global conflicts, changes in

discretionary spending, and recession risks, are creating a complex and challenging environment

for our business and industry that may continue to pressure our results of operations, including our

gross margin . For example, prolonged or escalating conflicts in the Middle East could disrupt our

supply chain and increase energy, transportation, and commodity costs, as well as cause shipping

delays. While these factors did not materially impact our results of operations during the current

period , they could negatively affect us in future periods.

• We are exposed to risks from evolving trade policies, including higher tariffs and restrictions

affecting goods imported from certain regions where we have a concentration of sourcing and

manufacturing . Recent judicial, regulatory, and administrative developments regarding tariffs

imposed under the International Emergency Economic Powers Act and other authorities have

increased uncertainty related to both our future duty costs and potential recovery of previously paid

duties. The US Customs and Border Protection have announced a phased process for submitting

refund requests; however, the availability, timing, and amount of any refunds remain uncertain. As

of March 31, 2026, we have not recognized any amounts related to potential tariff refunds or other

recoveries. We continue to monitor developments and pursue mitigation strategies, including

selective pricing actions, i nventory and sourcing management, supplier diversification, and

negotiating cost-sharing arrangements; however, we may be unable to offset tariff-related cost

impacts, which could materially and adversely affect our gross margin and demand for our

products.

Brand and Omnichannel Strategy

• We are focused on increasing global consumer awareness, cultural relevance, and adoption of our

brands, which has contributed positively to our results of operations. Our global brand growth

strategy seeks to drive adoption through product innovation and marketing investments across

geographies and channels , while enhancing the customer experience through category expansion

and loyalty-driven engagement.

• We continue to manage marketplace inventory through product segmentation and differentiation .

During the current period , promotional activity slightly increased compared to exceptionally low

levels in the prior period ; however, we continued to achieve high levels of full-price sell through by

aligning product assortments with marketplace demand. These efforts contributed to largely

maintaining our gross margin compared to the prior period , even as the retail environment became

more promotional. We may not realize similar gross margin benefits in our fi scal year ending

March 31, 2027 ( next fiscal year ) due to various factors, including the macroeconomic and

geopolitical factors discussed above and the potential impact from our pricing strategies.

• Our long-term strategy is to grow our DTC channel to represent a larger portion of our total net

sales by differentiating the consumer experience relative to the wholesale channel and driving

consumer acquisition and retention. We are investing in e-commerce platform upgrades, data

analytics, consumer experience initiatives, and selective global retail store expansion. We expect

growth in our DTC channel’s net sales to continue to positively impact our gross margin ; h owever,

as we also seek to expand distribution with wholesale partners to drive brand awareness and

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market share, our wholesale channel may represent a larger portion of our net sales in certain

periods, which could pressure gross margin in those periods.

• We are pursuing growth strategies for the HOKA brand and UGG brand to grow international sales

to represent a larger portion of our total net sales . We continue to selectively expand our HOKA

brand presence through additional wholesale partner locations and targeted DTC channel retail

store expansion . We are also investing in regions that provide influential market presence to build

brand awareness , including through the launch of our US HOKA brand loyalty program during fiscal

year 2026. W e expect to continue investing in the UGG brand and HOKA brand global loyalty

programs .

• W e continue to take actions to reposition the Teva brand, including refocusing certain wholesale

channel distribution toward outdoor and premium retail partners and emphasizing brand messaging

around its outdoor-adventure heritage. Our efforts to reposition the Teva brand and our future

results of operations remain uncertain. In particular, macroeconomic pressure on value‑oriented

domestic wholesale consumers may continue to adversely affect Teva brand performance.

Supply Chain

• To support our growth, we c ontinue to invest in our global distribution network, including our

warehouses and DC s, as well as 3PL s. We also continue to diversify our independent

manufacturers and the regions in which they operate; however, we maintain a significant

concentration of sourcing and manufacturing in Southeast Asia . In addition, w e are currently

transitioning one of our international 3PL s to a new partner, which may create temporary

operational risks . We expect to continue upgrading our global distribution network to continue

meeting customer and consumer demand.

Reportable Operating Segments Overview

As of March 31, 2026 , 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, tastemakers, and everyday athletes. Expansion into additional product categories,

elevated marketing campaigns, and investments in brand experiences, coupled with strategic marketplace presence

have fueled both domestic and international sales growth of the HOKA brand, which has quickly become a leading

brand within run and outdoor specialty wholesale accounts and is growing across its global marketplace. The HOKA

brand’s product line includes running, trail, hiking, fitness, and lifestyle footwear offerings, as well as apparel and

accessories.

We believe demand for HOKA brand products will continue to be driven by the following:

• Leading performance product innovation, a deep connection to culture and community, category

expansion into apparel and lifestyle, and key franchise management, including consumer led

product flow and strategic product lifecycle cadence.

• Increased global brand awareness and new consumer adoption through enhanced global marketing

activations and online consumer acquisition, including building a connected ecosystem through

social media platforms, e-commerce, and retail.

• Thoughtful and strategic distribution choices, allowing the HOKA brand access and introduction to a

broader, more diverse, consumer base.

• Strategic investment in scaling lifestyle footwear, apparel, and accessories.

UGG Bran d. The UGG brand is one of the most iconic and recognized brands in our industry, which highlights our

successful track record of building niche brands into consumer-focused fashion lifestyle market leaders. Born on the

California coast to warm surfers after they caught and rode the waves, we create iconic products and experiences

that are made for people to feel comfort, softness, warmth, and confidence. With loyal consumers around the world,

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innovative products, and elevated storytelling, the UGG brand has proven to be a highly resilient consumer-focused

line of premium footwear, apparel, and accessories that has driven both domestic and international sales growth

with year-round product offerings that appeal to a growing global audience and a broad demographic.

We believe demand for UGG brand products will continue to be driven by the following:

• Successful acquisition of a diverse global consumer base, and focusing on key markets, through

strategic marketing activations and collaborations that resonate with a fashionable consumer.

• High consumer brand loyalty due to elevated brand experiences and consistent delivery of crafted;

purposefully built and luxuriously comfortable footwear, apparel, and accessories.

• Diversification of our footwear product offerings, such as our spring and summer lines, as well as

expanded category offerings for Men’s products such as the slip-on shoe and sneaker category,

and more iconic fashion product for our Classics line, including reimagining existing iconic styles

into new categories.

• Continued expansion of our apparel and accessories businesses.

Other Brands . Other brands consist primarily of the Teva brand . The Teva brand’s products are built for a range of

outdoor pursuits and include a variety of footwear options, from classic sandals and shoes to boots. The Other

brands reportable operating segment includes financial results of the Koolaburra brand and AHNU brand, for which

the phase out of standalone operations were completed during the third and fourth quarters of fiscal year 2026 , as

well as financial results for the former Sanuk brand during the prior period through the sale date of August 15, 2024

( Sanuk Brand Sale Date ). Refer to the section titled “Reportable Operating Segments” in Note 1, “General,” of our

consolidated financial statements in Part IV within this Annual Report for further information.

Use of Non- GAAP Financial Measures

We disclose supplemental financial measures calculated and presented in accordance with generally accepted

accounting principles in the United States ( US GAAP ); however, throughout this Annual Report , including within our

consolidated financial statements, we provide certain financial information on a non-GAAP basis ( non-GAAP

financial measures ). We provide non-GAAP financial measures and information that may assist investors in

understanding our results of operations and assessing our prospects for future performance, which primarily consist

of certain constant currency measures and total segment-level financial information.

We believe presenting 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. 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 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 period 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, or 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 .

We believe presenting certain segment-level operating measures, including total segment income from operations

and total segment SG&A expenses, is important because it allows for an evaluation of operating performance and

cost structure across brands. Our segment-level non-GAAP financial measures represent the results of operations

and expenses for our individual reportable operating segments and differ from our consolidated results because

they exclude certain unallocated enterprise and shared brand expenses. Our segment-level non-GAAP financial

measures should not be considered in isolation, or as an alternative to consolidated financial and operating

measures presented in accordance with US GAAP .

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Seasonality

A significant part of the UGG brand’s business has historically been seasonal, with the highest percentage of net

sales occurring in the third fiscal quarter , which has contributed to variation in results of operations from quarter to

quarter. However, as the HOKA brand’s net sales have increased as a percentage of our aggregate net sales, the

impacts of seasonality have been partially mitigated as HOKA brand sales are generally more evenly distributed

throughout the fiscal year, although quarterly results may fluctuate based on the timing of product launches. This

trend is expected to continue. In addition, we have further mitigated the impacts of seasonality by diversifying and

expanding our year-round product offerings across our brands.

Results of Operations

Year Ended March 31, 2026 , Compared to Year Ended March 31, 2025 . Results of operations were as follows:

Years Ended March 31,

Change

Amount

Amount

Amount

Net sales

Cost of sales

Gross profit

Selling, general, and administrative

expenses

Income from operations

Total other income, net

Income before income taxes

Income tax expense

Net income

Total other comprehensive income,

net of tax

Comprehensive income

Net income per share

Basic

Diluted

(1) May not calculate on rounded amounts.

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

Years Ended March 31,

Change

Amount

Amount

Amount

Net sales by brand

HOKA brand

Wholesale

Direct-to-Consumer

Total

UGG brand

Wholesale

Direct-to-Consumer

Total

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Years Ended March 31,

Change

Amount

Amount

Amount

Other brands

Wholesale

Direct-to-Consumer

Total

Total (1)

Net sales by channel

Total Wholesale

Total Direct-to-Consumer

Total (1)

Net sales by geography

Domestic

International

Total (1)

(1) The Other brands reportable operating segment for fiscal year 2026, includes financial results for the phase out of the

Koolaburra brand and AHNU brand. The Other brands reportable operating segment for the prior period includes financial

results for the former Sanuk brand through the Sanuk Brand Sale Date. Refer to the section titled “Reportable Operating

Segments Overview,” above for further information.

Total net sales increased primarily due to higher net sales for the HOKA brand and UGG brand, partially offset by

lower net sales for the Other brands . Drivers of significant changes in net sales, compared to the prior period , were

as follows:

• Net sales of the HOKA brand increased due to higher global net sales growth across both

wholesale and DTC channels. Growth was led by international sales, and also included an increase

in domestic sales, driven by our continued marketplace strategy to meet increased global demand

as consumers adopt key franchises, including new innovation introduced during the current period.

• Net sales of the UGG brand increased due to higher global net sales growth across both wholesale

and DTC channels. Growth was led by international sales, with increases in domestic sales for the

wholesale channel and a slight increase in the DTC channel. This collective growth was as a result

of increased global demand for key franchises and further adoption o f year-round product offerings .

• Net sales of the Other brands decreased primarily due to lower domestic net sales in the whole sale

channel driven by the phase out of standalone operations of the Koolaburra brand and the sale of

the Sanuk brand in the prior period. The decrease was also due to lower g lobal net sales for the

Teva brand across both channels, primarily driven by lower sales in the value-oriented consumer

segment of the wholesale channel as the Teva brand refocuses its wholesale distribution with

outdoor and premium retailers.

Supplemental Disclosure

• On a constant currency basis, net sales increased by 9.0% , compared to the prior period .

• Comparable DTC channel net sales for the 52 weeks ended March 29, 2026 , increased by 4.6% ,

compared to the prior period .

• We experienced an increase of 6.2% in the total volume of units sold to 78,700 from 74,100 ,

compared to the prior period . Units sold include all categories such as footwear, apparel,

accessories, home goods, and care kits across all brands. Percentages may not calculate on

rounded units.

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Gross Profit. Gross margin decreased to 57.7% from 57.9% , compared to the prior period , primarily due to

incremental tariffs on domestic goods and a slightly unfavorable channel mix ; partially offset by cost‑sharing

arrangements, strategic price increases, and favorable product mix, along with slightly favorable foreign currency

exchange rate fluctuations and freight 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 $63,600 , primarily due

to higher promotion expenses for the HOKA brand and UGG brand of approximately $71,300 to

drive global brand awareness and market share gains, highlight new product categories, and

provide localized marketing ; partially offset by lower promotion expenses for the Other brands of

approximately $7,700 primarily driven by the phase out of standalone operations of the Koolaburra

brand and AHNU brand as well as the sale of the Sanuk brand in the prior period.

• Increased other SG&A expenses of approximately $59,000 , primarily due to higher IT expenses,

sales commissions, 3PL service fees, and other miscellaneous expenses. T he increase in other

SG&A expenses was comprised of approximately $51,300 of variable expenses specific to our

brands, primarily for the HOKA brand and UGG brand , and approximately $7,700 of unallocated

enterprise and shared brand expenses.

• Increased rent and occupancy of approximately $36,700 , 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 DC s. The increase in rent and occupancy was comprised of approximately

$28,000 of expenses specific to our brands, and approximately $8,700 of unallocated enterprise

and shared brand expenses.

• Increased payroll and related costs of approximately $33,000 , primarily due to higher headcount for

our brands , partially offset by unallocated enterprise and shared brand expenses. The increase in

payroll and related costs was comprised of approximately $41,700 of expenses specific to our

brands, partially offset by approximately $8,700 of lower unallocated enterprise and shared brand

expenses primarily due to payroll efficiencies in our owned warehouses and DC s.

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

Years Ended March 31,

Change

Amount

Amount

Amount

Income (loss) from operations

HOKA brand

UGG brand

Other brands (1)

Unallocated enterprise and shared brand

expenses (2)

Total

(1) The Other brands reportable operating segment for fiscal year 2026, includes financial results for the phase out of the

Koolaburra brand and AHNU brand. The Other brands reportable operating segment for the prior period includes financial

results for the former Sanuk brand through the Sanuk Brand Sale Date. Refer to the section titled “Reportable Operating

Segments Overview,” above for further information.

(2) To the extent that consolidated SG&A expenses exceed reportable operating segment SG&A expenses, the costs are recorded

in unallocated enterprise and shared brand expenses. Refer to Note 13 , “Reportable Operating Segments,” of our consolidated

financial statements in Part IV within this Annual Report for further information .

The increase in total income from operations, compared to the prior period , was primarily due to higher net sales,

partially offset by higher SG&A expenses as a percentage of net sales and slightly lower gross margin s driven by

tariffs .

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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 margin s driven by tariffs , as well as higher SG&A expenses as a percentage

of net sales driven by other SG&A expenses including sales commissions, as well as higher rent

and occupancy, payroll and related costs, and advertising, marketing and promotional expenses.

• The increase in income from operations of the UGG brand was due to higher net sales, partially

offset by slightly lower gross margin s driven by tariffs , 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 including sales commissions.

• The decrease in income from operations of Other brands was primarily driven by the Teva brand

from lower net sales and gross margin s due to tariffs, along with higher SG&A expenses as a

percentage of net sales; combined with lower income from operations driven by the phase out of

standalone operations of the Koolaburra brand .

• The increase in unallocated enterprise and shared brand expenses was primarily due to higher rent

and occupancy for our owned warehouses and DC s, as well as higher other SG&A expenses

primarily related to IT expenses and 3PL service fees , partially offset by payroll efficiencies in our

owned warehouses and DC s.

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

Years Ended March 31,

Income tax expense

Effective income tax rate

The net increase in our effective income tax rate, compared to the prior period , was primarily due to increases in net

unrecognized tax benefits, partially offset by tax benefits from changes to our jurisdictional mix of earnings.

Net Income. The increase in net income, compared to the prior period , was due to higher net sales, partially offset

by lower operating margin . 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, Net of Tax . T he 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

our net asset position against European and Asian foreign currency exchange rates and higher unrealized gains on

derivative contracts.

Liquidity and Capital Resources

Our liquidity may be impacted by a number of factors, including our results of operations, the strength of our brands

and market acceptance of our products, impacts of seasonality and weather conditions, our ability to respond to

changes in consumer preferences and tastes, the timing of capital expenditures and lease payments, our ability to

collect our trade accounts receivable in a timely manner and effectively manage our inventories, our ability to

manage supply chain constraints, our ability to respond to macroeconomic, geopolitical and international trade

developments, and various other risks and uncertainties described in the section titled “Trends and Uncertainties

Impacting our Business and Industry” above and in Part I, Item 1A, “Risk Factors,” within this Annual Report.

F urthermore, our liquidity needs may evolve due to a number of factors, including changes in business conditions,

changes in strategic initiatives, including any investments or acquisitions we may decide to pursue, changes in our

capital allocation strategy, including the timing and scope of share repurchases, and changes in the macroeconomic

or geopolitical landscape.

If there are unexpected material impacts on our business in future periods, we may need to raise additional cash to

fund our operations or pursue our business strategy, in which case we may seek to borrow under our revolving

credit facilities, seek new or modified borrowing arrangements, or sell additional debt or equity securities. I ncurring

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indebtedness under new or modified borrowing arrangements would subject us to debt service obligations and

additional covenants that could restrict our operations and further encumber our assets . The sale of convertible debt

or equity securities could result in additional dilution to our stockholders, and equity securities may have rights or

preferences that are superior to those of our existing stockholders. Although we believe we have adequate sources

of liquidity to support our cash needs and business strategy over the long term, factors such as changes in

consumer preferences or tastes and changes in the macroeconomic or geopolitical environment could adversely

affect our liquidity and capital resources.

Sources of Liquidity . We finance our working capital and operating requirements using a combination of cash and

cash equivalents balances, cash provided by operating activities, and repatriation of cash. We also have available

borrowing capacity under our revolving credit facilities. We believe our sources of cash and cash equivalents 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.

Cash and Cash Equivalents. As of March 31, 2026 , and 2025 , our cash and cash equivalents balance is $1,907,249

and $1,889,188 , r espectively, 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 .

Cash Provided by Operating Activities. For the years ended March 31, 2026 , and 2025 , we generated $1,181,955

and $1,044,523 , respectively, of cash from operating activities. Refer to the section titled “Cash Flows” below for

further discussion on cash flows generated from ongoing operating activities.

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 our interpretations of, global tax law and regulations,

and our actual earnings in various jurisdictions in future periods. During the years ended March 31, 2026 , and 2025 ,

no cash and cash equivalents were repatriated from an international subsidiary that were subject to income taxes .

As of March 31, 2026 , and 2025 , we have $653,924 and $481,836 , respectively, of cash and cash equivalents held

by international 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 international operations. Refer to Note 5, “Income Taxes,” of our consolidated

financial statements in Part IV within this Annual Report for further information regarding our cash repatriation

strategy.

During the years ended March 31, 2026 , and 2025 , we did not generate significant pre-tax earnings from any

countries which do not impose a corporate income tax. A small portion of our unremitted accumulated earnings of

non- US subsidiaries, for which no US federal or state income tax have been paid, are currently expected to be

reinvested outside of the US indefinitely. Such earnings would become taxable upon the sale or liquidation of these

subsidiaries.

Revolving Credit Facilities. Information about our revolving credit facilities available as of March 31, 2026 , is as

follows:

• Primary Credit Facility . We have a five -year unsecured revolving credit facility, which provides for

borrowings up to $400,000 ( Primary Credit Facility ) and contains a $25,000 sublimit for the

issuance of letters of credit. Under the Primary Credit Facility , there is no outstanding balance,

$399,407 of available borrowings, and $593 of outstanding letters of credit.

• China Credit Facility. We have an uncommitted revolving line of credit of up to CNY300,000 , or

$43,512 , with an overdraft facility sublimit of CNY100,000 , or $14,504 ( China Credit Facility ). Under

the China Credit Facility , there is no outstanding balance, $43,032 of available borrowings, and

$480 of outstanding bank guarantees .

• Debt Covenants. W e are in compliance with all financial covenants under our Primary Credit Facility

and China Credit Facility .

Refer to Note 6, “Revolving Credit Facilities,” of our consolidated financial statements in Part IV within this Annual

Report for further information regarding the terms of our revolving credit facilities.

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Primary Cash Requirements. Our primary cash requirements include working capital, purchase obligations,

payments to fulfill operating lease obligations, capital expenditures, and our stock repurchase program.

Working Capital . Our working capital requirements begin when we purchase materials and inventories and continue

until we collect the resulting trade accounts receivable. A significant portion of the UGG brand’s business has

historically been seasonal, with a higher concentration of net sales in the third fiscal quarter, which contributes to

variability in our working capital requirements and necessitates the use of available cash to build inventory levels in

advance of higher selling seasons. While the impact of seasonality has been partially mitigated by the increasing

contribution of HOKA brand net sales, which are generally more evenly distributed throughout the fiscal year, as

well as by the diversification and expansion of our year-round product offerings across our brands, we expect

working capital requirements to continue to fluctuate period to period.

Purchase Obligations. We have various types of purchase obligations, including obligations to purchase product,

commodities, and other purchase obligations such as service contracts, which are incurred in the normal course of

business but are considered commitments and contingencies that are not recorded in our consolidated financial

statements . As of March 31, 2026 , our purchase obligations total $1,374,265 . Refer to Note 8, “Commitments and

Contingencies,” of our consolidated financial statements in Part IV within this Annual Report for further information

on our purchase obligations.

Operating Lease Obligations. We primarily lease retail stores, showrooms, offices, and distribution facilities. As of

March 31, 2026 , undiscounted operating lease payments recorded in the consolidated balance sheets total

$436,556 . This amount excludes undiscounted minimum operating lease payments totaling $22,727 related to

leases signed during fiscal year 2026 that had not yet commenced. Refer to Note 7, “Leases,” of our consolidated

financial statements in Part IV within this Annual Report for further information on our operating lease obligations.

Capital Expenditures and Cloud Computing Arrangements. We estimate that aggregate capital expenditures and

certain implementation costs for cloud computing arrangements to be made before the end of our next fiscal year

will range from approximately $145,000 to $155,000 . We anticipate these expenditures will primarily relate to

expanding and upgrading our HOKA brand and UGG brand retail store fleet, completing IT infrastructure and

system improvements, upgrading our office facilities, and upgrading our existing warehouses and DCs. However,

the actual amount of our future capital expenditures may differ significantly from this estimate depending on

numerous factors, including the timing of facility and retail store openings, as well as unforeseen needs to upgrade

or replace facilities.

Stock Repurchase Program. We continue to evaluate our capital allocation strategy and consider further

opportunities to utilize our cash resources in a way that will profitably grow our business, meet our strategic

objectives, and drive stockholder value, including by potentially repurchasing additional shares of our common

stock. As of March 31, 2026 , the aggregate remaining approved amount under our stock repurchase program is

$1,549,602 . 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.

On May 20, 2026, our Board approved an additional authorization of $3,500,000 to repurchase shares of our

common stock under the same conditions as the prior stock repurchase program, resulting in an aggregate

remaining authorization of approximately $4,840,000 as of that date.

Refer to Note 11, “Stockholders’ Equity,” of our consolidated financial statements in Part IV and to Part II, Item 5,

“Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities,”

within this Annual Report for further information regarding our stock repurchase program.

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Cash Flows

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

presented:

Years Ended March 31,

Change

Amount

Amount

Amount

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Effect of foreign currency exchange rates on

cash and cash equivalents

Net change in cash and cash equivalents

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 increase in net cash provided by operating activities during the year ended March 31, 2026 , compared to the

prior period , was due to $80,635 of favorable net income after non-cash adjustments , as well as $56,797 of

favorable changes in operating assets and liabilities . Changes in operating assets and liabilities were primarily due

to favorable impacts from (1) timing of tax payments and receipts; (2) a higher rate of collections for trade accounts

receivable, net, on higher net sales; and (3) timing of purchases of inventory; partially offset by unfavorable impacts

from (4) net trade accounts payable from timing of receipts of goods and services and related disbursements; (5)

timing of derivative contract cash settlements recorded to prepaid expenses and other current assets; and (6) timing

of commodity deposits and investments in cloud computing arrangements recorded in other assets.

Investing Activities. The increase in net cash used in investing activities during the year ended March 31, 2026 ,

compared to the prior period , was primarily due to cash proceeds from the sale of assets received during the prior

period, partially offset by a decrease in purchases of property and equipment.

Financing Activities. The increase in net cash used in financing activities during the year ended March 31, 2026 ,

compared to the prior period , was primarily due to a higher dollar value of stock repurchases, inclusive of excise

taxes.

C ritical Accounting Estimates

The p reparation of our 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 and geopolitical factors on our financial condition, results of operations, and

liquidity, including inflationary pressures, increased tariffs, rising supply chain costs, high interest rates, foreign

currency exchange rate volatility, escalating global conflicts, changes in discretionary spending, and recession risks.

A lthough 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.

We believe the following critical accounting estimates involve a significant level of estimation uncertainty and the

balances have had or are reasonably likely to have a material impact on our financial condition or results of

operations. Refer to Note 1, “General,” of our consolidated financial statements in Part IV within this Annual Report

for further discussion of our significant accounting policies and use of estimates, as well as the impact of recent

accounting pronouncements.

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Sales Returns and Chargebacks. Revenue is recognized net of estimates, including for sales returns and

chargebacks. Actual sales returns and chargebacks may differ from our estimates and are based on various factors

including the following:

Sales Return Liability. The estimate of the sales return liability is determined based on several factors, including

known and actual returns, historical returns, and any recent events that could result in a change from historical

return rates. For our wholesale channel, we base our estimate of sales returns on approved customer return

requests, historical returns experience, and recent events that may affect expected return rates. For our DTC

channel, we estimate sales returns using a lag compared to the prior period and consider historical experience and

recent events or trends that may affect expected return rates.

Allowance for Chargebacks. We record a chargeback allowance based primarily on known circumstances, such as

price adjustments and short shipments, as well as unknown circumstances based on historical trends related to the

timing and amount of chargebacks taken against customer invoices.

Refer to Note 2, “Revenue Recognition and Business Concentrations,” of our consolidated financial statements and

Schedule II, “Total Valuation and Qualifying Accounts,” in Part IV within this Annual Report for further information

regarding the sales return liability and the allowance for chargebacks.

Allowance for Doubtful Accounts. We provide an allowance against trade accounts receivable for estimated

losses that may result from customers’ inability to pay. We determine the amount of the allowance by analyzing

known uncollectible accounts, aged trade accounts receivable, macroeconomic and geopolitical conditions and

forecasts, historical experience, and the customers’ creditworthiness. Changes in the characteristics of our trade

accounts receivable including the aforementioned factors, are reviewed periodically and may lead to adjustments in

our allowance for doubtful accounts. Actual future losses from uncollectible accounts may differ from our estimates.

Refer to Schedule II, “Total Valuation and Qualifying Accounts,” in Part IV within this Annual Report for further

information on our allowance for doubtful accounts.

Inventories . Inventories, which are primarily comprised of finished goods on hand and in transit, are stated at the

lower of cost (weighted moving average) or net realizable value at each financial statement date. Net realizable

value is the estimated selling price in the ordinary course of business, less reasonably predictable costs to sell.

We regularly review inventory for excess, obsolete, and impaired inventory to evaluate write-downs to the lower of

cost or net realizable value. Factors that may trigger inventory write-downs include damage, obsolescence, excess

quantities, discontinued styles, and declines in estimated selling prices, among others. Our evaluation considers

current and anticipated demand, historical liquidation and shrinkage experience, aging of inventory, and current

market conditions.

While we believe that adequate write-downs for inventory have been provided for in the consolidated financial

statements, our evaluation may be affected by factors outside our control, and we could experience additional

inventory write-downs in the future.

Income Taxes. Income taxes are accounted for using the asset and liability method. Deferred tax assets and

liabilities are recognized for the future tax consequences attributable to temporary differences between the financial

statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and

liabilities are measured using enacted tax rates that will be in effect for the years in which those tax assets and

liabilities are expected to be realized or settled.

We record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to

be realized. We believe it is more likely than not that forecasted income, together with future reversals of existing

taxable temporary differences, will be sufficient to recover our net deferred tax assets, after consideration of

valuation allowances, which primarily relate to foreign losses in certain jurisdictions. If we determine all, or part of

our deferred tax assets are not realizable, or that additional deferred tax assets have become realizable, we will

adjust the valuation allowance accordingly, with a corresponding impact to earnings in the period such

determination is made.

We make estimates to determine income tax expense, deferred tax assets and liabilities, and uncertain tax

positions. Our estimates, relative to income tax expense, consider current global tax laws and regulations (and our

interpretations thereof) and possible outcomes of current and future audits conducted by foreign and domestic tax

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authorities. Changes in tax laws and regulations (and our interpretations thereof), and the resolution of current and

future tax audits, could significantly affect the amounts provided for income tax expense in our results of operations.

Our estimates related to tax benefits from uncertain tax positions consider whether a tax position is more likely than

not to be sustained on examination by the taxing authorities, based on the technical merits of the position and the

largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement . Resolution of these

uncertainties may result in the recognition of a tax benefit or an additional tax charge in the period our assessment

changes.

We determine on a regular basis the amount of undistributed earnings that will be indefinitely reinvested in our non-

US operations. This assessment is based on the cash flow projections and operational and fiscal objectives of each

of our US and international subsidiaries. We have not changed our indefinite reinvestment assertion of foreign

earnings other than previously taxed earnings and profits .

Refer to Note 5, “Income Taxes,” of our consolidated financial statements in Part IV within this Annual Report for

further information on our income taxes and tax strategy.