--- ticker: DECK company: DECK filing_type: 10-K year_current: 2024 year_prior: 2023 risks_added: 2 risks_removed: 0 risks_modified: 9 risks_unchanged: 18 source: SEC EDGAR url: https://riskdiff.com/deck/2024-vs-2023/ markdown_url: https://riskdiff.com/deck/2024-vs-2023/index.md generated: 2026-06-01 --- # DECK: 10-K Risk Factor Changes 2024 vs 2023 > Source: U.S. Securities and Exchange Commission (EDGAR) > Generated: 2026-06-01 > All data extracted directly from official filings. No hallucinated content. ## Summary | Status | Count | |--------|-------| | New risks added | 2 | | Risks removed | 0 | | Risks modified | 9 | | Unchanged | 18 | --- ## New in Current Filing: 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 the constantly evolving risks associated with cybersecurity threats. These risks include, among other things, operational risks, reputational risks, financial risks, and litigation and legal risks. As a part of our comprehensive cybersecurity 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 integrated cybersecurity risk management into our overall risk management framework to ensure that cybersecurity risks are considered in all aspects of our business. The integration ensures that cybersecurity considerations are integral to our strategic and operational decision-making. Our management team works closely with our Chief Technology Officer (CTO) and Chief Information Security Officer (CISO), ensuring that our cybersecurity efforts align 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 CTO 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) Special Publication 800-61; •implementing a vendor risk management program, which includes cybersecurity and data privacy audits, evaluating vendor risk level, and monitoring risk 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 suspicious 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. These approaches are not exhaustive, and we plan to continuously improve our approaches to cybersecurity risk management. In the three-year period ended March 31, 2024, our business strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats or incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks and any future material threats or incidents. Refer to Part I, Item 1A, "Risk Factors - Risks Related to Technology, Data Security and Privacy" within this Annual Report for further information. --- ## New in Current Filing: CYBERSECURITY GOVERNANCE Our Board of Directors has delegated to the Audit Committee primary responsibility for oversight of risk assessment and risk management, including risks related to cybersecurity and information security issues. Our CTO and CISO, who head our cybersecurity and information security initiatives, provide quarterly updates to the Audit Committee, and annual updates to the full Board of Directors. These updates cover various topics, such as efforts to 29 29 29 Table of Contents Table of Contents enhance our cybersecurity posture, operational and incident metrics, mitigation actions, and key performance indicators like cybersecurity maturity, program health, and audit and compliance activities. In addition to these regular updates, significant cybersecurity incidents and updates are escalated on an as-needed basis in accordance with our IRP. Our CTO and CISO have extensive experience in cybersecurity. Our CTO has served in his role since 2014. He has also served in various roles in Information Technology for over 25 years, including the oversight of Information Security for 15 years. 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 that include the Information Systems Audit and Control Association Certified in Risk and Information Systems Control, Certified Information Security Manager, and International Information System Security Certification Consortium Certified Information Systems Security Professional certifications. --- ## Modified: 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 operations globally or to retain our customer base, could be materially adversely affected. **Key changes:** - Reworded sentence: "Many of our consumers shop with us through our Company-owned e-commerce websites or through third party digital marketplaces on which we operate." - Reworded sentence: "Any failure on our part to provide attractive, effective, reliable, secure, user-friendly e-commerce websites that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers or any failure to provide attractive digital experiences to our customers could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our reputation with consumers, have an adverse effect on the growth of our e-commerce operations globally and have an adverse effect on our business and results of operations." - Reworded sentence: "Risks specific to our Company-owned e-commerce websites also include diversion of sales from our Company-owned retail stores and our retailers' brick and mortar stores, difficulty in recreating the in-store experience through direct channels and liability for online content." **Prior (2023):** Many of our consumers shop with us through our e-commerce platforms or through third party digital marketplaces on which we operate. Consumer expectations and related competitive pressures have increased and are expected to continue to increase relative to various aspects of our e-commerce business, including speed of product delivery, shipping charges, return privileges, and other evolving expectations. Increasingly, consumers are using mobile-based devices and applications to shop online with us and with our competitors, and to do comparison shopping, as well as to engage with us and our competitors through digital services and experiences that are offered on mobile platforms. We are increasingly using social media to interact with our consumers and as a means to enhance their shopping experience. Any failure on our part to provide attractive, effective, reliable, secure, user-friendly e-commerce platforms that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers or any failure to provide attractive digital experiences to our customers could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our reputation with consumers, have an adverse effect on the growth of our e-commerce business globally and have an adverse effect on our business and results of operations. In addition, as use of our digital platforms continues to grow, we will need an increasing amount of technical infrastructure to continue to satisfy our consumers' needs. If we fail to continue to effectively scale and adapt our digital platforms to accommodate increased consumer demand, our business may be subject to interruptions, delays or failures and consumer demand for our products and digital experiences could decline. Risks specific to our e-commerce business also include diversion of sales from our and our retailers' brick and mortar stores, difficulty in recreating the in-store experience through direct channels and liability for online content. Our failure to successfully respond to these risks could adversely affect sales in our e-commerce business, as well as damage our reputation and brands. **Current (2024):** Many of our consumers shop with us through our Company-owned e-commerce websites or through third party digital marketplaces on which we operate. Consumer expectations and related competitive pressures have increased and are expected to continue to increase relative to various aspects of our e-commerce operations, including speed of product delivery, shipping charges, return privileges, and other evolving expectations. Increasingly, consumers are using mobile-based devices and applications to shop online with us and with our competitors, and to do comparison shopping, as well as to engage with us and our competitors through digital services and experiences that are offered on mobile platforms. We are increasingly using social media to interact with our consumers and as a means to enhance their shopping experience. Any failure on our part to provide attractive, effective, reliable, secure, user-friendly e-commerce websites that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers or any failure to provide attractive digital experiences to our customers could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our reputation with consumers, have an adverse effect on the growth of our e-commerce operations globally and have an adverse effect on our business and results of operations. In addition, as use of our digital platforms continues to grow, we will need an increasing amount of technical infrastructure to continue to satisfy our consumers' needs. If we fail to continue to effectively scale and adapt our digital platforms to accommodate increased consumer demand, our business may be subject to interruptions, delays or failures and consumer demand for our products and digital experiences could decline. Risks specific to our Company-owned e-commerce websites also include diversion of sales from our Company-owned retail stores and our retailers' brick and mortar stores, difficulty in recreating the in-store experience through direct channels 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. --- ## Modified: 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. **Key changes:** - Reworded sentence: "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." **Prior (2023):** Like other companies in our industry, we have an extended design and manufacturing process, which involves the initial design of our products, the purchase of raw and other materials, the accumulation of inventories, the subsequent sale of the inventories, and the collection of the resulting accounts receivable. This production 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 the sale of our products, and results in significant liquidity requirements and working capital fluctuations throughout our fiscal year. Because this cycle involves long lead times, which require us to make manufacturing decisions months in advance of an anticipated purchasing decision by the consumer, it is challenging to estimate and manage our inventory and working capital requirements. This may be exacerbated by supply chain disruptions that may drive higher inventory procurement positions that could negatively affect our gross margins resulting from a need to sell excess quantities though close out channels. Further, once manufacturing decisions are made, it is difficult for our management to predict and timely adjust expenses, accurately forecast our financial results, and meet the expectations of analysts and investors, in reaction to various factors, including the following: • the effects of unfavorable or unexpected weather patterns on consumer spending and demand for our products, as the sales of a majority of our UGG brand products are inherently seasonal and the further effects of climate change may pronounce these conditions; • changes in consumer preferences, tastes, discretionary spending, and prevailing fashion trends; • market acceptance of our current products and new products, and of competitive products; 15 15 15 Table of Contents Table of Contents • future sales demand from our customers; • the competitive environment, including pricing pressure from reduced pricing of competitive products, which may cause consumers to shift their purchasing decisions away from our products; • delays in resource or product availability due to effects from the pandemic; and • uncertain macroeconomic and political conditions. The evolution and expansion of our brands and product offerings has 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 or sell excess inventories at reduced prices, which would result in lower revenues 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, we may experience inventory shortages that may prevent us from fulfilling customer orders or result in us delaying 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. **Current (2024):** 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 expense 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, which require us to make manufacturing decisions months in advance of an anticipated purchasing decision by the consumer, it is challenging to manage our inventory and working capital requirements. Further, supply chain disruptions may drive higher inventory procurement positions that could negatively affect our gross margins as a result of selling excess quantities though close out channels. Further, once manufacturing decisions are made, it is difficult to predict and timely adjust expenses, accurately forecast our financial results, and meet the expectations of analysts and investors, including as a result of: •the effects of unfavorable or unexpected weather patterns on consumer spending and demand for our products, as the sales of a majority of our UGG brand products are inherently seasonal and the effects of climate change may pronounce these conditions; •changes in consumer preferences, tastes, discretionary spending, and prevailing fashion trends; •market acceptance of our current products and new products, and of competitive products; •the competitive environment, including pricing pressure from reduced pricing of competitive products, which may cause consumers to shift their purchasing decisions away from our products; •delays in resource or product availability from supply chain disruptions; and •uncertain macroeconomic and political conditions. 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 or sell excess inventories at reduced prices, which would result in lower revenues 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, we may experience inventory shortages that may prevent us from fulfilling customer orders or result in us delaying 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. --- ## Modified: We may not succeed in implementing our growth strategies, including through identifying new retail store locations that meet our requirements, in which case we may not be able to take advantage of certain market opportunities and may become less competitive. **Key changes:** - Reworded sentence: "For example, we have opened HOKA brand retail locations in international markets through Company-owned stores and through third-party partners, and we have expanded our international flagship store presence for the UGG and HOKA brands." - Reworded sentence: "Furthermore, our future growth also depends in part on our ability to effectively manage the profitability of our existing retail locations." - Removed sentence: "Additionally, we expanded our 3PL presence in Asia during fiscal year 2023." - Reworded sentence: "Failure to effectively implement our growth strategies and develop our business in new international markets, or disappointing growth within existing markets, could negatively affect our revenues and rate of growth and result in our business becoming less competitive." **Prior (2023):** As part of our overall growth strategy, we are continually seeking out opportunities to enhance the positioning of our brands, diversify our product offerings, extend our brands into complementary product categories and markets, expand geographically, optimize our retail presence both in stores and online, and improve our financial performance and operational efficiency. Our future growth depends in part on our expansion efforts outside of North America (international growth strategy). For example, we have opened and continue to explore future retail opportunities for the HOKA brand, including through third-party partners in international markets. However, if we are unable to identify new retail locations with consumer traffic sufficient to support a profitable sales level, our retail growth may be limited. Global store openings involve substantial investments, including those relating to leasehold 19 19 19 Table of Contents Table of Contents improvements, furniture and fixtures, equipment, information systems, inventory, and personnel. Successful operation of a retail store depends, in part, on the overall ability of the retail location to attract a consumer base sufficient to generate profitable store sales volumes, and if we have insufficient sales at a new store location, we may be unable to avoid losses or negative cash flows. Furthermore, we license the right to operate our brand retail stores to third parties through our partner retail program. We currently plan for most of the partner retail stores to be operated in international markets, with the largest number anticipated to be in China. 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 our brand image to suffer. Additionally, we expanded our 3PL presence in Asia during fiscal year 2023. 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 and develop our business in new international markets, or disappointing growth outside of existing markets, could negatively affect our revenues and rate of growth and result in our business becoming less competitive. 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. **Current (2024):** As part of our overall growth strategy, we are continually seeking out opportunities to enhance the positioning of our brands, diversify our product offerings, extend our brands into complementary product categories and markets, expand geographically, optimize our retail presence both in stores and online, and improve our financial performance and operational efficiency. Our future growth depends in part on our expansion efforts outside of North America (international growth strategy). For example, we have opened HOKA brand retail locations in international markets through Company-owned stores and through third-party partners, and we have expanded our international flagship store presence for the UGG and HOKA brands. Flagship stores play a crucial role in brand market positioning, and 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. Global store openings involve substantial investments, including leasehold improvements, furniture and fixtures, equipment, information systems, inventory, and personnel. Successful operation of a retail store depends, in part, on the overall ability of the retail location to attract a consumer base sufficient to generate profitable store sales volumes, and if we have insufficient sales at a new store location, we may be unable to avoid losses or negative cash flows. Furthermore, our future growth also 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. Most 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 our brand image to suffer. 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 and develop our business in new international markets, or disappointing growth within existing markets, could negatively affect our revenues and rate of growth and result in our business becoming less competitive. 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. --- ## Modified: Changes in economic conditions may adversely affect our financial condition and results of operations. **Key changes:** - Reworded sentence: "Volatile economic conditions and changes in the market have affected, and may continue to affect, consumer spending generally and the buying habits and preferences of consumers." - Reworded sentence: "The purchase of these products is discretionary and is therefore highly dependent upon the level of consumer confidence and discretionary spending." - Reworded sentence: "We sell a significant portion of our products through higher-end specialty and department store retailers, as well as through online marketplaces." **Prior (2023):** Volatile economic conditions and general changes in the market have affected, and will likely continue to affect, consumer spending generally and the buying habits and preferences of consumers. A significant portion of the products we sell, especially those sold under the UGG and HOKA brands, are premium retail products. The purchase of these products by consumers is largely discretionary and is therefore highly dependent upon the level of consumer confidence and discretionary spending, particularly among affluent consumers. Sales of these products may be adversely affected by factors such as worsening economic conditions, consumer confidence in future economic conditions, changes to fuel and other energy costs, labor, and healthcare costs, declines in income or asset values, and increases in consumer debt levels, inflation and interest rates, and unemployment rates. Uncertainty in global economic conditions continues, particularly in light of an anticipated economic downturn, causing unpredictability in consumer discretionary spending trends. During an actual or perceived economic downturn, fewer consumers may shop for our products, and those who do may limit the amount of their purchases or substitute less costly products for our products. As a result, we could be required 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 reduce our sales and profitability, which could have a material adverse effect on our financial condition and results of operations. We sell a large portion of our products through higher-end specialty and department store retailers, as well as through online marketplaces such as Amazon.com. The businesses of these customers may be affected by factors 14 14 14 Table of Contents Table of Contents such as changes in economic conditions, recent failures in the US banking system, reduced consumer demand for premium products, decreases in available credit, and increased competition. If our customers face financial difficulties, it could have an adverse effect on our estimated allowances and reserves, and potentially result in us losing key customers. **Current (2024):** Volatile economic conditions and changes in the market have affected, and may continue to affect, consumer spending generally and the buying habits and preferences of consumers. A significant portion of the products we sell, especially those sold under the UGG and HOKA brands, are premium retail products. The purchase of these products is discretionary and is therefore highly dependent upon the level of consumer confidence and discretionary spending. Sales of these products may be adversely affected by variable economic factors, including worsening economic conditions, consumer confidence in future economic conditions, changes to fuel, energy, labor, and healthcare costs, declines in income or asset values, and increases in consumer debt levels, inflation and interest rates, and unemployment rates. Uncertainty in global economic conditions may result in unpredictable consumer discretionary spending trends. During an actual or perceived economic downturn, fewer consumers may shop for our products, and those who do may limit the amount of their purchases or seek less costly substitutes for our products. As a result, we could be required 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 reduce our sales and profitability, which could have a material adverse effect on our financial condition and results of operations. We sell a significant portion of our products through higher-end specialty and department store retailers, as well as through online marketplaces. The businesses of these customers may be affected by factors such as changes in economic conditions, ongoing geopolitical conflicts and uncertainties, fluctuations in foreign currency exchange rates, failures or instability in the US banking system, reduced consumer demand for premium products, decreases in available credit, and increased competition. If our customers face financial difficulties, it could have an adverse effect on our estimated allowances and reserves, and potentially result in us losing key customers. --- ## Modified: We rely on technical innovation, as well as increased use of preferred materials, to compete in the market for our products. **Key changes:** - Reworded sentence: "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." **Prior (2023):** Our success relies in part on our continued innovation in both the materials we use and the design of our footwear. We continue to invest in research and development to drive our efforts to increasingly incorporate environmentally preferred materials in our products. For example, we continue to leverage our proprietary UGGpure and UGGplush materials, which incorporate repurposed wool to reduce our use of virgin wool. We also increasingly use preferred synthetics, such as recycled polyester, recycled nylon, recycled polyethylene, and bio-based ethylene, preferred regenerated or synthetic cellulosic fibers, such as TENCEL™ Lyocell and TENCEL™ Modal, and preferred plant fibers, such as cotton sourced through responsible cotton schemes, hemp, linen, ramie, and jute, as well as preferred wool, including UGGpure repurposed wool, and the responsible-down certified standard. Although we continue to invest in research and development to refine our materials and develop new properties for specific applications, if we fail to introduce technical innovation in our products or experience issues with the quality of our products or materials, consumer demand for our products could decline and we may experience reputational damage. 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. **Current (2024):** 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. Also, we continue to invest in research and development to drive our efforts to increasingly incorporate preferred materials in our products as part of our sustainability efforts. For example, we leverage our proprietary UGGplush material, which incorporates repurposed wool to reduce our use of virgin wool, and we utilize sugarcane-derived 18 18 18 Table of Contents Table of Contents EVA, as opposed to petroleum-derived EVA, within certain UGG brand products. We also increasingly use preferred synthetics, such as recycled polyester, recycled nylon, recycled polyethylene, and bio-based ethylene, preferred regenerated or synthetic cellulosic fibers, such as TENCEL™ Lyocell and TENCEL™ Modal, and preferred plant fibers, such as cotton sourced through responsible cotton schemes, hemp, linen, ramie, and jute, and the responsible-down certified standard. Although we continue to invest in research and development to refine our materials and develop new properties for specific applications, if we fail to introduce technical innovation in our products or experience issues with the quality of our products or materials, consumer demand for our products could decline and we may experience reputational damage. 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. --- ## Modified: We face risks associated with pursuing strategic acquisitions and divestitures, and our failure to successfully integrate any acquired business or product could have a material adverse effect on our results of operations and financial position. **Key changes:** - Reworded sentence: "Such acquisitions involve numerous risks, challenges, and uncertainties, including the potential to: •expose us to risks inherent in entering into a new market or geographic region; •lose significant customers or key personnel of the acquired business; •encounter difficulties managing and implementing acquired assets; •encounter difficulties marketing to new consumers or managing geographically remote operations; •divert management's time and attention away from other aspects of our business operations; and •incur costs relating to a potential acquisition that we fail to consummate, which we may not recover." - Reworded sentence: "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." **Prior (2023):** 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 or geographic region; • lose significant customers or key personnel of the acquired business; • encounter difficulties managing and implementing acquired assets; • encounter difficulties marketing to new consumers or managing geographically remote operations; • divert management's time and attention away from other aspects of our business operations; and • incur costs relating to a potential acquisition 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, or to achieve the expected benefits of any acquisitions. Following an acquisition, we may also face cannibalization of existing product sales by our newly acquired products, unless we adequately integrate new products with our existing products, aggressively target different consumers for our newly acquired 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. Further, we may be required to issue equity securities to finance an acquisition, which would be dilutive to our stockholders, and the 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. 21 21 21 Table of Contents Table of Contents **Current (2024):** 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 or geographic region; •lose significant customers or key personnel of the acquired business; •encounter difficulties managing and implementing acquired assets; •encounter difficulties marketing to new consumers or managing geographically remote operations; •divert management's time and attention away from other aspects of our business operations; and •incur costs relating to a potential acquisition 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, or to achieve the expected benefits of any acquisitions. Following an acquisition, we may also face cannibalization of existing product sales by our newly acquired products, unless we adequately integrate new products with our existing products, aggressively target different consumers for our newly acquired 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. Further, we may be required to issue equity securities to finance an acquisition, which would be dilutive to our stockholders, and the 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 October 2023, we announced that we intend to divest 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. Further, during the fourth fiscal quarter for the year ended March 31, 2024, we recorded an impairment loss of $8,164 in SG&A expenses in the consolidated statements of comprehensive income for the Sanuk brand definite-lived trademark, driven by lower-than-expected results of operations for the wholesale channel. Refer to the subsection "Definite-Lived Intangible and Other Long-Lived Assets" in the "Critical Accounting Policies" section in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," within this Annual Report for further information. The process of completing any acquisitions or divestitures may be time-consuming, involve significant costs and expenses, and may not yield a benefit if the transactions are not completed successfully. In situations where acquisitions or divestitures are not successfully implemented or completed, or the expected benefits of such acquisitions or divestitures are not otherwise realized, our business or financial results could be negatively impacted. --- ## Modified: 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. **Key changes:** - Reworded sentence: "Much of our financial success is related to the ability of our customers, which include our retailer and distributor partners, to successfully market and sell our brands to consumers." - Reworded sentence: "Any loss of one of these key customers, or a significant reduction in purchases from one of these customers, could result in a significant decline in sales, write-downs of excess inventory, or pressure to discount our products, any of which could have a material adverse effect on our financial condition or results of operations." - Removed sentence: "17 17 17 Table of Contents Table of Contents" **Prior (2023):** Much of our financial success is directly related to the ability of our retailer and distributor partners to successfully market and sell our brands directly to consumers. If a partner fails to satisfy contractual obligations or otherwise meet our expectations, or experiences a closure or other operational issues, it may be difficult to locate an acceptable substitute partner. If we determine that it is necessary to make a change, we may experience increased costs, loss of customers, or increased credit or inventory risk. In addition, there is no guarantee that any replacement partner will generate results that are more favorable than the terminated party. We currently do not have long-term contracts with our customers. As a result, we face the risk that key customers may not increase their business with us as we expect or may significantly decrease their business with us or terminate our relationship. Although no single customer accounted for 10.0% or more of our net sales during fiscal year 2023, the failure to increase or maintain our sales with our key customers as much as we anticipate would have a negative effect on our growth prospects and any decrease or loss of these customers' business could result in a material decrease in our net sales and net income or loss if we are unable to capture these sales through our DTC channel. Further, as of March 31, 2023, we have no customers that represent 10.0% of trade accounts receivable, net. Trade accounts receivable, net are typically unsecured and are thus subject to the increased risk of us being unable to collect on overdue amounts, or us doing so in a timely manner, which could affect our revenue and liquidity. Further, while we have distributor contracts with terms of up to five years, these contracts may have annual purchase minimums which must be met to retain the distribution rights, and these distributors are not otherwise obligated to purchase our products. Sales to our customers are generally on an order-by-order basis and may be cancelled or rescheduled by our customers. We rely on purchase order delivery dates as a key factor to forecast our sales and earnings for future periods, and if our customers postpone, reduce, or discontinue purchases from us, we could fail to meet our forecasted results. These risks have been exacerbated as key customers operate within a retail industry that continues to undergo significant structural changes fueled by technology, changes in consumer purchasing behavior, a shrinking retail footprint and recent changes in economic conditions, such as an anticipated economic downturn and bank failures. These trends have been further intensified by the pandemic. We may lose key customers if they fail to manage the effect of this rapidly changing retail environment. Any loss of one of these key customers, or a significant reduction in purchases from one of these customers, could result in a significant decline in sales, write-downs of excess inventory, or increased discounts to our customers, any of which could have a material adverse effect on our financial condition or results of operations. Further, a key customer may dispose of their excess inventories to consumers or unauthorized sellers at significantly reduced prices, which may put pressure on us to reduce our prices to compete, or cause consumers to shift their purchasing decisions away from our authorized sellers entirely. 17 17 17 Table of Contents Table of Contents **Current (2024):** Much of our financial success is related to the ability of our customers, which include our retailer and distributor partners, to successfully market and sell our brands to consumers. If a customer fails to satisfy contractual obligations or otherwise meet our expectations, or experiences operational issues, it may be difficult to locate an acceptable alternative. Any disruption to these relationships may result in increased costs or loss of customers. In addition, there is no guarantee that a new customer will generate results that are more favorable than the terminated party. We face a risk that key customers may not increase their business with us as we expect or may significantly decrease their business with us or terminate our relationship. Although no single customer accounted for 10.0% or more of our total net sales during fiscal year 2024, our top ten customers made up 24.2% of total net sales. The failure to increase sales with our key customers would have a negative effect on our growth prospects, and any decrease or loss of these customers' business could result in a material decrease in our net sales and net income if we are unable to capture these sales through our DTC channel. Further, as of March 31, 2024, we have two customers that represent 31.2% of trade accounts receivable, net. Trade accounts receivable, net are typically 16 16 16 Table of Contents Table of Contents unsecured and thus subject us to a 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 and may be cancelled or rescheduled by our customers. We rely on purchase order delivery dates as a key factor to forecast our sales and earnings, and if our customers postpone, reduce, or discontinue purchases from us, we could fail to meet our forecasted results. These risks have been exacerbated as our key customers are impacted by significant structural changes to the retail industry fueled by changing technology, consumer purchasing behavior, and economic conditions, as well as 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 loss of one of these key customers, or a significant reduction in purchases from one of these customers, could result in a significant decline in sales, write-downs of excess inventory, or pressure to discount our products, any of which could have a material adverse effect on our financial condition or results of operations. Further, a key customer may dispose of their excess inventories to consumers or unauthorized sellers at significantly reduced prices, which may put pressure on us to reduce our prices to compete, or cause consumers to shift their purchasing decisions away from our authorized sellers entirely. --- ## Modified: Global climate change, including extreme weather conditions, 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. **Key changes:** - Reworded sentence: "Natural disasters or other catastrophic events, including the effects of global climate change and a pandemic, may damage or disrupt our operations, international markets, and the global economy." - Reworded sentence: "Although we maintain disaster recovery plans, such events could disrupt our operations or those of our independent manufacturers, suppliers and customers, including through the inability of personnel to work, destruction of facilities, loss of life, and adverse effects on supply chains, power, infrastructure and the integrity of IT systems, all of which could materially increase 19 19 19 Table of Contents Table of Contents our costs and expenses, delay or decrease sales, and disrupt our ability to maintain business continuity." - Added sentence: "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." - Reworded sentence: "If consumers increasingly adopt plant-based diets for personal reasons, this could reduce the supply of sheep for the meat industry, and in turn, hinder our ability to source sufficient sheepskin for our products." **Prior (2023):** Natural disasters or other catastrophic events, including the pandemic and the effects of climate change, may damage or disrupt our operations, international markets, and the global economy. Our operations are subject to interruption from extreme weather events, power shortages, pandemics, terrorism, political instability, telecommunications failure, cyber-attacks, war, and other events beyond our control. Although we maintain disaster recovery plans, such events could disrupt our operations or those of our independent manufacturers, suppliers and customers, including through the inability of personnel to work, destruction of facilities, loss of life, and adverse effects on supply chains, power, infrastructure and the integrity of information technology (IT) systems, all of which could materially increase our costs and expenses, delay or decrease sales and disrupt our ability to maintain business continuity. We could incur significant costs to improve the climate-related resiliency of our infrastructure and otherwise prepare for, respond to, and mitigate the effects of climate change. We could also experience increased costs for energy, production, transportation, and raw and other materials, which could adversely affect our operations. Our insurance may not be sufficient to cover losses that we may sustain. A significant natural disaster or other event that disrupts our operations or those of our partners or customers could have a material adverse effect on our business, results of operations and financial condition. These events could also adversely affect the supply of raw materials, including sheepskin and leather, which are key resources in the production of our products, 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 that consumers purchase. It is possible consumers increasingly adopt plant-based diets to minimize their carbon footprint, which could reduce the supply of sheep for the meat industry, and in turn, hinder our ability to source sufficient sheepskin for our products. Further, health epidemics, including the pandemic, may reduce demand for certain products, deteriorate our ability, or the ability of our customers, to operate in affected regions, and result in the failure 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, any of which would adversely affect our business, results of operations and financial condition. **Current (2024):** Natural disasters or other catastrophic events, including the effects of global climate change and a pandemic, may damage or disrupt our operations, international markets, and the global economy. Our operations are subject to interruption from extreme weather events, power shortages, pandemics, terrorism, political instability, telecommunications failure, cyber-attacks, war, and other events beyond our control. Although we maintain disaster recovery plans, such events could disrupt our operations or those of our independent manufacturers, suppliers and customers, including through the inability of personnel to work, destruction of facilities, loss of life, and adverse effects on supply chains, power, infrastructure and the integrity of IT systems, all of which could materially increase 19 19 19 Table of Contents Table of Contents our costs and expenses, delay or decrease sales, and disrupt our ability to maintain business continuity. We could incur significant capital expenditures and other costs to improve the climate-related resiliency of our infrastructure and otherwise prepare for, respond to, and mitigate the effects of climate change, including compliance with evolving, and at times inconsistent, country specific laws and regulations. We could also experience increased costs for energy, production, transportation, raw and other materials, as well as higher insurance premiums and deductibles, which could adversely affect our operations. Our insurance may not be sufficient to cover losses that we may sustain. A significant natural disaster or other event that disrupts our operations or those of our partners or customers could have a material adverse effect 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, which are key resources in the production of our products, 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 that consumers purchase. If consumers increasingly adopt plant-based diets for personal reasons, this could reduce the supply of sheep for the meat industry, and in turn, hinder our ability to source sufficient sheepskin for our products. Further, public health issues and related regulatory responses, including a pandemic, may reduce demand for certain products, deteriorate our ability, or the ability of our customers, to operate in affected regions, and result in the failure 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, any of which would adversely affect our business, results of operations and financial condition. --- ## Modified: Supply chain disruptions could interrupt product manufacturing and global logistics and increase product and transportation costs. **Key changes:** - Reworded sentence: "We continue to proactively mitigate any effects of future disruptions by expanding and reallocating production capacity with our existing sourcing partners and onboarding new long-term partners to diversify our country-level manufacturing and sourcing lines." - Reworded sentence: "As we manage product availability from supply chain or other disruptions, the timing of sales to our wholesale partners and consumers may be affected, which may result in increased risk of order cancellations." **Prior (2023):** Our business depends on our ability to source and distribute products in a timely manner. The pandemic and related governmental and port facility actions in recent years have caused delays in product shipments. For example, port congestion, temporary closures, and worker shortages, have disrupted the operations of our independent manufacturers and 3PLs, as well as the DCs where we manage our inventory, have experienced disruptions that have increased the global lead-time for our products. Due to the pandemic, reductions in the number of ocean carrier voyages and capacity have delayed the arrival of imports and increased ocean transport costs globally and the conflict between Russia and Ukraine continues to result in higher energy and transportation costs. Ongoing ocean carrier consolidation, reduced capacity, congestion at major international gateways and other economic factors are challenging ocean transportation, and labor disputes at US shipping ports have historically affected the delivery of our products. In addition, trucking costs in the US have risen dramatically due to driver shortages, increased labor costs, and safety, environmental, and labor regulations. In addition, global inflation has contributed to already higher incremental freight costs, and such inflation may continue to fuel these costs. Elevated inventory levels, combined with the uneven flow of receipts and shipments, could cause further capacity pressures within our US DCs and 3PLs, resulting in higher costs and limiting our ability to efficiently fulfill orders for our wholesale partners and consumers. These pressures may be exacerbated by labor disputes that affect the operations of our partners, which creates significant risk for our business, particularly if these disputes result in work slowdowns, strikes, or similar disruptions. As supply chain disruptions continue and we manage product availability, the timing of sales to our wholesale partners and consumers may continue to be affected, and we face increased risk of order cancellations. We continue to actively manage our inventory positions, including by investing in supply chain and related tools, and transit lead times and related freight costs during fiscal year 2023 have improved compared to fiscal year 2022. However, these disruptions remain elevated compared to pre-pandemic levels and we expect supply chain constraints to continue into our next fiscal year. Our short-term priority remains meeting customer demand and expectations on service levels, which may result in inventory levels outpacing sales growth in the near term. In addition to logistical supply chain pressures, our network of strategic sourcing partners, which includes material vendors and manufacturers, has navigated delays and disruptions due to the lingering impacts of the pandemic. We have mitigated the effects of production disruptions through expanding and reallocating production capacity with our existing sourcing partners and onboarding new long-term partners to diversify our country-level manufacturing and sourcing lines. We plan to continue growing our distribution network to support our long-term strategic objectives but have experienced and expect to continue to experience headwinds in connection with these efforts, including new sourcing partner capacity constraints and long production lead times to ensure the rigorous quality standards of our brands are met. Further, we have historically used more expensive air freight to ship our products to meet demand, as needed. While we experienced significant increases in ocean shipping rates resulting in reductions to our gross margin during fiscal year 2022, we began to see improvement during fiscal year 2023 and reduced our use of air freight. However, if we experience such fluctuations in costs in future periods, we may be required to leverage air freight in future periods to maintain service levels. Failure to adequately produce and timely ship our products to customers could lead to lost potential revenue, failure to meet consumer demand, strained relationships with customers and diminished brand loyalty. **Current (2024):** Our business depends on our ability to source and distribute products in a timely manner. We continue to proactively mitigate any effects of future disruptions by expanding and reallocating production capacity with our existing sourcing partners and onboarding new long-term partners to diversify our country-level manufacturing and sourcing lines. We plan to continue growing our distribution network to support our long-term strategic objectives but have experienced and may continue to experience headwinds in connection with these efforts. Failure to adequately 21 21 21 Table of Contents Table of Contents produce and timely ship our products to customers could lead to lost potential revenue, failure to meet consumer demand, strained relationships with customers and diminished brand loyalty. Port congestion, temporary closures, and worker shortages may disrupt the operations of our independent manufacturers and 3PLs, as well as those of our DCs, and may increase the global lead-time for shipments of our products. In addition, in recent years, global ocean transportation costs, as well as freight costs in the US, have risen dramatically due to labor shortages and disputes, increased labor costs, congestion at ports of entry, increased safety, environmental, labor regulations, and global inflation. Further, while our operations in the regions are not significant, the Russia-Ukraine and Israel-Hamas conflicts are sources of uncertainty. These conflicts could grow and bring about disruption, instability, and volatility in global markets, supply chains, and logistics, and have contributed to shipping disruptions in the Red Sea and surrounding waterways, which could in turn adversely affect our business operations and financial performance. Elevated inventory levels, combined with the uneven flow of receipts and shipments, could cause further capacity pressures within our US DCs and 3PLs. For example, we are in the process of expanding our distribution network for HOKA brand wholesale operations to our DC in Mooresville, Indiana. If we are unsuccessful in achieving our transition timelines, we may be limiting our ability to efficiently fulfill orders for our wholesale partners and consumers. These pressures may be exacerbated by labor disputes that affect the operations of our partners, which creates significant risk for our business, particularly if these disputes result in work slowdowns, strikes, or similar disruptions. As we manage product availability from supply chain or other disruptions, the timing of sales to our wholesale partners and consumers may be affected, which may result in increased risk of order cancellations. While we have historically used more expensive air freight to ship our products to meet demand in the past, we continued to reduce our use of air freight into fiscal year 2024. However, if we experience such fluctuations in product demand and costs in future periods, we may be required to leverage air freight in future periods to maintain service levels. --- *Data sourced from SEC EDGAR. Last updated 2026-06-01.*