Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Deckers Brands Second Quarter Fiscal 2018 Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. I'll now turn the conference over to Steve Fasching, Vice President of Strategy and Investor Relations.

Thanks, and welcome, everyone, joining us today. On the call is Dave Powers, President and Chief Executive Officer; and Tom George, Chief Financial Officer. Before we begin, I would like to remind everyone of the company's safe harbour policy. Please note that certain statements made on this call are forward-looking statements within the meaning of the federal securities laws, which are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbour from liability established by the Private Securities Litigation Reform Act of 1995. All statements made on this call today, other than statements of historical fact, are forward-looking statements and include statements regarding our anticipated financial performance, including, but not limited to, our projected revenue, margins, expenses, earnings per share and operating profit improvement as well as statements regarding our cost savings and restructuring plans, strategies for our products and brands and our review of strategic alternatives. Forward-looking statements made on this call represent the company's current expectations and are based on currently available information. Forward-looking statements involve numerous risks and uncertainties that may cause actual results to differ materially from any results predicted, assumed or implied by the forward-looking statements. The company has explained some of these risks and uncertainties in its SEC filings, including in the Risk Factors section of its annual report on Form 10-K. Except as required by law or the listing rules of the New York Stock Exchange, the company expressly disclaims any intent or obligation to update any forward-looking statements, whether to conform such statements to actual results or to changes in its expectations or as a result of the availability of new information. With that, I'll now turn it over to Dave.

Thanks, Steve. Good afternoon, everyone, and thanks for joining us today. Before we discuss our second quarter fiscal 2018 financial and operating results, I'd like to briefly address the press release we issued this afternoon regarding the strategic review process. As you know, beginning in April, our Board of Directors conducted a comprehensive process to understand the level of interest in an acquisition of Deckers. We retained independent advisers to assist in our extensive review of ways to maximize shareholder value. This included looking at an outright sale of the company as well as looking at other value drivers, such as the sale of certain assets, capital structure optimization and various ways to return capital to shareholders. The board considered and pursued all options. After a careful and thorough evaluation, the board has concluded the process and has determined the best way to maximize shareholder value is to focus on aggressively driving the operating profit improvement plan, combined with an increased share repurchase authorization to $400 million. The intention is to purchase a considerable amount by fiscal year end 2018. The board remains open to considering and pursuing all strategic options to create value for shareholders but will no longer be actively pursuing a sale of the entire company at this time. Our efficiency initiatives position us well to achieve the operating profit targets established for fiscal 2018 and beyond. We continue to focus on driving improvements in the business through streamlining our cost structure, improving our operating profit, and when combined with the share repurchase program, simultaneously returning capital to stockholders and positioning Deckers for accelerated EPS growth. We are very confident in our projected earnings growth. With a strong balance sheet, cash position, projected cash flow and relatively modest capital expenditures, the board feels it's the right time…

Thanks, Dave, and good afternoon, everyone. Today, I will walk you through the details on our strong second quarter and first half fiscal 2018 results and provide an outlook for the third quarter and updated guidance for fiscal 2018. Please note, throughout this discussion, where I refer to non-GAAP financial measures, I am referring to results before taking into account restructuring and other charges that our management believes are not core to our ongoing operating results. Also note, our non-GAAP results are not adjusted for constant currency. A reconciliation between our reported GAAP results and the non-GAAP results can be found in our earnings release that is posted on our website under the Investors tab. Now to our results. For the second quarter, as Dave mentioned, revenue was $482 million, nearly flat to last year. However, this was significantly above our guidance of down 10%. The beat was driven by earlier-than-planned shipments, UGG DTC outperformance, HOKA domestic wholesale reorders and a DTC comp of up 3.7%. Breaking down the revenue upside. $29 million was due to timing as product originally expected to ship in the third quarter shifted into the second. $7 million came from better-than-expected UGG DTC performance. $6 million was from favourable foreign currency rates versus our expectation largely in European currencies, and $3 million was from higher demand for the HOKA brand as we continue to experience exceptional growth in the U.S. wholesale channel. Gross margins were up 220 basis points over last year and were also much better than our expectations. The main drivers of the year-over-year increase were lower closeout shipments, executing on our supply chain initiatives and a higher mix of DTC revenue. Non-GAAP SG&A dollar spend was $157 million, down 2.6% from last year's $161 million. As a percent of revenue, SG&A expenses…

Thank you, Tom. Reflected on our progress so far this year, I'd like to reiterate my confidence in a few things: our profit improvement plan to drive operating margin to better than 10.5% this fiscal year; our ability to achieve an operating margin of at least 13% by the end of fiscal 2020, which would put Deckers in the top quartile of our industry; our ability to implement a capital allocation framework that will drive an increased ROIC; and a plan to create a capital structure that will drive increased shareholder value and return meaningful capital to shareholders through a robust share repurchase program. We have the right management team in place that intimately know the drivers of the business, and we are supported by an outstanding organization that is driving structural improvements in the business in the face of dynamic marketplace headwinds. I am now more confident than ever that we will achieve our fiscal 2020 operating margin target. As always, I would like to thank our employees for their hard work and dedication as well as our shareholders for their continued support. Before turning it over to Q&A, I would like to briefly address our upcoming Annual Meeting on December 14. We have been speaking with and will continue to speak directly with many of Deckers' shareholders to hear first-hand what they think about the future direction and leadership of the company. Deckers has a diverse and experienced Board of Directors that is actively engaged in our transformation process and is helping to deliver continued operational improvement. Our board works closely with management, and has been and will continue to be a significant agent of change to improve Deckers' performance and drive shareholder value. Now, as we get into Q&A, I'd like to remind all participants that the purpose of today's call is to discuss our earnings results and the outcome of our strategic review, so we ask that you please keep your questions focused on these topics. We thank you for your cooperation in that regard. Operator?

[Operator Instructions] Our first question comes from the line of Randy Konik from Jefferies.

So, I guess, a question for Dave. You showed nice progress in the quarter, even ex the timing shift. So, I guess what I want to talk about is, how do you think about distribution, both domestically and abroad, as we get towards the -- as we lay out the 2020 plan? Like, how are you making -- how are you thinking about making progress around the key accounts, working more closely there on the domestic side, and then give us some update on how you're approaching international development further. That's my first question.

Yes, great question, Randy. So, as you know, we've been working pretty aggressively in North America over the last 12, 18 months to reduce the amount distribution we have in this marketplace and elevate it with key partners, and we've made great progress to that event -- or to that goal. Over the last year, coming into Q3, we have roughly 350 fewer points of distribution in North America, and that's net of the new stores that we are now selling in through Macy's. So, we'll continue to skinny down that distribution list strategically in the right way in North America and continue to work with the top partners in a more strategic way, which we again, we started about 12 months ago: meeting with them on a regular basis, prelining product, having robust segmentation strategy conversations with them and collaborating on how we can better elevate the presentation in-store and online to our consumers. So, we'll continue that in North America. I think the important thing to know in North America also is that part of the long-term strategy is that we are focused on strategically growing and maintaining the core Classic business, but at the same time, aggressively growing in new areas of opportunity, which is men's, spring and summer across all categories and then in lifestyle. From an international standpoint, Europe continues to be a strength of ours. We're opening up new distribution there, we opened up [Asos] this past spring to give us a better digital presence in that marketplace, and that's been very successful. They're buying a broad range of product. And we're continuing to look for more strategic partners, particularly in Germany, where we see a lot of upside still. And then in Asia Pacific, the key opportunity there that we've talked about over the time period is in our China partners, the third-party partner retail. We have some very strong large partners over there who are seeing success with our business right now and are -- continue to be excited about opening more doors and partnering with us across all categories to expand our distribution, our reach in that marketplace. And of course, this is all in line with our overall intent to drive more product through our DTC channels, particularly our E-Commerce channel. And we're ramping up our digital analytics and our digital marketing through social and influencers to continue that drive that channel at the same time.

That's very helpful. And then I guess my -- it seems I got one more follow-up here. The way you kind of framed out operating margin, it sounded like increased confidence around obtaining that 13% -- at least 13% goal in fiscal 2020. It almost sounds like -- it's almost more of a starting point. So, has there been some things that have come up in your transformation process that you've identified where you said, "This could be additional opportunity for us over the next 3 to 5 years as we kind of go forward." Just trying to get a sense of bringing that increased confidence to that long-term -- operating margin guidance and the drivers.

Yes, I think, what I was alluding to there, is since we started down this journey of the profit improvement plan over 1.5 years ago, we realized that we were able to identify some cost savings pretty much across the board from an SG&A perspective, but also a significant amount, about 1/3 of $150 million, in cost of goods sold. So, having that level of visibility across the business now gives us more visibility into the puts and takes and the opportunities going forward. I'm not at liberty to say exactly right now where we think there is additional opportunity or how much there is, but suffice to say that the entire organization is focused on improving the profitability of the company. We think that the traction in the business we're seeing already, the margin flow-through in the last quarter, the way we're cleaning up distribution, we're reducing closeouts, coupled with the SG&A improvements and the COGS improvements, leads us to believe that there's potentially more opportunity ahead of us.

Our next question comes from the line of Mitch Kummetz from Pivotal Research.

I guess, I got a couple for Tom. Tom, maybe just on the guidance, when you look at the cadence of the back half Q3 versus Q4, I think if you adjust your Q3 outlook for the $0.22 on the shift, you're still looking for kind of down earnings there. And then sort of default kind of Q4 guide is for a pretty big year-over-year uptick in the earnings. Can you just help us out a little bit? I mean, I feel that's consistent with kind of how you've laid this out for the last couple of years. But is there anything else we really need to be thinking about in terms of kind of that quarterly flow?

I think, Mitch, you've got it laid out really well. Relative to the prior year as well as relative to our old guidance, the biggest driver is that timing, that $29 million of sales and $0.22 per share that moved into the second quarter versus the third quarter. Another thing to point out is at these levels of profitability, there's the opportunity for increased incentive comp as well as there's some increased marketing. We're going to focus more marketing into this quarter relative to some of the other quarters. And as a result of that, you do have some higher operating expenses that puts some pressure on the earnings per share as well.

Okay. And then on the revenue guide, you've obviously raised the revenue guide. I think last time, you provided some guardrails kind of around weather and macro things like that. Has anything changed? I mean, obviously, the overall revenue guidance has gone up, but in terms kind of underlying assumptions, again, around kind of weather and macro, has anything changed on that front from where you were, I think, as of the last quarter?

I think in terms of weather, pretty much the same assumption as before. What we have done though for the -- especially the December quarter, is given the current marketplace out there, we wanted to take a more cautious view on the promotional environment. So, we've taken down our gross margin in the December quarter a little bit. We still expect it to be at the low end of the guidance, at least flat to the prior year and a little bit higher at the high end, but that's probably the only thing there. Steve, you want to jump in?

Yes. Maybe -- and just a little bit of caution with you mentioned weather, with the warm start to October, what we factored in is a little bit caution with the warm start to the quarter.

Our next question comes from the line of Camilo Lyon with Canaccord Genuity.

Got a couple of questions. I guess just dovetailing off of the last comment you made there, Steve. The warmer start to October, I think it's now probably more or less the third or so warm start to the fall season. But I think what's been different, correct me if I'm wrong here, is that there hasn't been a level of panic that we've been accustomed to seeing by the retailers. Maybe you can talk a little bit to that and maybe talk about the conversations you're having with those retail partners today as we approach November. What do you think is the kind of the panic date that, that really starts to set in? And how does that translate into, I guess, the pace of promotionality? You've just mentioned a little more promotionality expected for Q4 and December. Was that -- does that really start to ramp now and is there an impact there to how they're viewing the later quarter receipts?

Yes. So, this is Dave, I can answer that. First of all, I think I would start with, as you know Camilo, we spent a lot of time over last year cleaning up the channel. And if you remember, last year, around this time, we had the challenge of the Classic I transition and then closeout carryover from the previous Q4 that retailers were holding into Q3 of fall '17 -- fall '16, sorry. That is behind us. And so, we feel very good about the setup for this quarter. Suffice to say, the inventory channel is -- inventory in the channel is cleaner and healthier from both a composition and a quantity perspective. So, you have a situation where you're going into the quarter where the retailers feel good about their inventory levels, the channel is not stuffed and I think, overall, they're feeling confident in the brand. Albeit, there's a slow start across the business to everybody because of the weather, but the inventory levels are much better in line. We don't have the level of closeouts planned into the quarter. That being said, there is always that risk of -- and I wouldn't call it panic, but obviously going on promotion in certain areas. So, we plan a conservative amount of that into our business, but it won't be to the level that we saw last year.

Is it fair to say that in that cleaning up of that channel, you've gotten retail partners that are a little bit more patient with the promotional trigger and more supportive of the brand in totality? That it seems to like there's been...

Yes, I think that's safe to say. Yes, as you remember last year, that we had a couple of people going off-price. Those days are behind us. We have -- I think we have the right distribution with the right partners who understand the value in full-price sales and what it does to their business. And it's in their best interest to maintain the full price through the season where we can.

Got it. And then just my next question, my follow-up question is store closures. Can you just update us on your thinking around store closures, the quantity and the timing? And how do you think about the recapture of those closures?

Yes. So, retail is obviously a healthy conversation across the industry and it's an important one for us. It's important in our long-range operating improvement plan. As you know, we've put long-range targets out there for approximately 125 stores by the end of FY '20. Long-term, that's still our target. I think what is important to know, that to get to that ultimate ideal store level, there's a lot of considerations that you have to take a look at that are in the best interest of the shareholders. So, lease expirations, lease negotiations, location and type of concept store or type of store that we have in the mix. So, between now and that time, we're going through the process of evaluating the best timing. And I think it's important to know that you could spend a lot of money to quickly get out of a large number of stores, but that's highly dilutive to the profitability of the company in the short term. Exiting stores in this environment, particularly when you have a small amount of store -- store locations globally, such as we do, with a strong balance sheet, you have very little negotiating power. So, what you'll start to see is more reduction in store counts starting mostly in FY '19. That's when a lot of our lease expirations come up for review, and then we'll continue to manage that through to the end of FY '20 and get to our ideal target. At the same time, we are still taking efforts to enhance the performance of our fleet. We've made quite a few steps to improve operating expenses within the stores, but also the HQ support network of those stores: elevating our experience, leveraging our Omni-Channel capabilities, bringing more exclusive product to our DTC channel and just elevating overall service and engagement. So, we're managing both the top line and the experience as well as managing to the bottom line.

Our next question comes from the line of Jay Sole with Morgan Stanley.

Dave, I just wanted to follow up on the strategic review and just make sure I understood what the message is. It sounded like there's no effort being made at this time for an outright sale of the company. But does that exclude the possibility of selling a brand or taking some other strategic action with part of the company?

Yes. At this point, we're focused on the plan going forward. I think what's important to know is that the strategic process did not end in the ultimate sale of the entire company. And the board and management feel like the best plan going forward is to double down on the plan that we have in front of us. We think that will return the most shareholder value over the next few years. And then enhancing that with stockholder -- or sorry, the share buyback, proves to be the better way to bring shareholder value, both in the short-term and long-term, to our shareholders. So, the process evaluated all options, ultimately, did not end in the sale of the entire company. But we're always open-minded and we'll continue to work to see how we can always evaluate those opportunities with the shareholder interest in mind throughout the process.

Okay, got it. And then, if I can follow up on the last question about the doors. Can you just talk about the interplay between doors and obviously, E-Commerce sales for the UGG brand? And what the interplay is between having a store and what that does for the E-Commerce sales in the area? And how you think about the store base in relation to what you think you can do online directly with the UGG brand?

Yes. As you know, we spent a lot of time over the last few years really enhancing our ability to service the consumer both in our stores and online. And those lines have blurred obviously, throughout the industry. And I think to our advantage, we're able to manage the engagement of the consumer and the sale of the consumer through stores and/or E-Commerce. We have the capabilities of Click & Collect so you can purchase online and pick up in-store. We're now offering ship from store, which is a better way of managing our inventory. Through Infinite UGG, you can purchase in-store and that gets delivered from online. And the teams are -- it's a shared group of teams that are managing the business across both retail and E-Commerce. T They're optimizing inventory flow and offering to the consumer. And every time we open a store, we do see a pickup in the E-Commerce business in the range of roughly 15% to 50% in some cases in that demographic area. But we're managing that as we look at the long-term fleet and what the right stores are in the right locations. But generally speaking, we do see an impact of the E-Commerce business from those stores. So, as we close stores over time, we don't expect all that revenue to go directly online or all of it to our wholesale partners. We will pick up some, but the good news is, is we have the customer information that we can continue to cultivate and we'll continue to drive more to our loyalty program so we can keep them in the fold and to continue to engage with them despite store closures.

Our next question comes from the line of Scott Krasik from Buckingham Research.

So just a couple more clarifications on the announcement today. So, for the share buyback, you said you are planning to be as aggressive as possible buying stock back through the end of this fiscal year but nothing is considered in the press release -- or nothing is considered in the guidance, sorry.

Correct.

Yes, just -- Scott, this is Steve. Just so we clarify on that. Yes, so we have made the announcement around the share repurchase. We did put out kind of a -- some time line in terms of the amount that we would intend to purchase by the year end. But we wanted to be clear on the EPS, that, that does not contemplate a share repurchase. We're trying to show a like-for-like so that the actual raise that you're seeing in the guidance is not related to a share repurchase. It's actually the flow-through of the business improvement. So, depending on what the share repurchase is, that will accelerate our earnings per share growth.

Okay. And then just in terms of the comment about the debt, so is that an ongoing target, like, as you generate cash and EBITDA goes up, then you'll continue to buy back stock to maintain that 1x leverage?

No, it's not an ongoing target. I think the comment about that was, historically, we've had a conservative balance sheet. Now that we're executing well on our long-term plan and we got -- see further improvement in profitability going forward and further working capital improvements, we feel that it's an appropriate point in time to consider and evaluate the concept of some long-term debt, and we'll start slow, i.e., we think the company can easily support 1x EBITDA. So that's more of an evaluation of some initial thoughts around raising some long-term debt. That doesn't necessarily mean we'll always maintain that 1x EBITDA.

Our next question comes from the line of Bob Drbul with Guggenheim Securities.

This is Andrew Roberge on for Bob. Our first question, is just kind of -- could you guys talk about how your business is doing on Amazon right now? And then maybe also fill that into, I know you guys recently entered Macy's and how that's doing in Macy's?

Sure. I have to comment on those. So, as you know, we started with Amazon early this year in January with the spring line. And then we filled in product over the last Q1 and actually, the end of Q4, we sold an inventory to take them into fall. I would say that we are proceeding well or proceeding on plan. The conversations with Amazon from Tracy and the teams, our North American sales teams, have been healthy. They've been strategic. And I would say they've been in the best interest of the brand. So, we continue to monitor that relationship, the presence of the brand closely with Amazon and meeting with them on a regular basis to make sure that we have the best possible presentation and we have the right inventory at the right time for that consumer. Pretty much the same situation with Macy's. Again, we've been working closely with them over last year. The 30-store test that we did last year proved well. We're now in 200 doors with the women's line, all full-service doors, no self-service doors. And we're in 50 men's doors with Macy's as well. That business is proceeding on plan. I know from visibility to the Herald Square concession that we have that it's strong. And we think that will continue to be a great access point for the consumer and a healthy robust business for us over time. So, heading into Q3, we feel good about both of those right now, and I think that's going to continue to be a long-term partner for us.

And then kind of if we can shift to your own E-Commerce and DTC operations. Can you just talk about you're -- the UGG Closet and UGG Rewards, how they are performing? What -- against your expectations and then maybe how many members you now have?

Yes. So, I'll talk about the Closet first. As you know, that's a short-term window that we open up on certain weekends throughout the year, to help us clear carryover inventory or closeout inventory. That's been a great vehicle for us to better maintain healthy margins on closeout inventory versus selling that in the channel. We are monitoring that. We don't want that to get too big and we do look at it in the context of the full marketplace, not specifically just the E-Commerce business. So, it helps us manage closeouts across the entire marketplace in North America. So, we'll continue to use that as a tool. But the other great benefit of the closet is that it allows us to bring new consumers into the brand, and we gain their information. So, we can continue to cultivate that relationship with them. It does bring new consumers into our database, which is a great side benefit to that. And that is in line with our loyalty program. We launched our loyalty program last year. I think we're up to about 650,000 loyalty customers right now. We're starting to lap the first year of loyalty programs with them. So, we can now go out to, I think, about 1/3 of that list in Q3 with incentives to bring them back to shop again. And we're going to continue to focus to build that program because it's a great way to stay connected and further engage with our customer and cultivate them for the long-term. So, so far, so good on both those initiatives.

Our next question comes from the line of Corinna Van der Ghinst from Citi Research.

First of all, I think you guys have done a better job on closeouts and there was a question on closet. Can you talk about just how you're managing the balance of the promotions going forward across those sites? And is it really a different consumer that you're seeing between the 2 sites? It sounds like you're continuing to offer promotions across both.

Yes. We still -- we continue to offer sale items on our full site. But the closet is specifically one in that you have to sign up to enter the site, and then there's additional closeouts at really further discounts than you would see on the main site. So, think about that as an outlet versus a full-price store is probably the best way to think about it. And it's not entirely new consumers, but it is -- we do see more and more new customers coming in because it's an opportunity to access the brand at a lower price point versus the full-price product that we have in the marketplace. So, I think they work well hand-in-hand, and it allows us to keep our full-price experience elevated and premium while still allowing us to clear in a profitable way from a digital online perspective.

Okay, that's helpful. And just in terms of gaining the younger consumer. What is it that give you guys confidence that you are kind of gaining traction with that younger consumer? And you did talk about adding some marketing spend in the third quarter. Is that kind of targeted towards that initiative? Or can you give some more colour behind the incremental spend for this fall?

Yes. Happy to do that. So, 2 things with the marketing this fall. One, is we have really, really shifted our marketing spend online and digitally through social and influencers and search, et cetera. And part of the overall marketing strategy of the UGG brand is to maintain our core customer base but also cultivate a younger consumer. So, you'll see that. And the look and feel of the marketing itself, you'll see that on where we show up, the type of influencers we're using. And we're seeing some great traction with younger consumers from our Jeremy Scott launch and our Phillip Lim launch. Some of the work we've done with Footaction and some celebrities in the hip-hop space, they're really helping bring new consumers into the brand. We're really seeing a dramatic shift in our men's business, which is being adopted by a younger consumer in new channels and we're going to continue to work on that. The other thing that we did this fall from marketing's perspective is we've taken some of the savings through our cost savings plan that we did last year from a global perspective and pushed that marketing spend further into Q3 than earlier in Q2. So, for example, last year, we spent a lot of money in August, September promoting the brand, promoting the launch of Classics II. And what we decided to do this year is shift more of that marketing into the core season to get a further acceleration of the sales from that marketing spend. So, you'll start to see really heavy marketing for the UGG brand starting to kick in, in the beginning of November more so than you did last year.

Our next question comes from the line of Erinn Murphy with Piper Jaffrey.

Dave, I guess, my first question was for you. I was hoping you could square away a couple of comments. In your prepared remarks, you talked about just the opportunity this holiday season to see a bigger full-price sell-through. What percent of your units are you currently selling full price versus where you want to be? And then just trying to square that away with the comment you guys made just on the overall promotional environment that you continue to see ongoing.

Yes. Erinn, we haven't really disclosed that information of full-price sell-through in previous years, and it would be hard to me to say what we're planning right now off the top of my head. But generally speaking, you'll probably see, I would say, a 10 to 20 percentage point improvement in full-price sell-through this fall than you did last fall. That's a combination of things. As I said before, there's less closeouts and carryover product in the channel. And then we're selling in, in a more conservative approach. More so in kind of key Classic categories. So, there is an upside in inventory, as I said, in men's, in winter boots and some of the new product launches, but from a Classics perspective, we are -- we've been really more conservative on inventory into the channel. So, we're -- the plan there is to sell more at full price, optimize margins and have a better overall online and brick-and-mortar experience for the consumer. Can you repeat your second question, Erinn?

Well, I was just trying to understand that comment. You were pretty confident in being able to sell fuller price this holiday season, which your context helped with that. But then you also talked about you're planning for a more promotional environment as you guys were kind of speaking to the guidance during the third quarter piece.

Yes. So Erinn, that's not -- that more promotional isn't in reference to last year. That's in kind of from the previous guidance. So, while we have increased our guidance, kind of the question that was asked was more about, what are the assumptions in the change from the previous guidance? So, we've raised our guidance and part of the Q3 guidance, what we've said is, from what we had previously thought 3 months ago, we're just being a little more cautious about the promotional environment.

Yes, which has really led from a general marketplace perspective, not specific to the UGG brand.

We're not seeing it right now but we think at this point in time early in the quarter, it's good -- it's better to be cautious.

That is all the time that we have for questions. I'd like to hand it back over to Dave Powers for closing remarks.

Thanks, operator. In closing, I think it's clear from our first half performance and recent actions that our management team and Board of Directors are committed to taking the necessary steps to maximize shareholder value. We are confident that the course we have set for Deckers will allow us to achieve this overarching goal. We have laid out a robust and well-thought-through plan that will provide brand-enhancing growth and meaningful profit enhancement. It calls for rightsizing our business, improving how we go to market, leveraging our supply chain and elevating our brand in key channels. In this marketplace transition, we feel that our plan offers the right combination of profit improvement and delivers meaningful shareholder value over the next couple of years. In the meantime, we are focused on executing our plan and elevating our brands and consumer experience globally. This is the right plan with the right team and the right brands. We appreciate your support and look forward to updating everyone on our continued progress during our third quarter fiscal call in February. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.