Deckers Outdoor · Risk factors

Prior heading: 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, including by successfully introducing new products, 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 make makes it difficult to anticipate demand for our products and forecast our financial results. results of operations. Our success is driven to some extent by 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 depends in part relies on the continued strength of our brands, which in turn depends on our ability to anticipate, understand, and promptly respond promptly to the rapidly changing preferences and evolving preferences, fashion tastes, as well as trends, and consumer spending patterns, patterns with appealing merchandise. merchandise and effective brand-building initiatives. As our brands and product offerings evolve, it is necessary for our products to must appeal to an even a broader and more diverse range of consumers whose preferences cannot be predicted with certainty. New footwear models that we introduce products may not be successful with achieve market acceptance, including due to pricing that consumers are unwilling to bear, or our brands may fall out of favor with consumers. If we are unable favor, which could impede our ability to anticipate, identify, maintain or react appropriately to changes in consumer preferences, our revenues may decrease, our brands’ image may suffer, our operating performance may decline, grow sales, adversely affect brand perception, and negatively impact our results of operations. If we may do not be able effectively respond to execute our growth plans. Even if these changes, we develop and manufacture new footwear products could experience reduced sales and collaborations that consumers find appealing, their ultimate success may depend pressure on our pricing, and we may set the prices gross profit as a percentage of new styles too high for the market to bear. Further, the net sales (gross margin), including as a result of reduced pricing power and increased reliance on promotional activity. The value of our brands is based on also driven by evolving consumer perceptions, including as a result of shifting ethical, political political, or social standards, and concerns with respect standards. Concerns related to product pricing, quality, design, technical performance, components or materials (including their sustainability), or customer service service, or the effectiveness of our brand loyalty initiatives, including loyalty programs, could result in negative perceptions perceptions, diminished consumer engagement, and the a loss of brand loyalty and or value. These concerns risks may be exacerbated amplified by negative adverse publicity regarding concerning us or our products, brands, marketing campaigns, partners, or endorsers, which could adversely affect our reputation and sales regardless of the accuracy of such claims. Social particularly where social media and digital marketing campaigns, which channels accelerate the dissemination of information, can increase the challenges dissemination, amplification, or persistence of containing negative claims. If consumers perceive our brands negatively, whether or not warranted, our brand image would become tarnished and our products would become less desirable, claims, regardless of their accuracy, which could harm our reputation and sales and have a material adverse effect on our business. Failure to gain market acceptance for new products 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 impede lead to consumer backlash, operational disruptions, or reputational harm. If our ability brand- related initiatives, including loyalty programs, fail to maintain drive sustained consumer engagement or grow current revenue levels, reduce profits, adversely incremental demand, or involve increased costs or operational complexity that negatively affect the image of our brands, erode our competitive position, customer perceptions, we could experience reduced sales and result in long-term harm to pressure on our business and financial results.gross margin, adversely affecting our results of operations.

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Prior heading: 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 spending generally and the buying habits confidence and preferences of consumers. discretionary spending. A significant portion of the products we sell, especially those sold under the UGG and our HOKA brands, are premium retail products. The purchase of these brand and UGG brand products is are premium, discretionary and is therefore highly dependent upon the level of consumer confidence purchases, and discretionary spending. Sales of demand for these products may be adversely affected by variable economic is sensitive to macroeconomic factors, including worsening economic conditions, consumer confidence in future economic conditions, including recessionary concerns, changes to fuel, energy, labor, inflation, wages and healthcare costs, employment, consumer debt, declines in income or asset values, and increases in consumer debt levels, inflation and net worth driven by market conditions, interest rates, tariffs, and unemployment rates. Uncertainty in global economic conditions may result in unpredictable consumer discretionary spending trends. public health issues such as a pandemic. During an actual or perceived periods of economic downturn, fewer uncertainty, consumers may shop for our products, and those who do may limit the amount of their purchases reduce discretionary purchases, trade down to lower-priced alternatives, or seek less costly substitutes for our products. As a result, we delay buying decisions, which could be required require us to reduce the price we can charge for our products or increase our marketing and promotional expenses to generate additional demand for our products. In either case, these changes could activity or reduce prices, adversely affecting our sales and profitability, which could have a material adverse effect on our financial condition and results of operations. profitability. We sell a significant portion of our products through higher-end specialty and department store retailers, as well as through retailers and online marketplaces. The businesses of these These customers may be adversely affected by factors such as changes in economic conditions, ongoing geopolitical conflicts and uncertainties, fluctuations in instability, foreign currency exchange rates, failures or instability in the US banking system, fluctuations, reduced consumer demand for premium products, decreases in available limited access to credit, and increased competition. If competition. Financial difficulties among our customers face financial difficulties, it could have an adverse effect on negatively affect our estimated allowances and credit exposure, reserves, and potentially result in us losing relationships with key customers.customers, and could reduce orders or increase the risk of delayed payments or defaults.

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Prior heading: 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 and tastes. Our inability preferences. If we are unable to compete effectively effectively, we could cause our experience a decline in market share share, reduced demand for our products, pricing pressure, or damage to decline, our reputation, which could harm our reputation and have a material adverse effect on our financial condition and results of operations. Competition in our markets is influenced by factors such as 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 companies global brands and newer entrants into the market. In particular, we market entrants, including competitors whose broader product assortments and higher sales volumes may be more important to certain customers. We believe that, as a result of that the growth of the UGG and HOKA brands, competitors have entered the marketplace specifically in response to the success visibility of our brands, HOKA brand and other UGG brand have attracted competitors may do so in specifically targeting the future, particularly as categories in which we operate. Barriers to entry have been reduced by access to offshore manufacturing and changes in technology make it easier evolving technologies, allowing competitors to develop and scale products more cost effective to compete. A number quickly and at lower cost. Some of our larger competitors also have significantly substantially greater financial, technological, engineering, manufacturing, marketing, and distribution resources than we do, as well as greater broader brand awareness in the footwear, apparel, and accessories markets among consumers. As a result, we have faced, and expect to continue to face, intense pressure with respect to competition for key customer accounts and distribution channels. These competitors may have relationships with our key retail customers that are more important to those customers because of the significantly larger volume and product mix that our competitors sell to them. Our competitors’ greater resources awareness, which may enable them to compete more effectively compete on the basis of price and production, develop new products more quickly price, accelerate product development, leverage advanced data analytics or with superior technical capabilities, AI, adapt to changes in technology, including the successful utilization of data analytics, artificial intelligence, and machine learning, market their products technological changes, and brands more successfully, identify or influence consumer preferences, increase their market share, withstand the effects periods of seasonality, and manage periodic downturns in the footwear, apparel, and accessories industry excess inventory or in economic conditions. reduced consumer demand. As a result of 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 pressures, dynamics, we have faced, experienced, and expect to continue to face, intense experience, pricing and promotional pressure across our brands and channels, particularly during periods of elevated industry inventory levels or inflationary pressure. Efforts Increased discounting or promotional activity by our competitors to dispose of excess inventories may significantly reduce prices of competitive products, which may pressure require us to reduce the pricing of our products to compete, prices or increase promotions to remain competitive, negatively affecting our gross margin and results of operations, and could cause consumers to shift their purchasing decisions away from our products entirely. Further, we believe that purchases to competing products. In addition, many of our key wholesale customers face intense competition from competitive pressures, and deterioration in their competitors, which financial condition could negatively adversely affect the financial stability of their businesses and their ability to conduct do business with us.

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Prior heading: If we are unsuccessful at managing product manufacturing decisions to offset the inherent seasonality of our business, 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 revenue from sales, and results in significant liquidity requirements and working capital fluctuations throughout our fiscal year. Because this cycle involves long lead times, year, which require us to make manufacturing decisions months in advance of an anticipated purchasing decision may be amplified by the consumer, it is challenging to manage our inventory supplier performance issues and broader supply chain constraints. As a result, these liquidity and working capital requirements. 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 disruptions may drive higher inventory procurement positions that could negatively affect our working capital and gross profit as a percentage of net sales (gross margin) margin as a result of selling excess quantities though through close out channels. Further, once manufacturing decisions are made, it is difficult to predict and timely adjust expenses, accurately forecast As a result, our financial results, inventory levels, working capital requirements, and meet the expectations results of analysts and investors, including as operations may be adversely affected by a result of: •the effects number of unfavorable 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 demand; •unfavorable or unexpected weather patterns on that affect consumer spending and demand for our seasonally-driven products, as the sales of a majority of particularly within our UGG brand products are inherently seasonal and brand, which may be intensified by the effects of climate change may pronounce these conditions; change; •changes in consumer preferences, tastes, discretionary spending, and spending patterns, prevailing fashion trends; •market acceptance of our current products and new products, trends, and of competitive products; •the competitive environment, including pricing pressure from reduced pricing of competitive products, which that may cause consumers require increased promotional activity to shift their sell inventory; •macroeconomic conditions, including inflation, interest rate volatility, or global economic uncertainty, that may affect consumer purchasing decisions away from our products; •delays in resource behavior, supplier capacity, or product availability from supply chain disruptions; logistics costs; and •uncertain macroeconomic •market acceptance of our products and political conditions. 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 incur significant markdowns increase promotional activity or adjust pricing to sell excess inventories at reduced prices, inventories, which would result in lower revenues 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 products in sufficient quantities, quantities or on a timely basis, we may experience inventory shortages that may prevent us from fulfilling customer orders or result in us delaying 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 financial condition and results of operations.

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Prior heading: 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 DCs 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 expect our recent domestic warehouse and DC expansion to create long-term capacity for the domestic growth of the UGG and HOKA brands. 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. In addition, if Any significant disruption to our domestic warehouse and or DC operations and scaling efforts are impeded or delayed for any reason, it could result in shipment delays or the inability to deliver product at all, which would result in lost sales, strain adversely affect our relationships with customers and consumers, and cause harm ability to fulfill customer orders. In addition, increased reliance on automation, data analytics, and system integrations within our reputation, any 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 DCs managed by 3PLs in certain international locations. For example, we are currently in the process of transitioning one of our certain international 3PLs 3PL operations to a new partner partner. While we conduct diligence prior to entering into service agreements with an upgraded warehouse management system beginning in October 2025. We 3PLs, we depend on 3PLs these providers to manage the operation of operate their warehouses and DCs to meet in a manner that meets our business needs, performance standards, and expectations, performance requirements, including with respect to data security, 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. While we believe we conduct appropriate diligence before entering into service agreements with 3PLs, if If our 3PLs 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 on other countries by the US government, or broader disruptions or inefficiencies in global logistics and transportation networks, our distribution operations could face significant disruption. 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.

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Prior heading: We rely upon independent manufacturers for most 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 most all of our production needs, the majority of which are located in Southeast Asia, predominately predominantly in Vietnam, 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. Further, because most The ability of our independent manufacturers are in Southeast Asia, we are subject to risks associated with natural disasters, epidemics, geopolitical tensions, or other events outside of our control affecting the region. If any of meet these were to occur, we expectations may not be able to timely source raw and other materials, manufacture products, adversely affected by liquidity constraints or fill customer orders, limitations in their access to third-party financing arrangements supporting their supply chains or products delivered may not meet our quality standards, working capital needs, which would could reduce available production capacity, delay shipments, or result in lost sales sales. Disruptions arising from these geographic concentrations, our limited control over independent manufacturers and harm their suppliers, or our manufacturers’ inability to meet these expectations could adversely affect our relationships with customers. ability to manufacture products or fulfill customer orders, which could negatively affect our results of operations. There can be no assurance of a long-term, uninterrupted supply of products from our independent manufacturers. 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.

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Prior heading: 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 financial condition and results of operations.

Much of our financial success is related to the ability of our customers, which include our retailer customers in the wholesale channel, including international distributors and distributor retail partners, to successfully effectively market and sell our brands to consumers. These relationships are typically governed by contractual arrangements. If a customer fails to satisfy contractual obligations or meet contractual obligations, satisfy our expectations, expectations and standards, or experiences operational issues, or financial difficulties, it may be difficult challenging and time-consuming to locate identify and transition to an acceptable alternative. Any disruption to 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 increased costs lost sales, significant transition costs, and operational disruption as we identify, onboard, and integrate replacement distribution or loss of customers. In addition, retail partners, and there is can be no guarantee assurance that a new customer replacement will generate results that are more favorable than the terminated party. comparable or improved results. We face a the risk that key customers may not increase their business with us as we expect or anticipated, may significantly decrease their business with us reduce purchases, or may terminate our relationship. Although their relationships with us. However, no single customer accounted for 10.0% or more of our total net sales during fiscal year 2025, our top ten customers made up 23.7% of total net sales. 2026. The failure to increase sales with our key to these customers would have a negative effect on could negatively affect our growth prospects, and any decrease reduction or loss of these customers’ their business could result in a material decrease in materially and adversely affect our net sales and net income results of operations, particularly if we are unable to capture these sales offset such declines through our DTC channel. Further, as As of March 31, 2025, we have 2026, one customer that represents 13.6% 18.5% of trade accounts receivable, net. Trade accounts receivable, net are typically net, which is generally unsecured and thus subject exposes us to a collection risk that we will be unable to timely collect on amounts owed, which could affect our revenue and liquidity. Sales to our customers are on an order-by-order basis results of operations and may be cancelled or rescheduled by our customers. liquidity. We rely on customer purchase order orders and delivery dates as a key factor in schedules for forecasting our sales and earnings, and if our results of operations. If customers postpone, cancel, reduce, or discontinue purchases from us, orders, we could may fail to meet our forecasted results. forecasts. These risks have been may be exacerbated as our key customers are impacted by significant structural changes to in the retail industry fueled by changing including shifts in technology, consumer and wholesale partner purchasing behavior, and economic conditions, as well as and a shrinking retail footprint. These trends have been, and may in the future be, intensified by a pandemic or other public health emergency. We may lose key customers if they fail to manage the effect of this rapidly changing retail environment. Any The loss of one of these a key customers, customer, or a significant reduction in purchases from one of these customers, orders, could result in a significant decline in lower sales, write-downs of excess inventory, or pressure to discount our products, any of which could have a material adverse effect on inventory and related write-downs, and materially and adversely affect our financial condition or results of operations. Further, In addition, a key customer may dispose of their liquidate excess inventories to consumers or inventory through discounted channels, including unauthorized sellers at significantly reduced prices, sellers, which may put pressure on us to reduce our prices to compete, or cause consumers to shift their purchasing decisions away could negatively impact brand perception and divert demand from our authorized sellers entirely.distribution channels.

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Prior heading: 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, and our results of operations may be adversely impacted.

To execute our growth plan, we must continue to attract and retain highly qualified talent, including executive officers and key employees. Further, to continue In addition, to develop new products and successfully operate and grow our key business processes, it is important for us to continue hiring and retaining talent in highly skilled footwear, apparel and accessories we rely on employees with specialized expertise across design, marketing, merchandising, sourcing, technology, operations, and support functions. 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 industry, and there continues we continue to be experience upward pressure on the compensation paid to these professionals. costs. Changes to our office environment or work models may not meet our employees’ expectations. Many expectations, and many of the companies with which we compete for experienced talent have greater name recognition and financial resources than we have. Further, continued Continued strength of in our results may result in other companies and competitors perceiving also increase the risk that our employees as more desirable. are targeted by competitors. If our overall employment proposition proposition, including compensation, benefits, culture, work model, or career development opportunities, is not perceived as favorable compared relative to other companies’, it could negatively affect employers, our ability to attract, hire, and retain our employees. qualified personnel could be adversely affected. We are committed to offering competitive compensation and benefits to employees across our business to positively affect attrition, benefits, which impacts may increase our selling, general, and administrative (SG&A) expenses. Our Further, our domestic headquarters are located in Goleta, California, which is not generally recognized as a prominent commercial center, and it is difficult may further limit our ability to attract qualified professionals due to our location. 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 our management time and resources. In addition, prospective Prospective and existing employees also often consider the value of the stock-based compensation when deciding whether to take accept or remain in a job. If position. Accordingly, volatility in our stock price is volatile, it may adversely affect our ability to recruit and retain qualified talent and we may be unable 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 may suffer, operations, and it may damage our reputation as a preferred employer, which would challenge impair our ability to effectively compete across the global labor market. We believe our culture has been and will continue to be a key contributor to our success. If we do not maintain our culture and core values, the growth and success of our business may be harmed. Any failure to preserve our culture could negatively affect our ability to recruit and retain talent and to achieve our strategic objectives. 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 business.results of operations.

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Prior heading: We use sheepskin to manufacture a significant portion of our products, and if we are unable to obtain sufficient sheepskin at acceptable prices that meets our quality expectations, or if there are legal or social impediments to our ability to use sheepskin, it could have a material adverse effect on our business.

We purchase certain raw materials and components that are affected by commodity prices, the subject to supplier and geographic concentration, most significant of which is sheepskin. The supply of significantly sheepskin, which is used to manufacture in a significant substantial portion of our UGG brand products, products. Sheepskin is in high demand and there are limited suppliers that are able to provide the quantity and quality of sheepskin that we require. In addition, our unique product design and animal welfare standards require sheepskin that may be found only in certain geographies. Sheepskin used in our UGG brand products is sourced primarily from designated suppliers in Australia and processed largely by two tanneries in China. If this sheepskin and the resulting products we produce do not conform to our quality or sustainability specifications or fail to meet consumer expectations, we could experience reduced demand for our products, a higher rate China capable of customer returns, meeting our quality, volume, and negative effects animal welfare standards. This geographic and supplier concentration exposes us to supply disruption risk. We also rely on the image designated suppliers for certain other specialized raw materials, including sugarcane-derived EVA, used in certain components of our brands, any products. If suppliers of which could have a material adverse effect on our business. Similarly, if these sheepskin, including tanneries are not able to deliver sheepskin involved in the quantities required, its processing, sugarcane-derived EVA, or were other materials are unable to cease operations, meet our quality, sustainability, or volume requirements, or if their operations are disrupted or cease, we may not be able to timely obtain adequate quantities of these materials or suitable substitute materials, substitutes on acceptable terms, or at all. Although alternative materials may be available for certain branded components, which may be limited, such alternatives would limit our ability to meet demand for our products, lead to not include the same trademarks. As a result, supply disruptions could require product redesign or delayed production, increase costs, reduce inventory shortages, availability, result in a loss of sales, strain our customer relationships, sales or increased returns, and harm our reputation. reputation. In addition, any factors that negatively affect the business of these tanneries, or the businesses of raw materials used in the suppliers that warehouse their inventories, such as loss of customers, financial instability, loss or destruction of property, work stoppages, political instability, or acts manufacturing of terrorism or catastrophic events, could result in shortages in our supply of sheepskin. While we have experienced stable products are subject to commodity price volatility, most significantly sheepskin. Although sheepskin pricing has been relatively stable in recent years, fluctuations prices and availability may fluctuate due to changes in the price of sheepskin could occur as a result of any factors that increase the demand for, or decrease the supply of, sheepskin, including and demand, weather patterns, supply conditions, energy prices, work stoppages, increased and logistics costs, government regulation, sanctions and policy, market speculation, compliance with our standards, harvesting decisions, incidence of disease, the price of other commodities, such as wool and leather, the demand for our products and labor disruptions, regulatory developments, disease incidence, the products of our competitors, and global economic conditions, any of which would increase our manufacturing costs and reduce our gross margin. The impacts of any effects of these factors may be exacerbated by global climate change. change, and broader market dynamics. While we use purchasing contracts and other pricing arrangements to reduce the effect of sheepskin mitigate price fluctuations on volatility, prolonged increases in sheepskin costs or other key inputs could increase manufacturing expenses and negatively impact our results of operations, gross margin, and we may be unable to offset the negative effect of a prolonged increase in such prices on our results of operations. In that event, it is unlikely we will be able to adjust our increases through pricing actions or changes in product prices sufficiently to eliminate the effect on our gross margin and our financial results may suffer. In addition, our industry is characterized by rapidly changing mix. Evolving fashion trends and consumer preferences, trends, social expectations, and we believe there is a growing trend ethical considerations, including increased opposition to eliminate the use of certain animal products, most notably fur, in footwear, apparel, and accessories. For example, animal-derived materials, as well as existing or potential legislation restricting the sale of fur is banned such products in certain US cities, and similar legislation is being considered in other geographies. While the use of leather and sheepskin has typically not been subject to these restrictions, it is possible that future legislation jurisdictions, could restrict our ability to use also reduce consumer demand for sheepskin in the products we sell in certain geographies. In addition, notwithstanding whether specific legislation is passed, it is possible that consumer preferences may change based on evolving ethical or social standards, such that limit our products may potentially become less desirable ability to certain consumers. sell them in key markets. Because sheepskin is used integral to manufacture a significant portion of our the UGG brand products, any legal brand, adverse changes in consumer preferences, regulatory requirements, or social impediments sourcing standards applicable to the sale of sheepskin products, especially within our large target markets, could have a material adverse effect on our business, financial condition, and results of operations.

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Prior heading: We rely on technical innovation to compete in the market for our products.

Our success relies in part on our continued innovation in both the materials we use and the design of our footwear. 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. 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 preferred recycled, renewable, regenerated, and certified/ natural materials (preferred materials) in our products as part of our sustainability efforts. We also increasingly use preferred synthetics, preferred regenerated or synthetic cellulosic fibers, and preferred 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 recycled, renewable, regenerated, and certified/natural materials (preferred materials), 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.

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Prior heading: 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 may become less competitive.

As part of our overall growth strategy, we are continually seeking out opportunities 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, and improve our financial performance and operational efficiency. online. Our future growth depends in part on our expansion efforts outside of North America 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. Flagship stores play a crucial role in brand market positioning, are operated to have neutral operating profitability, are typically greater in size, and involve more extensive leasehold improvements and furniture and fixtures compared to our other concept retail stores. 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. 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 cause harm our brand image to suffer. image. As part of our international growth strategy, we may transition certain brands in certain geographies from a third-party third- party distribution model to a direct distribution model or vice versa. Failure to effectively implement our growth strategies and develop strategies, including transitioning between distribution models or developing our business in new international markets, or disappointing growth within existing markets, could negatively affect our revenues and rate of sales growth and result in our business becoming less competitive. 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 any corresponding benefits, and diverting management time and resources away from our existing business.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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Prior heading: 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 new or additional risks.

Investor Investors, advocacy groups, certain institutional investors, investment funds, stockholders, customers, consumers, employees, non-governmental organizations, the media, including social media, and regulators, such as the SEC, and other stakeholders are increasingly scrutinizing corporate responsibility, specifically related to companies’ ESG practices and disclosures of companies and the implications of disclosures, including the social and environmental costs impacts of their investments. From time to time, we operations. We periodically communicate certain ESG initiatives to market participants and our customers and business partners, initiatives, including through our annual Creating Change Report. Any ESG disclosure we make may include our policies, practices, initiatives, Report and goals on 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 variety broad range of topics, including human rights, corporate governance, environmental compliance, sustainability, employee health and safety practices, human capital management, product quality, supply chain management, and workforce inclusion practices, and diversity. Although we have undertaken expansive efforts to improve diversity and implement inclusion. Despite our ESG initiatives, it is possible stakeholders may not be satisfied with such disclosures, or efforts, our ESG practices or practices, the speed of their adoption. In addition, negative perception of diversity, equity, and inclusion initiatives, whether due to perceived over or under pursuit of such pace at which we implement related initiatives, could result in reduced customer demand, stockholder activism, regulatory inquiries, and litigation or other adverse impacts. The establishment of ESG criteria and key metrics, as well as the collection of relevant data subject to evolving internal controls and processes, can be costly, complex, and time consuming, and is subject to evolving reporting standards and regulations. If our ESG practices do disclosures may not meet investor or other evolving stakeholder expectations and standards, which continue to evolve, or if we are perceived to have not appropriately responded to the growing concern for expectations. Perceptions regarding our ESG issues, regardless of priorities, whether there is a legal requirement to do so, it may negatively affect our employee retention and recruitment, viewed as over- or we may suffer from reputational damage and our business and financial condition under-emphasized, could be materially and adversely affected. We may also incur additional costs or require additional resources to monitor such stakeholder expectations and standards and to meet our targets and commitments. Further, we could fail, or be perceived to fail, to achieve our ESG initiatives or goals, or we could fail to report our progress fully and accurately on such initiatives and goals, which could negatively affect our reputation, customer demand, employee retention and recruitment, and the willingness of our customers and suppliers to do business with us. Increasing focus on ESG matters has resulted in, and is expected to continue to result in, the adoption of legal and regulatory requirements designed to mitigate the effects of climate change on the environment recruitment and requiring climate-related disclosures. If new laws retention, or regulations are more stringent than current legal investor relations, or regulatory requirements, we may experience increased compliance burdens and costs lead to meet such obligations. Our processes and controls for reporting reputational harm, regulatory action, or litigation. In addition, developing ESG matters goals, metrics, and related data across our operations collection processes is complex, costly, and supply chain are subject to evolving along with multiple disparate standards for identifying, measuring, standards, internal controls, and reporting ESG metrics, regulatory regimes, including ESG-related disclosures required by disclosure requirements of the SEC, European, and other regulators, such as those in California, and such standards may change over time, which could result in significant revisions California. Failure, or perceived failure, to our current goals, reported achieve or accurately report progress in achieving such goals, against our ESG initiatives or ability adapt to achieve such goals in the future.changing regulatory requirements could increase compliance costs, damage our reputation, and negatively affect our business and results of operations.

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Prior heading: Climate 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 or and other catastrophic events, including the effects of those associated with climate change or a pandemic, and extreme weather conditions, may damage or disrupt our operations, supply chain, international markets, and the global economy. Our operations are business is subject to interruption from events such as extreme weather events, weather, power shortages, pandemics, terrorism, war, political instability, telecommunications failures, cyber-attacks, war, terrorism, and other events beyond our control. failures of infrastructure or communications systems. Although we maintain disaster recovery plans, such and business continuity plans designed to support critical operations and information systems, these events could disrupt our operations, including through the inability of talent to work, loss of life, and adverse effects on impair employee availability, damage facilities, interrupt supply chains, power, infrastructure and or compromise the integrity of our IT systems, any of which could materially increase our costs and expenses, decrease costs, reduce sales, and disrupt or otherwise adversely affect our business continuity. We could continuity. In addition, climate-related regulatory developments and evolving standards may require us to incur significant capital expenditures and or other costs to improve enhance the climate-related resiliency of our infrastructure and otherwise prepare for, respond to, and mitigate the effects of climate change, including compliance infrastructure, comply with evolving, and at times inconsistent, laws and regulations. legal requirements, or implement mitigation measures. We could may also experience increased costs for energy, production, transportation, raw and other materials, as well as production, and insurance, including higher insurance premiums and deductibles, which could adversely affect our operations. or deductibles. Our insurance coverage may not be sufficient to cover all losses that we may sustain. Any event that disrupts our operations or those of our partners or customers could have a material adverse effect may not remain available on our business, results of operations and financial condition. Any assessment of the potential impact of future climate change legislation, regulations, or industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change in the countries in which we operate. These events could also adversely affect the supply of raw materials, including sheepskin and leather, disrupt the operation of our supply chain and the productivity of our contract manufacturers, increase our production costs, impose capacity restraints, and affect the types of products consumers purchase. acceptable terms. Further, public severe weather events, health issues and related regulatory responses crises, or other widespread disruptions may reduce demand for certain products, deteriorate our ability, or consumer demand, impair the ability of our customers, manufacturers, third-party distributors, or other partners to operate in affected regions, and result in effectively, or disrupt the failure supply of key business partners to provide services for our efficient operations, including the inability of our manufacturers or third-party distributors to timely fulfill their obligations to us, raw materials, any of which would could adversely affect our business, results of operations and financial condition.operations.

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Prior heading: 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 a new market markets or geographic region; regions; •lose significant customers or key personnel of the acquired business; •encounter difficulties managing integrating and implementing managing acquired assets; •encounter difficulties marketing to new consumers or managing geographically remote dispersed operations; •divert management’s time and attention away from other aspects of our business operations; and •incur costs relating to a potential acquisition acquisitions that we fail to consummate, which we may not recover. Additionally, we may not be able to successfully integrate the assets or operations of any acquired businesses into our operations, operations or to achieve the expected benefits of any such acquisitions. We may also face cannibalization of existing product sales by newly acquired products unless we aggressively successfully differentiate target different consumers for products and increase our overall market share. The failure to successfully integrate any acquired business or products in the future could have a material adverse effect on our results of operations and financial position. 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 2025, 2026, we completed the sale of the Sanuk brand and began phasing 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 away 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, realized. Our business, results of operations, and our business or financial results condition could be negatively impacted.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.

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Prior heading: Our reliance on independent manufacturers and suppliers located primarily in Southeast Asia subjects us to risks associated with complex and evolving international trade policies, regulatory environments, and geopolitical relations that could materially increase our costs, disrupt our global supply chain, and adversely affect our financial performance.

The production of our finished goods is outsourced to independent manufacturers, the majority of which are primarily located in Southeast Asia, predominately 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 Vietnam. 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 our raw materials and components used in the production of our products by our independent manufacturers are sourced from designated suppliers. As a result, our operations are exposed to risks arising from evolving international trade dynamics, including tariffs, import restrictions, customs disputes, retaliatory measures, shifting trade agreements and cross-border partnerships, suppliers, and broader geopolitical instability. US administrations have enacted tariffs on imports, renegotiated tariffs, duties, or withdrawn from trade agreements, and implemented other restrictive measures. trade restrictions may be imposed, modified, or expanded with limited notice. These changes can adversely affect measures could require us or our independent manufacturers to seek alternative sourcing costs, product pricing, inventory flow, and product demand, which 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 sales, goods sold, disrupt logistics or inventory flows, adversely affect our gross margins, product pricing and demand, and reduce our competitiveness in the US and other markets. gross margin. Customs authorities may also disagree with challenge our claimed tariff classifications or treatment for of certain products, resulting in unexpected additional costs that 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 negatively impact our gross margin. We cannot predict be invalidated, modified, or refunded in the outcome future. As a result, we may face uncertainty regarding the treatment of ongoing tariff-related costs, including the potential recovery or future trade negotiations, and any escalation refund of tariff amounts previously paid or partially reflected in selective pricing actions or cost-sharing arrangements. These and other judicial, regulatory, or trade tensions policy developments could materially and adversely impact increase compliance complexity, create cost volatility, impair our business, financial condition, ability to plan sourcing, pricing, and results of operations, inventory strategies, and those result in disputes, claims, unrecoverable costs, and reputational harm, regardless of our wholesale channel customers. the ultimate outcome. In addition to trade-related risks, our international operations and independent manufacturers are subject to a range of regulatory, operational, and reputational risks. While Although we require our independent manufacturers and suppliers to adhere to compliance with environmental, labor, ethical, health, safety, and other business standards and conduct periodic audits of their operations, audits, we do not directly control their practices. Noncompliance with applicable laws the practices of our independent manufacturers or standards could lead suppliers. As we continue to diversify within Southeast Asia, monitoring compliance across a broader supplier base may be more complex. Any noncompliance could result in product recalls, regulatory penalties, the seizure or forfeiture of our products, or goods, reputational harm. If any harm, termination of our suppliers are unable or unwilling to comply with our standards, we may be forced to terminate those supplier relationships, which could increase our costs and disrupt our supply chain. Further, if our independent manufacturers or suppliers violate violations of US or foreign international trade laws or regulations, we may be subject to extra duties, significant monetary penalties, the seizure, and forfeiture of products we are attempting to import, laws, increased costs, supply chain disruption, or the loss of our import privileges, which could have a negative effect on our results of operations. privileges. Our international operations and independent manufacturers are also subject exposed to other risks and uncertainties, additional risks, including: •poor infrastructure •logistics, infrastructure, transportation, and equipment shortages, which can disrupt transportation distribution constraints, including raw material availability, and utilities; cost volatility related to fuel costs, labor disputes, inflation, port congestion, or geopolitical or climate‑related disruptions; •restrictions on the transfer of funds from foreign jurisdictions fund repatriation or volatile foreign exchange rates; •customary business traditions in certain countries such as local holidays, which are traditionally accompanied by elevated levels of turnover in the factories; •decreased scrutiny by custom officials for counterfeit products; •social instability and corruption, extortion, bribery, pay-offs, theft, and other fraudulent activity; •use of currency volatility; •local labor practices, workforce availability, or holidays; •counterfeit, unauthorized or prohibited materials misclassified materials, or reclassification of materials; product integrity or compliance risks; •health-related disruptions, such as including disease outbreaks or raw material shortages, which could impact our workforce or scarcity of raw and other materials; outbreaks; and •adverse changes in consumer perception perceptions of goods sourced from certain countries. Transportation and distribution costs may also be adversely affected by fluctuating demand, fuel cost volatility, labor disputes, inflation, and political, social, and economic instability. For example, we continue to experience port congestion, increased lead times, and rising freight and energy costs. Continued global countries, including as a result of geopolitical uncertainty, rising labor tensions, or climate-related disruptions further add to the complexity of global supply chain planning and resilience, and could increase distribution costs, create further capacity constraints in Europe and adversely affect our results of operations. Additionally, the increased threat of terrorist activity and heightened customs inspections have created delays in bringing imported goods to market and increased our logistics expenses. While social conditions. Although we pursue mitigation strategies, including selective, staggered, and strategic price increases on our products in the US selective pricing actions and by negotiating cost-sharing arrangements with our independent manufacturers, we these measures may be unable to not fully offset all resulting increases to our trade-related and regulatory cost of goods sold, which increases. If such strategies are ineffective, it could have a material adverse effect on materially and adversely affect our business, operations, and financial condition. Further, these risks may have a material adverse impact on demand for our products.condition, and results of operations.

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Prior heading: 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 in certain regions.

Our ability to capitalize on growth in new international markets and to maintain the current level of operation operations in our existing international markets is subject to risks associated with international operations that could adversely affect our sales and 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; consumers and our reported results; •limitations on our ability to move currency out of international markets; markets or repatriate earnings; •burdens of complying with a variety of foreign 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 foreign international laws; •inability to import products into a foreign country; •supply chain logistics disruptions, such as shipping disruptions in the Red Sea; •heightened cybersecurity threats; •difficulties associated with promoting and marketing products in unfamiliar markets and cultures; •political or economic uncertainty or instability, which has disrupted may disrupt the global economy and has the potential to reduce levels of consumer spending, which could have a material adverse effect on our business, particularly for our UGG and HOKA brands’ net sales; •changes in unemployment rates and consumer spending; UGG brands; •anti-American sentiment in international markets in which we operate; •changes in diplomatic and trade relationships between the US and other countries; and countries; •general economic fluctuations in specific countries or 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.

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Prior heading: We conduct business outside the US, which exposes us to foreign currency exchange rate risk, and could have a negative effect on our financial results.

We operate on a global basis, with 36.1% 41.7% of our total net sales for the year ended March 31, 2025, 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 currencies, and our foreign international distributors typically sell our products in local currency, which affects the price to foreign international consumers. Many of our subsidiaries operate with their local currency as their functional currency. Future foreign Foreign currency exchange rate fluctuations and fluctuations, which can be exacerbated by volatility in global credit markets markets, may cause changes in change the US dollar value of our purchases or sales and and, when converted to US dollars, could materially affect our net sales, gross margin, and results of operations, when converted to US dollars. Changes in the value of the US dollar, relative to other currencies, could result in material foreign currency exchange rate fluctuations and, as a result, our net earnings could be materially adversely affected. operations. When the US dollar strengthens relative to foreign currencies, our revenues sales and profits denominated in foreign currencies are reduced when converted into US dollars and our margins may be negatively affected. We routinely utilize foreign currency exchange rate 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 foreign currency exchange rate 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.

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Prior heading: 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 adversely affect our business and results of operations.

We store and transmit a significant amount of sensitive information, including the personal information of our customers customers, consumers, and employees, credit payment card information, and our proprietary financial, operational, financial, and strategic information. The data. Unauthorized access to, loss, theft, misuse, or unauthorized disclosure or access to of such information could lead to significant reputation or competitive harm, result in reputational harm, litigation, expose us to regulatory proceedings, investigations, significant remediation costs and cause us to incur substantial losses. As a result, we believe our future success and growth depends, in part, Our operations also depend on the ability continued performance of our systems, internal information systems and third-party technology providers, including those systems utilizing artificial intelligence (AI) such as generative data analytics and AI, to prevent the theft, loss, misuse, or unauthorized access of this information, and to respond quickly and effectively if to data security incidents occur. Data privacy and security incidents may prevent us from maintaining the privacy of this information, result incidents. Cybersecurity threats continue to evolve in the disruption of our business, frequency and require us to expend significant resources to secure such information sophistication, and respond to incidents, any of which could materially adversely affect our business, financial condition, or results of operations. Our success also depends in part reliance on the continued operation of our key business processes, including our IT interconnected systems, cloud-based platforms, and global communications systems. We rely on third-party IT service providers for many of our worldwide IT functions, including network, hardware, and software configuration, and on internal networks to support business processes. Any disruption to these systems or networks could, among other things, delay product fulfillment, impede personnel from performing their duties, adversely impact sales, and expose us to significant costs. Further, we could experience information silos and inefficiencies across our organization if we do not invest in appropriate operational systems and processes. If we are unable to structure our systems and processes to respond to changing business needs, or if we or our third-party providers experience a failure in these systems, our ability to accurately forecast sales, report our financial position and results of operations, or otherwise manage and operate our business could be adversely affected. The frequency, intensity, and sophistication of cyber and data security incidents have significantly increased in recent years. Like other businesses, we have experienced, and are continually at risk of, attacks and incidents. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the current global economic and political environment, our prominent size and scale, the advances in computer capabilities and AI, and increases the interconnectivity and interdependence of third parties to our systems. We expend significant resources on IT and data risk that a security tools, and processes designed to protect our IT systems and information, and to ensure an effective response to any attack incident affecting us or incident. Whether these measures are successful, these expenditures parties could adversely affect on disrupt our financial condition and results of operations. operations. Although we take the invest in security of our IT systems seriously, there can be no assurance the measures we employ will prevent unauthorized access to our systems controls and information. Because the techniques used to obtain unauthorized access to IT systems are constantly evolving, we may be unable to anticipate monitoring, these techniques or implement adequate protective measures in response. Cyber-attacks or data may not prevent all incidents could remain undetected for some period, which could result in significant harm to our systems, as well as unauthorized access to the information stored on and transmitted by our systems. A cyber-attack or other ensure timely detection. A cyber-attack, data security incident could result in significant incident, or system disruption of could materially and adversely affect our business such that: if: •critical business systems become inoperable or require considerable significant time or cost to restore; •personnel •employees are unable to perform their duties or communicate effectively with third-party partners; •it results in the loss, theft, misuse, third parties; •sensitive or unauthorized disclosure of confidential information; •we are prevented from accessing information necessary to conduct our business; •we is lost, misused, or disclosed without authorization; •business operations, including order placement, fulfillment, or reporting, are required to make unanticipated disrupted; •significant, unplanned investments in equipment, technology, or security measures; •customers cannot place remediation, or receive orders, and we recovery are unable to timely ship orders or at all; required; or •we become subject to other unanticipated incur additional liabilities, costs, or claims. If any of these events were to occur, it could have a material adverse effect on our financial condition and results of operations and result in harm to our reputation. In addition, a cyber-attack claims, or other data incident regulatory exposure. Any such event could put us at a competitive disadvantage, result in the deterioration reputational harm, loss of our customers’ confidence in our brands, cause our suppliers to reconsider their relationship customer trust, strained relationships with us or impose onerous contractual provisions, partners and subject us to suppliers, litigation, liability, fines, and penalties. We could be subject to regulatory penalties, or other regulatory actions pursuant to under domestic and international privacy laws, which could result in costly investigations data protection and litigation, civil or criminal penalties, operational changes, privacy laws and negative publicity that could materially and adversely affect our reputation, as well as our business, financial condition, or results of operations and financial condition.operations.

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Prior heading: 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 adversely affected.

Many of our consumers shop with us through our Company-owned e-commerce websites or through and third-party digital marketplaces. Consumer marketplaces, where expectations and competitive pressures, including speed of product delivery, delivery speed, shipping charges, costs, return privileges, and other evolving expectations, have increased policies, and are expected to mobile functionality, continue to increase. Consumers are increasingly using use mobile platforms to shop with us platforms, social media, and with our competitors, digital channels to do shop, comparison shopping, shop, and to engage with us brands, and our competitors. We are increasingly using social media we rely on these channels to interact with 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 consumers marketing and as a means sales efforts. These platforms may also become subject to enhance their shopping experience. Any failure on regulatory actions that limit our part ability to operate on them or require costly operational or technological changes. Failure to provide effective, reliable, secure, and user-friendly e-commerce websites digital platforms that offer a wide assortment of merchandise with rapid competitive delivery options and that continually meet the changing evolving consumer expectations of consumers could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our reputation, have an adverse effect on the growth of our e-commerce websites and have an adverse effect on our business and results of operations. In addition, as use of our digital platforms grows, we will need an increasing amount of technical infrastructure. If we fail or to effectively scale and adapt our digital platforms technical infrastructure to accommodate support increased consumer demand, our business may be subject to interruptions, delays or failures and consumer demand for could disrupt operations, reduce sales, harm our products reputation, and digital experiences could decline. Risks specific to adversely affect our Company-owned e-commerce websites also include diversion results of sales from our operations. Additional risks include channel conflict with Company-owned retail stores and our retailers’ third-party brick and mortar stores, difficulty challenges in recreating replicating the in-store experience through direct channels online, and liability for online content. Our failure to successfully respond to these risks could adversely affect e-commerce sales, as well as damage our reputation and brands.content.

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Prior heading: 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 financial condition and results of operations could be adversely affected, and our business may become less competitive.

We continually strive to improve and automate our operational and IT systems and processes as part of our ongoing effort to improve enhance the overall 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 the realization 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 at in improving our operational systems, adapting to changes in technology, including the successful utilization effective use of data analytics, AI, and machine learning, other emerging technologies, or that our these efforts will result in the anticipated benefits to us. In addition, the integration of emerging technologies, including data analytics, AI, and machine learning, into our systems and processes may require us to address rapidly developing laws and regulations governing AI. benefits. We may also experience difficulties in implementing or operating our new or upgraded operational or IT systems, including, but not limited to, including ineffective or inefficient operations, significant system failures, system outages, delayed implementation and loss of system availability, which could lead to increased implementation and/or and operational costs, loss or corruption of data, delayed shipments, excess inventory and interruptions of operations resulting in lost sales and/or 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.

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Prior heading: 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 US and foreign 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. taxes. Changes in these tax laws, or to their interpretations, 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 Base Erosion and Profit Shifting, Pillar Two model rules, which could modify existing tax principles. 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. Many countries in which we operate have adopted tax laws that could impact our financial position and results of operations beyond fiscal year 2025, including the 15% global minimum tax under the Organization for Economic Cooperation and Development’s Pillar Two Global Anti-Base Erosion Rules. As Refer to Note 5, “Income Taxes,” of March 31, 2025, these rules are either effective or have been adopted in draft form in various countries, and may adversely affect our income tax expense, profitability, and capital allocation decisions going forward. Based on our current analysis, the enacted global minimum tax does not have a material impact on our consolidated financial statements in Part IV within this Annual Report for the fiscal year ended March 31, 2025. We continue to evaluate the impact of Pillar Two as additional guidance becomes available; however, uncertainty remains further information regarding the timing and interpretation of the rules by the jurisdictions in which we operate. tax law changes. 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 pressures pressure to increase tax revenues 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.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.

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Prior heading: Our common stock price has been volatile, which could result in substantial 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, but not limited to the following: 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; 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 position, condition, and results of operations; •the financial stability of our customers, manufacturers, suppliers, and suppliers; 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; changes impacting us, our competitors, or the industry in which we operate; •the declaration of stock or cash dividends, share stock repurchases, or stock or reverse stock splits; •consumer confidence and discretionary spending levels; •broad market fluctuations in trading volume and price; market price of publicly traded securities; •general market, political, geopolitical, and economic macroeconomic conditions, including evolving international trade dynamics and recessionary conditions; and •a variety of risk factors, including the ones described herein and •trading activity in our stock by short-term or technical investors, including algorithmic trading, index funds, or other SEC filings. 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 that have often been unrelated or disproportionate to the operating performance of individual companies. 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.price, including in ways that are disproportionate to or not directly related to our operating performance.

Added · Removed · word-level comparison of the two filings