Linda Pazin - Vice President of Investor Relations & Communications Angel R. Martinez - Chairman of the Board, Chief Executive Officer and President David Powers - President of Omni-Channel Thomas A. George - Chief Financial Officer and Principal Accounting Officer Constance X. Rishwain - Group President of Fashion & Lifestyle Brands and President of UGG Australia

Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division Karyn O'Brien Taposh Bari - Goldman Sachs Group Inc., Research Division Camilo R. Lyon - Canaccord Genuity, Research Division Scott David Krasik - The Buckingham Research Group Incorporated Omar Saad - Evercore ISI, Research Division Sam Poser - Sterne Agee & Leach Inc., Research Division Erinn E. Murphy - Piper Jaffray Companies, Research Division Jeffrey Wallin Van Sinderen - B. Riley Caris, Research Division Evren Dogan Kopelman - Wells Fargo Securities, LLC, Research Division Laurent Vasilescu - Macquarie Research Corinna Van der Ghinst - Citigroup Inc, Research Division Eric B. Tracy - Janney Montgomery Scott LLC, Research Division Corinna Lynn Freedman - BB&T Capital Markets, Research Division Danielle McCoy - Wunderlich Securities Inc., Research Division Christopher Svezia - Susquehanna Financial Group, LLLP, Research Division

Good afternoon, ladies and gentlemen and thank you for standing by. Welcome to the Deckers Brands Third Quarter Fiscal 2015 Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. I'll now turn the call over to Linda Pazin, Vice President of Investor Relations and Corporate Communications.

Welcome, everyone joining us today. Before we begin, I would like to remind everyone of the company's safe harbor policy. Please note that certain statements made on this call are forward-looking statements within the meaning of the federal security laws. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements include statements relating to the company's anticipated financial performance, including its projected revenues, expenses, gross margin, operating margin, capital expenditures, earnings per share and effective tax rate. These statements may also relate to the company's brand strategies, store expansion plans, inventory management systems and customer retention policies as well as the outlook for the company's markets and the demand for its products. The forward-looking statements made on this call are based on currently available information. The company's business is subject to a number of risks and uncertainties, some of which may be beyond its control, and actual results may differ materially from the results expected at the current time. The company has explained some of these risks and uncertainties in its earnings press release and in its SEC filings, including the Risk Factors section of its annual report on Form 10-K and its other documents filed with the SEC. Listeners are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The company disclaims any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations except as required by the applicable law or the rules of the New York Stock Exchange. As a reminder, we have posted supplemental information about the 2015 third quarter in a document entitled Third Fiscal Quarter 2015 Commentary. The document is on our corporate website at www.deckers.com. You can access this document by clicking on the Investor Information tab and then scrolling down to the Featured Reports heading. With that, I'll now turn it over to President, Chief Executive Officer and Chair of the board of Directors, Angel Martinez. Angel R. Martinez: Well, thanks, Linda, and hello, everyone. Tom George, our Chief Financial Officer; Dave Powers, President of Global Omni-Channel; and Connie Rishwain, President of the UGG brand, are also on the call. Our third quarter results indicate that a number of our key strategic initiatives are beginning to take hold. Our performance was highlighted by stronger-than-expected demand for the UGG brand new collection and the successful execution of our Omni-Channel strategies. As we have communicated over the past several years, our goal has been to diversify the UGG brand offering in an effort to extend the closet share of our loyal consumers, target a larger audience and extend the brand's selling season and lessen our dependency on the brand's iconic core classic collection. While we missed our top line projection by approximately 3%, our results demonstrate that consumers are responding strongly to our diversification efforts. This is an important component of our strategy, and we are excited about what it means for our future. Fall 2014 represented our broadest offering of casual, weather and fashion boots as well as specialty classics. The response to these collections has been very positive with consumer demand surpassing our expectations. In the third quarter, we saw high-teens growth in our non-classic business globally. For instance, our women's casual boot business continue to sell through very well during the holiday season after a strong Q2. Total sales of women's casual boots were up approximately 65% over last year. Our strategy of improved styling and more competitive pricing in the casual boot category was very successful at retail. As temperatures turned colder across the U.S. with the exception of the West Coast, which has remained unseasonably warm, demand for our weather collections spiked. We experienced strong gains in technical boots, fashion waterproof boots and boots with rain application. In total, sales of our weather offerings grew over 70%. In many instances, demand for casual and weather boots exceeded our inventory investments. As a result, we believe we missed nearly $7 million to $10 million in sales from domestic wholesale reorders as we were unable to fulfill 100% of the demand for these collections. We also believe that we missed approximately $2 million in online sales due to sellout of weather and casual boot product. This shift to expanded categories has highlighted the need to further improve our ability to plan and manage our product and inventory strategy against these consumer purchasing trends. This also requires some adjustments in our product and marketing strategies at both wholesale and in our DTC channels, which we are currently implementing. Classics had a very good second quarter, both from a sell-in and sell-through perspective, which created some bullish expectations among our retailers and internally for the third quarter. This was the main driver behind our decision to raise guidance on our last earnings call. Unfortunately, most of November, with the exception of Black Friday and Cyber Monday weekend, was below plan, which we believe was a result of mild temperatures in certain markets and weak store traffic trends across the industry. Sales trends accelerated as the quarter progressed. However, it wasn't enough to offset the slow start, which eventually led to some cancellations primarily in our domestic wholesale channels in December. Despite the cancellations in December at wholesale, consumer demand for classics, which includes core and specialty, remained strong. For the fall holiday season, meaning Q2 and Q3 combined, total units of women's classics increased approximately 5%. However, for Q3 alone, sales were down slightly compared with a year ago, which contributed to our overall revenue shortfall relative to our updated guidance. In analyzing our performance, the shortfall in classic sales relative to our forecast drove the total revenue miss along with the impact of FX headwinds. In addition to the success of diversifying our footwear offerings, the UGG brand has also -- has 2 small but very exciting non-footwear initiatives in loungewear and home, both of which performed very well in Q3. Loungewear sales more than doubled on our wholesale channel with sell-through equally as strong. Key classifications included robes, hoodies and pants for both men and women. With UGG Loungewear quickly becoming the #1 brand in our domestic accounts, such as Nordstroms, we are now selectively adding new distribution with a focus on specialty and independent doors. We're launching kids and infants this fall. Home grew at an even faster pace than Loungewear, although from a smaller base, driven by successful launches at Nordstrom, at Dillard's, Neiman Marcus and Von Maur's. We believe that the extremely positive response we've received from these launches, though small from a revenue perspective, is another strong indicator of brand strength. As we develop further our Home and Lounge business, we are seeing opportunities to cross merchandise at retail in these categories along with UGG slippers. We think these categories resonate with our consumer and tell a comprehensive UGG brand comfort story. With respect to I HEART UGG, the biggest takeaway from the initial rollout was that there is a place in the market for these products. However, it isn't on a stand-alone basis. Without fully associating the line with the UGG brand, we struggle to communicate to consumers the strong value proposition of the product line. In fact, once we made I HEART UGG available in the uggaustralia.com website, next to our Kids Traditional Classic product, we did see a strong pickup in sales. For fall 2015, the product line will become a tween collection within the UGG brand starting this July, and we are redesigning the logo. This will help diversify our kids business, which is currently very classic centric. Moving toward Direct-to-Consumer channel, total DTC comparable sales increased 7.6% led by a 26% increase in comparable E-Commerce sales. E-Commerce sales were driven by strong sell-through of our entire collection, including classics, as more consumers appear to be replenishing this staple item via the web versus brick and mortar compared to years past, fueled in part by the acceleration of our Omni-Channel activities. In fact, we saw positive growth in the classics category in both our North America and global Direct-to-Consumer channel. Our strong E-Commerce results were partially offset by a high single-digit decline in store comps, which was below our expectation. We believe that there were a few specific factors behind our store performance, which included: one, a more significant shift than we anticipated in classic sales to online versus in-store; second, inventory management assortment and brand presentation issues in our company-operated China stores; and third, the drop-off in traffic at several flagship stores, which we believe is partially attributable to the negative impact on tourism from the strong U.S. dollar. Dave will address how we're responding to these issues in a moment, but we feel confident that we have our hands around the first 2, which are under our control and that they are temporary and fixable. On a positive note, with only 138 stores globally, we still have a relatively small footprint compared to our peers. We're continuing to take a very strategic approach to our store openings while maintaining ample flexibility as we execute our broader Omni-Channel plan globally and evaluate ongoing strategies for adapting to the changing consumer environment. It was by far our most diverse holiday quarter ever in terms of the collections that contributed to our results. And analyzing the breakdown of sales by line and channel, we believe it is evident that the consumers are responding favorably to our product strategies and global Omni-Channel initiatives. But we clearly have work to do in further adjusting our merchandise planning and inventory management to help our wholesale customers succeed in this rapidly changing retail environment. To support our efforts, we also plan to shift our marketing to focus more on the specific product attributes that make the UGG brand so attractive and less lifestyle marketing. We're now seeing that our marketing is most effective when we better highlight the luxury and comfort of UGG products. Further, we now realize that we have not been placing enough emphasis on our classic line in our marketing creative, almost taking our largest business for granted. However, our research tells us that our classic UGG line is often the first step for consumers who fall in love with the unique feel and comfort of UGG and ultimately, go on to purchase other UGG products. This has been born out in our more established markets, and so it's very important that we give a core offering ample treatment in our marketing campaigns. We believe this adjustment, combined with the greater emphasis on the luxury and comfort components of the brand, will allow us to better drive growth across all of our channels. In 2015, we're increasing our penetration of our non-core collections in the fall line, better to reflect consumer demand. This means ramping up casual boots faster than before with more meaningful assortments and increased SKUs. We have the broadest assortment of casual boots to ever support the strategy for 2015. We're also increasing the penetration of weather product through deeper and better assortments and deliveries all the way through January. This includes weather styles that double as casual boots. We're in the middle the fall pre-book process, but I will share that feedback from our major accounts on these changes have been extremely positive. They're very excited about the direction of the brand and the amount of newness that we're introducing for Fall '15. Based on where we are today, we project that once the pre-book is complete, we'll have shifted approximately 10% of our core classic order book to casual boots and weather, bringing those categories up to 15% and 10% of our EMEA and domestic wholesale women's business, respectively. This is a great indication that our major wholesale accounts are onboard with our product strategy. Now with that, I'll turn the call over to Dave.

Thanks, Angel. It was another quarter of solid growth for our Direct-to-Consumer division. Total sales increased 15% to $339.6 million driven by new store openings and a 7.6% total DTC comparable sales gain. By region, total DTC comps were up in the high teens in Japan, up high single digits in the U.S., up mid-singles in China and up low singles in Europe. The 7.6% overall comp gain was fueled by a 26% increase in comparable E-Commerce sales, marking the 11th straight quarter of double-digit improvement in E-Commerce, a strong indication of the success we are having driving traffic and higher conversion, utilizing our advanced global Omni-Channel capabilities. Our E-Commerce performance gives us confidence that when we showcase the full breadth of the line, the consumer reacts positively. We're also seeing the benefits of the improved site experience, our Infinite UGG program, and more efficient marketing spend led by the consumer insights team and analytics. Growth in E-Commerce was partially offset by high single-digit comps store decline. While this was below our expectations, many of the headwinds are within our control and addressable for next fall and holiday. These factors are primarily driven by the fact that our consumer migrated faster than expected to non-classic categories in the online channel for classics replenishment. They include product mix shifts and inventory levels, AURs, in-store presentation and seasonal inventory flow. I'd also point out that while many retailers ran aggressive promotions over the holidays, we made the conscious decision to maintain our conservative promotional cadence in an effort to protect our brand value and margin. This impacted comps but helped improve our Q3 four-wall store operating margins by 40 basis points over last year, which is a primary focus as we aim to drive profit and leverage out of our store base. Digging deeper into our results. Like most of retail, store traffic continues to be challenging. It improved as the third quarter progressed with December down low single digit. However, it closed down high single digits for the 3 months period, and much of this was driven by our tourist and flagship locations. Our store teams continue to do a good job converting traffic into sales as conversions were up in mid-single digits. Given that many of the casual and weather boots carried sharper opening price points than a year ago, as we talked about in our last call, the increased conversion was partially offset by lower AURs. From a store-level perspective, outlets performed better than concepts driven by channel-specific initiatives, such as our SMU or special makeup strategy. In addition, outlets have become a strong entry point into the UGG brand with a diverse product line. The biggest drag on store comps came primarily from older domestic flagship shops that are heavily tied to tourist traffic followed by Europe and China. In China, while there are some macro-level challenges in this complex mass market, many of our challenges were self-inflicted and had to do with the evolution of our business there. We suffered from not having the right inventory management expertise and missteps in store allocations and presentation. In addition, while China saw some of the same challenges at our other stores, we also had some product and marketing that did not resonate with the Chinese consumer. We believe we've identified the issues and are making the necessary operational changes intended to improve results going forward. That being said, we did make some adjustments mid-season that led to a positive 3% store comps in the month of December, but it was not enough to offset the declines experienced in October and November. In Europe, store traffic continues to be the issue, particularly for concept stores. We attribute the softness to the combination of weak macroeconomic conditions, mild weather and the same shift to more online purchases that we saw elsewhere. With respect to the older flagship locations in our U.S. fleet, they were hurt by the strengthening of the dollar versus the euro and the yen, which has impacted foreign tourism, particularly to popular destinations like New York, Las Vegas and San Francisco. Partially offsetting these headwinds was the performance of our new store feet, which included positive comps for stores opened in the last 18 months. With the exception of some of our new store openings in China, total stores opened in the last 12 months are performing at or above our original performance. This is a good sign that our strategy of targeting smaller formats and more strategic locations based on top and underpenetrated markets that will provide solid returns and positively impact our E-Commerce channel are delivering positive results. Looking ahead, we have a number of initiatives already in place aimed at improving our store performance that take into account the shifts we are seeing at consumer shopping behaviors from both the category and channel standpoint. These include: shifting the mix of inventory in our concept stores and online by placing a bigger emphasis on casual boots, winter and weather boots and casual shoes; reinvigorating our classics business through innovation and more elevated styling; and increasing the penetration of our non-footwear categories; increasing opening price points to bring AURs closer to 2013 levels; refreshing the look and feel of our concept store through re-merchandising and an improved product presentation that reflects the new face of the UGG brand, which is much more diversified and less reliant on classics. This will include an enhanced visual presentation and service model. We are also in the process of updating our UGG concept store design to better reflect the lifestyle offering of the brand. Developing new marketing programs that are more product centric aimed at driving traffic and sell-through are big ideas and key items; and better optimize our digital spend globally; and lastly, selecting -- selectively expanding our footprint in North America and Japan and looking to shift more of our China store openings to partner doors. While we implement these store operating model adjustments and gauge their effectiveness, we have decided to moderate and assess the pace of new store openings. As Angel noted, we have a very manageable store count, and we have continued to validate areas to increase efficiencies across our model, in line with our global Omni-Channel plan. Consistent with our long-term strategy, our new store openings will be influenced by the consumer shopping behaviors and total Omni-Channel impact to maintain flexibility in our model. Our new store expansion strategy will be heavily weighted towards outlets, as this channel, while it is still small to the total, is outperforming concepts. We'll also continue to invest opportunistically in pop-up stores, a format that we've recently enjoyed good success with around the globe. Improving our store performance is a priority, and our overarching focus continues to be on executing our global Omni-Channel strategy and elevating the consumer experience across all channels. We are seeing strong results from this approach. In fiscal 2016, we'll start to benefit from initial investments in CRM software and database and the build-out of our new loyalty program to drive increased traffic to the UGG brand. We know from market research that UGG brand owners are incredibly loyal, and with the more powerful suite of tools, we are confident that we can strengthen our consumer connection and increase the frequency of their buying cycle. Our stores, E-Commerce and mobile sites are now intertwined as a result of the successful Omni-Channel initiatives, such as Infinite UGG; buy online, return in-store; Click and Collect, and retail inventory online. As a reminder, we are moving ahead with our previously stated plan of reporting just the combined DTC comp beginning in fiscal 2016. We believe this is the best way to measure the performance of our DTC business going forward. Turning to our European wholesale channel. We are pleased with the overall growth in this market despite some economic headwinds led by the strength of our Germany transition. U.K. sales got off to a good start in the third quarter was translated into minimal cancellation. However, following consecutive warm winters, retailers were cautious about coming out of the season with FX inventory, which limited our reorder opportunities. In Germany, we've been ramping up our subsidiary operations, assuming distribution in the middle of the last year. We are excited by the progress we are making through our first fall pre-book with retailers to evolve the product offering in this large and important market. We are also pleased with the strong reaction we are seeing to the UGG brand's casual boots, weather and fashion products, as well as the HOKA ONE ONE and Teva lines in this market. Looking ahead, we believe the evolution of product lines highlighted by the growth of casual, weather and specialty classics, along with the global popularity of our iconic collection, classics collection, provides exciting opportunities for the brand in our global Direct-to-Consumer and wholesale channels. Our focus is on exciting consumers through compelling, innovative products and a superior shopping experience that allows them to engage with our brand in a seamless fashion. We believe our merchandise and Omni-Channel strategies allow us to expand and maximize our relationships with our consumer base. I'll now turn the call over to Tom. Thomas A. George: All right. Thanks, Dave. As Linda mentioned -- as Linda reminded everyone at the beginning of the call, we posted the quarterly financials on our website under the Investor Information tab, so my comments on the call are going to be brief and focused primarily on guidance. For the third fiscal quarter, revenue increased 6.6% to a record $784.7 million. On a constant dollar basis, sales increased 8.2%. We missed our revenue guidance by approximately $22 million. $7 million of which was due to the strengthening of the U.S. dollar versus the yen and the euro during the quarter. The remaining shortfall was from a combination of higher wholesale order cancellations and negative same-store sales, which Angel and Dave discussed earlier. EPS for the third quarter was $4.50 compared to $4.04 last year and our guidance of approximately $4.46. We exceeded EPS guidance despite the shortfall in revenue and FX pressures due to lower incentive compensation expense accruals and a lower-than-expected effective tax rate. Based on our third quarter -- third fiscal quarter performance, we are revising our full year outlook. For the fiscal year ending March 31, 2015, we now anticipate revenue to increase approximately 13.5% to $1.8 billion versus our previous projection of approximately $1.825 billion. UGG brand revenue is now projected to increase approximately 11% versus our prior expectation of approximately 14%. As a result of our lower revenue projection, diluted earnings per share is now expected to increase approximately 12.6% to $4.58 compared to our previous guidance of approximately $4.71. And we are expecting operating margins of approximately 12.5% versus our earlier guidance of approximately 13%. We are still assuming gross profit margins for the year of close to 49%. Our fiscal year 2015 guidance now assumes that the company's effective tax rate will be approximately 27%. Wholesale and distributor sales for all brands are now projected to be up low double digits in fiscal 2015 driven by our Germany conversion, a low single-digit increase in UGG domestic sales and continued growth of the HOKA brand. For our DTC channel, our overall sales projection has not changed as stronger E-Commerce trends for the UGG brand are offsetting lower store comp sales, which are now expected to be down in the high single-digits range for the year. We will end fiscal 2015 with approximately 30 new stores, as we shifted some of our planned concept stores in China to partner stores. For the fourth quarter of fiscal 2015 or 3 months ending March 31, 2015, we still expect revenues to increase approximately 10% compared to the same period in the prior year. However, due to FX headwinds putting pressure on gross margins, we now expect diluted earnings per share to be approximately breakeven compared to our previous expectation of approximately $0.15 per share. Now that we have completed our largest quarter, we'd like to share some preliminary thoughts about our fiscal year 2016 outlook. Keep in mind that we are in the early stages of reassessing our store opening strategy, and in light of the recent FX trends, we are also evaluating our hedging and international pricing strategy. And as we've discussed today, we are incorporating our learnings from our holiday performance into our product, marketing and merchandising strategies. With this background, at current foreign currency exchange rates, we expect revenues to grow approximately high single digits and gross margins in total to be down approximately 30 basis points due to FX pressures, which will more than offset sheepskin and UGG Pure cost improvements. With respect to operating expenses, as we've said previously, we do expect to begin achieving leverage next year. This is still the case, and we believe it will initially be in the neighborhood of approximately 40 basis points. With respect to profitability, we expect earnings per share to grow at a slightly faster rate than revenue at or near 10% based on our current thinking. Finally, we are pleased to announce that the Board of Directors has authorized a new $200 million stock repurchase program, which is in addition to the $66 million we still have left under the previous $200 million authorization that was approved in July 2012. I'll now turn it back over to Angel for his closing comments. Angel R. Martinez: Thanks, Tom. Before we open the call up to questions, I want to provide some color on the progress of our other brands. Teva's coming off a solid third quarter, the brand's smallest quarter of the year driven by exceptional growth of women's boots, a category that performed very well at retail. As we move into spring, Teva's key theme will continue to center on the brand's original sandal collection, which forms the core of our merchandising strategy. The Teva lifestyle is coming back into favor, and we're positioned to capitalize on this added interest through new colors and materials and new collections like the Fundamentals. This product is perfect for a consumer looking for versatile go-anywhere footwear and will encompass everything from canvas casual styles to boots for men and women. Sanuk entered spring with good brand momentum following a solid season at retail last year. This has translated into additional shelf space and more in-store marketing for 2015. The early read is that women's sandals are off to a strong start led by the Yoga Sling and the Yoga Mat. On the international front, we recently introduced the brand in Australia, Brazil and Japan, 3 markets that we believe are ideal for the brand and its line of lifestyle footwear rooted in the surf culture. The last 12 months have been a period of rapid growth for HOKA, culminating in a very successful Outdoor Retailer show where the brand's product line received multiple industry awards and recognition. Specifically, GearCaster, gave us the Innovation Award for 2015; Gear Patrol, the Editor's Choice, Best of Outdoor Retailer show; and GearJunkie gave it the Best in Show at the Outdoor Retailer show. That said, we believe that this is just the beginning. Right now the quality of the product line is bigger than the brand. We've gotten good traction in the specialty running channel where we focused our initial distribution expansion efforts. Next month, we'll be rolling out to select stores with mainstream sporting goods retailers such as Sports Authority, Hibbett Sports and Finish Line. The priority will be on growing brand awareness to drive demand across all channels and take advantage of the unique position that HOKA occupies in the running industry. Finally, I want to highlight the recent launch of Ahnu's new yoga performance line. You may have seen it featured on CNBC today. Ahnu's YogaSport footwear will emphasize greater footwear -- forefoot, rather, flexibility, to maximize physical stretching moves as well as a centered heel base, ideal for standing poses where balance is key. With Yoga's growing popularity and increased participation rates and Ahnu's authentic positioning in active lifestyle, we believe this new collection is incredibly timely and will be received very well by the yoga consumer. With respect to Decker's 2 other brands, Tsubo and MOZO, we recently made a decision to seek strategic alternatives for these businesses. We'll provide an update on our incubator brands once the final decisions have been made as to our future plans. This allow us to focus more of our resources on the growth of UGG and the other brands. Now to close, I want to reiterate that we're continuing to see the benefits of our product diversification and Omni-Channel strategies. Our product teams have consistently delivered attractive high-quality functional footwear and accessories that resonate with consumers. And in turn, consumers are extremely passionate about our products and loyal to our brands. The diversification of our product line has further expanded our target consumer market and growth potential, while our global Omni-Channel initiatives are helping maximize traffic, improve the shopping experience and drive sell-through. At the same time, it's still early in our product transformation, and we have considerable growth ahead. We have to keep investing wisely in our infrastructure and improving our inventory management capabilities to better monetize consumer demand for our broader portfolio while supporting our plan to begin driving operating leverage in our model in fiscal 2016. We're taking into account our learnings during the past quarter, and we believe that we're implementing the right courses of action to ensure that we can better capture the multiple long-term opportunities that we're very confident exist for our company. Among other initiatives, this includes better accentuating the luxury and comfort aspects of the UGG products in our market as well as -- in our marketing, rather, as well as putting more emphasis on our classics line. Before moving to Q&A, I would like to acknowledge the appointment of David Lafitte to Chief Operating Officer announced last week. We reviewed a number of candidates for the position, and we determined that David was a great fit for our needs. He's advised the company since 2006 and has served as General Counsel of Deckers since 2012. He knows our culture and our organization very well and has wide-ranging relationships across our channels, given his experience working with many facets of our business. Now David is in China as we speak and formally starts in his new position on February 2. He replaced Zohar Ziv, who announced his retirement last April, and stepped down earlier this month. I'd like to once again thank Zohar for his many contributions during his 8 years with Deckers. Not only was he a great asset to the company, he's a great person and a friend to me and many others across our organization. And with that, let me turn it over to the operator for the Q&A. Operator? [qa/>

[Operator Instructions] And we'll take our first question from Mitch Kummetz with Baird. Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division: Couple of questions. The revision to the guidance, I think you're going from UGG from 14% growth to 11% growth, which implies sort of flattish sales in the fourth quarter. I was hoping you could just address that. Thomas A. George: Yes, Mitch. One of the things to keep in mind is we do have FX pressure relative to the prior guidance as well in the fourth quarter and that's not only with the euro but also the yen. And relative to prior guidance, the wholesale business is -- for UGG, it's pretty on par. The UGG domestic wholesale business relative to the prior guidance is about the same. The international wholesale business for UGG is up slightly. So does that help you? Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division: Yes. And I know you guys were previously expecting some comp improvement going from Q3 to Q4, which I think implied a positive comp in the fourth quarter. I'm guessing that's maybe no longer the case.

Yes, Mitch. We're continuing to see the similar trends we've had through the past quarter in our retail stores and again, contributed primarily to some of the challenges in China and the migration of classics to the online business. So with the total DTC levels, we still feel confident, but the store comps themselves will continue to be negative high single digits. Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division: And I got a follow-up question for you, Dave. On -- I think you had said in your remarks that four-wall margin was up 40 basis points in the quarter, and that's despite a negative high single-digit comp. Can you just kind of reconcile that for me? How did you achieve that margin improvement despite difficult comp in the stores?

Yes. We reacted pretty early in the quarter when we saw challenges in the comp trends, and we made a conscious decision to focus on profitability versus comp total revenue spend. So we aggressively looked at reducing SG&A and expenses in our store base globally, and then we made decisions to maximize margin opportunity in our outlets and concept stores to make up that difference. So we feel pretty good about the progress we made on profitability despite the traffic headwinds we had.

And we will now go to Bob Drbul with Nomura. Karyn O'Brien: This is Karyn O'Brien filling in for Bob. You mentioned increasing opening price points in getting AURs up to 2013 levels. Is there any way you could put some numbers around that?

Yes. We're still in the process of evaluating that. Coming out of the last months, we have relooked at our merchandising assortment and inventory mix for fall. But I would say it's safe to bet that we'll see an increase of at least 10% across the board in retail AURs. It's a combination of selective price point increase due to styling changes and also inventory mix into higher price-point product.

And we will now go to Taposh Bari with Goldman Sachs. Taposh Bari - Goldman Sachs Group Inc., Research Division: I wanted to follow up on the idea of weaker Classics in your retail stores as your customer shifts to more online replenishment. It seems like a good problem to have. So I'm not sure if I heard you, Dave, on what the fix to that problem is on the retail stores. And I guess, maybe the obvious question is why bother fixing it if you're getting more of that business online?

Well, we still think there's opportunity in our Classics business. So while the core classic customer's replenishing online, and that seems to be a global trend at the moment, we still believe that there's opportunity in the specialty classics business and more unique product to the DTC and retail channel. So we're not going to go down fighting on that one -- without a fight on that one. We're going to continue to be aggressive in that classics category while at the same time shifting our inventory and assortments into more of a casual boots and winter boots in fashion to take advantage of that opportunity as well. So I think it's just, again, we're continuing to read the shopping patterns of the consumer. And when they want to replenish online, that's great for us, but we still have an opportunity to drive people to the stores at the same time. Constance X. Rishwain: Right. And I also wanted to add, when people come into the store, they want to see the new products and the new fashion products in casual boots, so we really want to wow them with that product in the stores. Taposh Bari - Goldman Sachs Group Inc., Research Division: Got it. And just a follow-up on inventories in the channel, how does the performance of the UGG brand this season, do you think -- any comment on what you think the status of inventories are in the channel and how you think that this -- the performance this past quarter impacts orders for fall -- of next winter? Constance X. Rishwain: Well, our retailers, our wholesale customers are happy with the results of the quarter and their inventory levels. They're very excited about our strategy of buying into more casual boots and more weather products for next fall, and so we see an increase in pre-book in those categories. Angel R. Martinez: And inventories across all channels remain healthy.

Yes. Constance X. Rishwain: Yes.

And we will now go to Camilo Lyon with Canaccord Genuity. Camilo R. Lyon - Canaccord Genuity, Research Division: So a few questions. On the classics business, is there -- are you seeing anything different on the competitive landscape? Or is there some sort of trade-down away from the UGG brand to middle-market brands or lower tiered brands that could be explaining some of this? Constance X. Rishwain: Yes. We're not actually seeing that. Overall for the total fall season, Classics are up. It was up in second quarter. It's just slightly down in third quarter. So no, we're not seeing any competitive problem there. Angel R. Martinez: I think one of the things that we're learning, Camilo, one of the things that we're learning is having a better understanding of the replenishment cycle by our core classic consumer and all of the various factors that impact the replenishment cycle. Generally speaking, it's the consumer, every 2 years replaces their classic. Many years ago or 5 or 6 years ago, our job was to get them to buy more UGG product beyond classics. We've succeeded at that obviously. But now getting back to that replenishment cycle, it can be disruptive -- a bit disrupted. So for example -- and this is speculation. I don't know the answer to this, but it's just one of the things that we have to consider in understanding this. The polar vortex of early 2014 and February and March, people were out buying classic, and they were buying a lot of product that normally would have been postponed until the fall season. And there could have been some impact from that. That's, again, one of the many things that we're starting to better understand so that we really make a science out of this classic business and the replenishment cycle that impacted. Camilo R. Lyon - Canaccord Genuity, Research Division: Okay, that's helpful. Just 2 follow-ups quickly. You mentioned on how the shift in mix away from classics to more of the weatherized in fashion products and how the retailers are responding positively for that -- to that. How much more of a mix shift will you need to undertake from what you can see right now to get the balance to where you want it to be? Is this kind of an ongoing headwind that you're going to have from a decelerating classics business to a smaller -- much smaller weather/fashion business? Constance X. Rishwain: Right. Angel R. Martinez: Go ahead, Connie. Constance X. Rishwain: Okay, sorry. We see shifting approximately 10% of our core business into these categories. Classics will still remain our #1 category, and it still performed extremely well at retail, double-digit sell-through every week in November, December with our customers. So it's just a shift into newer products. But again, classics and slippers will still be our 2 biggest category. Angel R. Martinez: Let me -- I just want to underscore, again, basically, the Classic business has emerged as an incredibly powerful foundation stone for this brand obviously. And it's the kind of foundation stone that if you're properly managing it, you have to manage it as separate and distinct from the brand. It has its own needs. It has its own marketing requirements. It has its seasonality, and as I mentioned, it has replenishment. And those are all things that we will now be focusing on far more aggressively to fully maximize what classic is as a foundation of our UGG brand. I think, as I said on my comments, it kind of feels like we took it for granted a little bit. The consumer would predictably show up on a certain cycle, in a certain quarter every single year, and we know that we have to drive that demand aggressively in order to give her awareness that there's always something new and fresh and a new reason to buy a new pair of classic. Camilo R. Lyon - Canaccord Genuity, Research Division: So will the wholesale accounts domestically, from what you're seeing right now, will they be comfortable ordering up the overall UGG brand, looks like, to get -- to reach your guidance in the mid- to high single digits? I mean, is that realistic in a... Constance X. Rishwain: Yes, we think so because we have accounts that this year for fall '14 had converted a lot of their classic dollars into casual boots and weather, and they were the most successful. They had the most successful year end of all of our customers. So the performance of non-classic product in sneakers, in casual boots, weather, slippers was good across the board and fashion as well. So our retailers are seeing the consumers are voting, that they're buying into these new categories. So they're happy to shift -- they're open to [ph] dollars to this. Angel R. Martinez: And Camilo, we're also seeing the same reaction from our key accounts in Europe as well. It's been very positive Fall line. Camilo R. Lyon - Canaccord Genuity, Research Division: Are those margin -- are those positive margin categories or neutral margin categories to the classics? Constance X. Rishwain: They're similar, yes. Angel R. Martinez: Similar. Thomas A. George: The lower price points but at a lot lower cost.

And we will now go to Randal Konik with Jefferies. And now we'll go on to our next question, Scott Krasik with Buckingham Research. Scott David Krasik - The Buckingham Research Group Incorporated: One question on gross margin and then a question on the top line guidance for next year. I think in the filings, you had indicated that your E-Commerce gross margin decreased a little over 700 basis points last quarter. I'm assuming that's just one of the unintended consequences of moving away from slippers and classics, more markdowns, more fashion risk. How do you think about that as you grow that piece of the business? Do you sacrifice a little on margin rate for profit dollars? And then just in very rough terms, how do you build up to the high single-digit revenue growth for next year? I'm assuming the other brands will add about 1 to 2 points. So maybe dissect the UGG piece of that if you can. Thomas A. George: The comment on the gross margins, I know, the E-Commerce business, we're really pleased this quarter with what the gross margin performance, and the retail store margins for this quarter were actually in aggregate on a global basis and a little bit higher than a year ago. And to round that out for the quarter at an operating margin level, when you combine retail and E-Commerce together, like you total DTC, we had improved operating margins year-over-year. So you'll see that in our filings. So we're pleased with that. And I mean, one thing to keep in mind for the guidance for fiscal year '16 is that I don't know what exchange rates you all had in your models, but if they were the ones from October, the euro has moved 10%. The yen's moved 10%, so that, everything else being equal, has some pressure on growth rates for next year. But that said, we're -- it is early. Like we mentioned, we're early in our planning process, but we feel very good that we're talking about high single-digit growth rates for next year. Feel really good reinforcing, that we expect to get operating leverage next year and feel really good that we'll have a year that we grow earnings per share at a faster rate than sales. Scott David Krasik - The Buckingham Research Group Incorporated: And UGG wholesale versus DTC next year, maybe the general growth rates you're planning? Thomas A. George: DTC next year for UGG should be growing at a faster rate than the wholesale. Scott David Krasik - The Buckingham Research Group Incorporated: The wholesale will grow? Thomas A. George: Yes. Constance X. Rishwain: Yes.

And we will now go to Omar Saad with Evercore ISI. Omar Saad - Evercore ISI, Research Division: I wanted to ask you if you thought about kind of the year-over-year impact of the weather, so cold last year in the winter and then going into the spring. Have you thought about how to quantify that and the impact on your kind of core business, which was a little bit part of the sluggishness this quarter and as you think out to the fourth quarter guidance as well? And then I have a couple of follow-ups. Angel R. Martinez: Well, as I mentioned earlier, Omar, the -- it altered the repurchase or the replenishment cycle. That's a reasonable theory. There are a lot of moving parts to understanding the impact of weather. We have been responding, as you've heard, very aggressively with cold weather product, with waterproof product, and that has made a big difference because it seems from my sort of layman's perspective, it seems that winter comes later and lasts longer. And we're -- look at the storms of this last week back east, more intensity. So we're really beginning to understand that impact across our business. And keep in mind that there are regional differences as well. So Europe, for example, does not have the same weather impact at the same time that we get in North America.

Yes. And I would add on to that, I think the -- in the month of October and the first weeks of November is where we saw -- if I were to quantify an impact from weather anywhere, it would have been those 2 months. And that was a global issue. Europe was warm. China was warm. And compounded on top of that, we got into November, people were also starting to wait for Black Friday weekend. That was a dramatic effect on the European business where retail kind of came to a halt a couple weeks leading up to Black Friday weekend. So the October-November time frame was challenging partly because of warm weather, partly because of the shift in shopping behavior. But it came back when the weather got cold, and we got into the busy season of December. This wasn't enough to make up for that gap in October. Omar Saad - Evercore ISI, Research Division: Got it. I mean, so looking forward, should we be worried that it was so cold, like the next 3 months last year were so cold? I mean, you guys could have been selling UGG on the streets for $300, $400 a pair in parts of the Northeast, and I'm sure that you would have found buyers. That kind of tough comparison, is that something that we should be thinking about? Or is that -- are we overthinking it? Constance X. Rishwain: No, I mean, we had a really healthy increase in our weather business this year, and we could have probably sold a lot more if we had, had more inventory. We had aggressively stocked it, and we ended up chasing it, and we're still chasing it in January. So we see that weather category being more important than ever before for next year. And then there's a lot of casual boots that are within the weather category that have weather features, but they just look like everyday casual boots that women can wear to work. And we see a lot of growth and opportunity there, and that performed extremely well this year. Angel R. Martinez: And last year, we did lose opportunity because we ran out cold weather product. We didn't have all the extensions of casual, waterproof product that Connie mentioned, and that was one of the adjustments we made as we went into this year. So I think we're in a better shape from a product assortment perspective this year than we were last year. And so I think the comparison is not as difficult as one might think. Omar Saad - Evercore ISI, Research Division: Okay, got you. That's really helpful. And then one follow-up. I think, Angel, you mentioned in your prepared remarks, do a better job marketing the core classics of the business. It's the heart of what -- kind of your profit pool. It's the gateway to the brand, I think, you mentioned. Can you elaborate on that, what you think you could do better in the future? Angel R. Martinez: Well, this -- I can use an example from my past, and I think Dave has got examples, too, from his past. And when I was at Reebok, for example, it was many years ago now, our classic business had grown to be $650 million, which is a very big business. And what was very interesting is that we found ourselves suddenly realizing that we have been putting all the marketing effort toward Shaquille O'Neal and various other things at the expense of that classic business. So we broke the classic business up. We gave it its own marketing plan, its own marketing budget, its own strategy separate and distinct from everything we were doing with performance product, and it became -- it grew significantly after that. So it then got the attention that it deserved, and it got the focus that it deserved. This is what we're talking about here. We're saying that if what -- x percentage of our business is represented by core classic, then we need to make sure that we at least devote that percentage or close to it of our marketing spend against core classic and not to the broader idea of lifestyle marketing for the total brand because people sometimes then take their eye off the classic ball. You might want to talk about your experience at the GAP.

Yes. I think, I'm starting to look at this classics business similar to my early days at the GAP, similar to the denim business there, where your core classic is your basic fit jeans. Every season you're doing specialty versions of that, but you're still keeping the heat and energy on the core basic. And similar to what we're going through with the core classic here, back in the day at the GAP, and I'm sure it's still a focus there, denim was such an important part of that business, and it became the foundation for a lot of the advertising and marketing that was done for that brand. And it kept the heat and energy on that business, but also at the same time, we were growing the fashion component. And I think that's where our opportunity is here.

And we'll now go to Sam Poser with Sterne Agee. Sam Poser - Sterne Agee & Leach Inc., Research Division: I mean, can -- you mentioned -- you talked about the casual and the waterproof businesses as being now growing to about 25% total, I gathered, as what you said for the back half of the year if I got that right? Constance X. Rishwain: No, that's what we're planning it for fall '15. Sam Poser - Sterne Agee & Leach Inc., Research Division: All right. So can you help us because you have other pieces of the businesses that are not boots, like slippers and so on, so can you talk about how that looks as a percentage of the overall boot business, basically how it was planned this year and how you're seeing it next year? Constance X. Rishwain: Well, we're planning many of these new categories up across the board, Sam. So we're planning sneakers up, slippers up, not double digits but up. And we're just trying to convert our open-to-buy dollars to have a much more diversified assortment and a healthier business with all of our retailers. We have a lot of retailers that have done that already and really believe -- and they believe as well that this is the best future for the UGG brand, is to diversify our assortments further. Sam Poser - Sterne Agee & Leach Inc., Research Division: No, I understand that. I want to know what percent these -- those 2 categories would be of the total boot business versus how you plan them this year. I understand all that. I have no issue with that. I'm just trying to understand the question I asked.

Yes. It's about 25%, Sam, roughly... Sam Poser - Sterne Agee & Leach Inc., Research Division: Well, 25% of your total business, how could it be 25% -- of the total UGG business, how could it be 25% of the boot business when your slippers and all these other things in there, sneakers and so on and so forth? Constance X. Rishwain: Yes. It's 25% of the women's business.

He's asking percent of total footwear. Sam Poser - Sterne Agee & Leach Inc., Research Division: Boots.

Oh, no, boots. Sam Poser - Sterne Agee & Leach Inc., Research Division: A percent of the total boot business, not of slippers, not of sneakers. Boots. Constance X. Rishwain: Yes... Angel R. Martinez: I'd say to you it's probably around 10% to 15%, and that's about where we want it to be given where we are. Just so you understand, over the last year, the mix of classics has really changed. We've continued to drive our core classic business down from roughly 1/3 to below 30%, and that drop in core classics, we've made up for by the growth of specialty classics. And certainly, when you look at the total boot business, we now have to talk about casual boots and weather and fashion. Total women's -- total classics -- all classics for womens in 2014 is up over 6%. Sam Poser - Sterne Agee & Leach Inc., Research Division: All right. All right. Let me follow up with 2 other things. What is the currency impact on the fourth quarter again, Tom, you mentioned it. I think I missed it. Pure currency in the guidance -- in the reduction of the guidance? Thomas A. George: It's about $7 million of sales that was in the third quarter. In the fourth quarter, it's a similar number and has about a close to a 200-basis-point impact on the margin relative to our prior guidance. Sam Poser - Sterne Agee & Leach Inc., Research Division: On the op margin or on the gross? Thomas A. George: On the gross margin. Sam Poser - Sterne Agee & Leach Inc., Research Division: Okay. And then lastly, what was wrong with the product in China? And what -- can you just tell us what you did midstream to start correcting that?

Yes. Sam, we're still learning what is most appealing to the Chinese consumer, and I think what we have learned is they like things that are a little bit more -- what's the right word for it? They like sparkles. They like more color, things of that sort, and we had come in with the corduroy bow collection, which was material play but didn't have a lot of excitement and novelty in material. We had a grunge collection, which didn't resonate well. So they -- they're -- and they like things that are a little bit more colorful and sparkles and novel, and we just didn't have enough of that. And so that was a miss for them. The adjustments that we made in going into December is we actually started allocation help from the U.S. We had some issues with people leaving in the middle of the season over there, so we were down a person. And we had some systems issues. We had some delays in product getting into stores. So we dug in really quick from the U.S. team in helping out with that team and fixing the store presentation. We sent people over there to help with the visuals, presentations in the stores, got a little bit promotional but definitely not a lot to hurt the business. And we started turnaround in December from those efforts. In addition to that, Sam, we are heading over there in 2 weeks. My whole management team meeting with the Asia-Pacific team and the China team and really getting under the covers of that business. It's going to be a major focus of ours for the next 6 months.

And we will now go to Erinn Murphy with Piper Jaffray. Erinn E. Murphy - Piper Jaffray Companies, Research Division: I just wanted to clarify something on the 2016 guidance. I think you guys said that for gross margin, it would now be down 30 basis points, and I know a big piece of that is FX. But I think on the last call, you talked about 40- to 50-basis-point gain coming from sheepskin costing. So can you maybe just help us think about the buckets that drove that difference? Is it entirely FX? Is there some different assumption that you guys are using for closeout or broadening opening price point? That would be helpful. Thomas A. George: All right. Good question, Erinn, and it's almost entirely FX. So on the last call, we gave you the element that on margins relative to improve sheepskin cost and UGG Pure and now with the change in FX and what we thought we'd have a benefit on the gross margins has now gone negative. Erinn E. Murphy - Piper Jaffray Companies, Research Division: So then, I guess, on -- from an FX perspective, what should we be using in our models for both the euro and the yen to get to that high single digits for next year from a sales perspective? Thomas A. George: Yes, we're -- our modeling is based on the current rates at this point in time. Erinn E. Murphy - Piper Jaffray Companies, Research Division: Okay, that's helpful. And then just the last question from a traffic perspective, what you're seeing in the North American stores. Could you maybe just parse out for us how much of the traffic decline you assume was just from a shrinkage of that international shopper, that international tourist just with the strengthening dollar?

I'd say probably 1/3 of it. The thing about our flagship stores, Madison Avenue, Hawaii, Woodbury, those are still a large portion of our total revenue and traffic numbers. And when those get hit in a situation like that, particularly in a store like Hawaii, they have a big impact on the total. So it's probably about 1/3 of our total decline is coming out of those major stores, including Las Vegas as well.

And we'll take our next question from Jeff Van Sinderen with B. Riley. Jeffrey Wallin Van Sinderen - B. Riley Caris, Research Division: Can you talk a little bit about any difference, if there was a noticeable difference in business trends between some of your major retail partners in terms of the demographics they serve? In other words, obviously, you've got different retail partners that kind of serve or cater to different demographics. Did you hear of any differences there? And then also, did you hear about any geographic differences in U.S. sales performance at your retail partners that might have been weather related? Just trying to get a sense of where you feel the weather comparisons showed up as toughest in the U.S. Constance X. Rishwain: Right. For most of our retail partners, the stores that were hit the hardest were the West Coast and Hawaii, which doesn't affect some of our retailers like Dillard's but does affect some of our other retailers. And that trend was throughout the fall. And it was similar, as Dave was saying, for our own stores. Hawaii and the West Coast was probably the softest, and then the Northeast and Upper Midwest was very strong.

And demographic difference account. Constance X. Rishwain: Yes. I would say men's was very strong. Women's was definitely strong. Kids was a little soft. Overall, internet was very strong, a lot of conversion from our stores, from our customers that have brick and mortar and an internet site, a lot of conversion from their brick-and-mortar stores to the internet. Jeffrey Wallin Van Sinderen - B. Riley Caris, Research Division: Okay. And then just as a follow-up to the discussion on tourism and such, just wondering how we should -- if you think that, that was maybe 30% of the impact? How should we think about that going forward? How are you -- how was that baked into your guidance? Just wondering how you're thinking about that and the whole context of FX and demand and so forth.

Yes. We haven't gotten to that point. We model things out going forward at a store level, but it's a dynamic that we're going to have to deal with. And so it's hard to say at this point, but we are being conservative with our estimates going forward for next year with regards to our larger flagship stores. We are seeing that some of those locations are hurt by traffic but also shopping patterns in the street. And so we're modeling that into our efforts for '16. We haven't gotten to that level yet.

And we'll take our next question from Evren Kopelman with Wells Fargo. Evren Dogan Kopelman - Wells Fargo Securities, LLC, Research Division: I had a question about your fourth quarter revenue guidance. I'm a little confused because you're reiterating 10% growth, but obviously, there's currency translation pressure on that, which almost means you're expecting better on a constant-currency basis after the miss in Q3. Can you talk about your level of confidence what are the drivers for the expectation for fourth quarter sales growth? Thomas A. George: Yes. Relative to the prior guidance, we see some -- a little bit improvement from the E-Commerce businesses as well. That's -- that sort of balances out relative to the currency pressure.

And we'll take our next question from Laurent Vasilescu with Macquarie. Laurent Vasilescu - Macquarie Research: FX appears to be a hot topic these days. Can you remind us what percentage of your orders from suppliers are done in U.S. dollars or in currencies pegged to U.S. dollar? Thomas A. George: Of our -- from our customers relative -- customer orders, right, as opposed to factory orders and that kind of thing? Laurent Vasilescu - Macquarie Research: Yes, correct. Thomas A. George: Our -- yes, our international business is about 33% to 35% of our business. 2/3 of Europe probably is in local currency. A good amount of the business is in the pound, and a faster growing amount of business is in the euro, not only our Benelux business, but now that we're directing Germany, that's had a big impact. And then our -- another big region of the world is Asia, and obviously, China is big, but Japan's even bigger, and Japanese currency has moved significantly. And Japan and China are sort of neck and neck in terms of equal size for the -- within the market. And those are -- and all of Asia other than some of the distributor sales, which are pretty modest, are in local currencies. Laurent Vasilescu - Macquarie Research: Okay, great. And then a quick follow-up on store comps. I think in late October, it was mentioned that the third quarter comp could be guided down to negative 0.8%, suggesting to me that the store comp was better in October when guidance was given. So I'm trying to reconcile how the quarter played out in terms of the comp.

Yes. To segment it by market, what happened in North America is that comp shifted to online from a replenishment perspective. So when the winter weather started getting colder, classics business shifted to online, but we made up that business online. Where we really got hurt was in China, which we didn't precede those challenges coming at the time we made that assumption into the business. Laurent Vasilescu - Macquarie Research: And then lastly, I think in the prepared remarks, you outlined that you're evaluating the store openings for FY '16. Can you tell us how many -- what the percentage of stores are profitable today? And would you possibly entertain rightsizing some locations next year, fiscal year?

Yes. I don't have the exact figure in front of me as percentage of the mix, but... Thomas A. George: Profitable, virtually, all are profitable , right?

Yes, I mean, well, the couple of non-UGG stores. Couple of non-UGG stores that were in the mix right now. So at the moment, we're going through a little bit of a retail rationalization exercise by market and by channel. I don't foresee us closing any at this moment, but it's still early in our assumptions. But we are going through the exercise of making sure that each one of these from a lease perspective, from a return on profit perspective still fit our threshold for acceptable profit.

And we will take our next question from Corinna Van der Ghinst with Citi. Corinna Van der Ghinst - Citigroup Inc, Research Division: My question was also on the moderated pace of new store openings. Presumably, we'll get more details in June. But how many outlets could you potentially open in the U.S. and also internationally over the longer term? And does this change in retail growth combined with some of the macro headwinds that you guys highlighted this quarter? Does that impact how you're thinking about your potential for international growth over the next few years?

Yes. If you think about -- so take Europe, for example, we've been cautious and conservative in that market, so we haven't had a lot of growth planned in. We do have an outlet store planned for opening next fiscal year in that market, but that's it. Asia Pacific, Japan is still healthy, strong positive growth market with a lot of upside there, so both concepts and outlets have pretty significant opportunities for us. China is the one where we're taking a deeper look, and what we're looking at right now is potentially shifting some of our own store opening plans to partner stores. We opened 18 partner stores last year, and those have been off to a very solid start. And our partners are actually coming back looking for more stores for next year, so that's the healthy opportunity for us to shift some of the owners of that business to the partners. In North America, it's -- there's still tremendous opportunity in outlets. What's exciting about our outlets is we are selling a lot of what we would call full-price product now in our outlets. We have a high demand for product in those outlets, and we don't have a lot of price resistance. And so it's a very healthy business from a margin perspective. We see pretty significant opportunity in that channel to continue to drive positive sales growth and profit. So I don't have an exact number yet, but there's a number of still A locations and top B locations throughout the country that we're taking a significant look at. Corinna Van der Ghinst - Citigroup Inc, Research Division: And then should we expect the pace of share repurchases to start accelerating as we get into calendar 2015 given the new authorization? Thomas A. George: Well, it's certainly everything else being equal, the bigger authorization, that certainly could happen. We really can't comment on the timing and price and whatnot of share repurchases. But obviously, we're very pleased that the board did authorize an additional $200 million.

And we will now go to Eric Tracy with Janney Capital Markets. Eric B. Tracy - Janney Montgomery Scott LLC, Research Division: I guess, if I could start with DTC. I know we've gone through this at length, but just as we step back sort of strategically, again, in the future sort of allocation of capital to new stores, I understand in internationally going to partner doors. But just relative to the E-Com business, seemingly that's where the customer continues to migrate, maybe just again talk about the investment spend, the SG&A spend. I know you got a little bit more tactical in the quarter. But is that a kind of longer-term thing we should be thinking about? And then, again, as it relates to your wholesale partners, are you all at this point somewhat more channel agnostic in letting you just go where the consumer takes you? Or still doing the best to optimize the wholesale business while you see the DTC accelerate?

Yes. I -- this all goes back to our high-level Omni-Channel strategy. And so if you think about the channels that we do business in, the brick and mortar, E-Commerce and wholesale, they all play an important and significant role in the consumer's experience and shopping behavior. And so our goal is to give them the most flexibility to shop between those channels based off their preference. And we still think it's very important based on the tactile nature of UGG and the diversification focus that we're putting into this brand to be able to have stores that showcase that, and people can still go to the stores to experience the full breadth and experience of that brand. If they choose to then shop online, that's fine. If they choose to then shop in wholesale, that's fine. And we're setting up our systems and our teams and our product assortments to be ready for that. With regards to continuing to open stores, it is still a significant growth driver for us. We don't see the majority of that business shifting online. We still think people are going to want to go to a store, and we still think that it's important to have that experience. And particularly, with some of the Omni-Channel capabilities we're putting in place with Infinite UGG, research -- retail inventory online, click and collect, the stores are just changing in their strategic role in the business. And so it's not a place where you go to just purchase your classics anymore. You can do that online. But if you want to see the breadth of the line, you want to talk to a sales representative and interact with the full product and brand experience, that's where you're going to go, and we still think that's an important part of our Omni-Channel strategy. Constance X. Rishwain: Right. And with our wholesale partners, the store business is still very, very critical, and we're really excited about opportunities with presentation and cross merchandising between loungewear. We had a lot of that this year especially at Nordstrom, where he had started the [ph] loungewear department and kiosks throughout the store. So our presence in our wholesale partner stores is very critical. They are seeing a shift to online as well, but that doesn't diminish the importance of our business in-store.

Yes. And I would just add further to that, we are, obviously, looking at the mix going forward of the business coming out of E-Com versus stores. And I think that was one -- if you didn't understand in the script, that is something that we got surprised by this past quarter, is how dramatic some of the consumers are shifting to online. We're addressing that in our plans going forward for sure. Eric B. Tracy - Janney Montgomery Scott LLC, Research Division: Okay. And then, I guess, just a follow-up for you, Dave, in terms of, again, the sort of tactically, from an SG&A perspective, cutting back. Was that really just a 3Q sort of event? Or as we think about going forward, is it really just, say, we're going to flex depending on sort of with the traffic in terms of play?

Yes. The Q3 reduction in OpEx earnings was just tightening our belts and being ready in the stores for the continued traffic declines, so making sure that we're more efficient in our stores. But going forward from an SG&A trends perspective, we're going to continue to do that. We've done that in our new store model with regards to capital expenditure and operating model. But also, I think you're going to see that impact in a place like China where we think we can save on SG&A and capital and have some of the partners do the business for us.

And we'll now go to Corinna Freedman with BB&T Capital Markets. Corinna Lynn Freedman - BB&T Capital Markets, Research Division: I just wanted to unpack the SG&A guidance for fiscal '16 and how we get to that 40 basis points of leverage. Does the shortfall in revenue change the way or your philosophy toward the brand marketing? And is that where we might see some savings for next year? Thomas A. George: No, it's not in marketing. We are going to evaluate our marketing, and as we talked about on the call, we'll consider doing some shifting around and reallocation. But it's not in marketing. It's directionally fewer company-owned retail stores and partner stores. There's really not much G&A associated with that. This year, there was some onetime items that won't recur next year, i.e., some reorganization cost and the transaction cost related to the Germany conversion. The only good thing about FX is it does reduce your operating expenses in those local currencies, so that will help next year. And we're gaining some operating -- more operating efficiencies around the supply chain as well as others we're seeing and anticipating for our business transformation efforts. So that's what's going to be driving leverage next year. Corinna Lynn Freedman - BB&T Capital Markets, Research Division: Okay. And then if you guys could just elaborate on how the outlets performed relative to the full-price stores and relative to that overall negative 7% comp?

Yes. The outlets had a better comp than concepts, generally speaking, and the other important piece of that was that our margins were better in outlets than they've been in the past. And that's directly associated to our SMU strategy and putting some of our core classic traditional product in those at full price. Corinna Lynn Freedman - BB&T Capital Markets, Research Division: Okay. And then, Connie, when do we anniversary the price reductions on some of the fashion product? How much longer are we going to see that impact going forward? Constance X. Rishwain: So we really rolled that out for fall '14, and so our pricing will be similar for fall '15.

And we will now go to Danielle McCoy with Wunderlich Securities. Danielle McCoy - Wunderlich Securities Inc., Research Division: I guess, just if we could go back to gross margin, 180 points -- basis points expansion during the quarter, is there any way you can kind of break that out between benefit from UGG Pure increase, Direct-to-Consumer and kind of the negative impact from FX? Thomas A. George: Yes. I would say the results of impact of having more Direct-to-Consumer relative to a year ago, as well. So really, the FX impact pretty much offset the improvement we saw because of sheepskin cost and the higher penetration of UGG Pure, so that was close to a wash. We had lower -- we had a positive impact on margins relative to fewer closeouts than a year ago, so that helped fewer closeouts not only in volume but improved margins in our closeouts. Germany, there -- that was a lift as well. And then we talked about the Direct-to-Consumer, that was about 50 basis points of improvement because we had the higher content to Direct-to-Consumer at better margins, so a lot of puts and takes, but we did end up with 180 basis points of improvement. Danielle McCoy - Wunderlich Securities Inc., Research Division: Okay. And then I'm not sure if I heard correctly. The 200 basis points of FX impact is expected in the fourth quarter? Thomas A. George: So there are -- you're right. Additionally, for the -- our guidance for the March quarter because of FX roughly is at the same sales impact number, around $7 million, that has a direct negative margin impact. That's going to reduce our gross margin expectations by about 200 basis points in that quarter. Danielle McCoy - Wunderlich Securities Inc., Research Division: Okay. And then can you just talk about inventories a little bit more specifically with Sanuk? Thomas A. George: A couple of things going on there. First, they pre-booked their spring business at a higher rate than they did a year ago, so they're bringing their inventory sooner. There was some concerns with the port strike that was going on that they wouldn't get inventory in time for reorders, so they brought that in earlier as well. They're expected to have a good March quarter, so they need inventory to service that sales increase. And they do have a much broader product assortment now that they're broadening their offering for women as well as broader distribution as well.

And we will now go to Christopher Svezia with Susquehanna Financial Group. Christopher Svezia - Susquehanna Financial Group, LLLP, Research Division: A couple of them here. I guess, first, I think, Dave, you mentioned a comment about increasing average selling prices, and certainly, there are categories of products. Can you just clarify where -- what that is exactly?

Yes. It's -- well, what we're planning for fall '15 in -- is elevated price points in specialty classics through some SMUs that we're developing for our DTC channel and then a higher mix of the casual boots in the fashion and weather product that will impact the total AUR. Christopher Svezia - Susquehanna Financial Group, LLLP, Research Division: Okay. So just mix of casual and weather product will automatically increase AUR -- also, not increasing AUR in those?

No, no, but yes, there's more to do -- those have more to do with mix. Specialty classics, we'll be increasing prices on it but build -- but that will build demand on design. Christopher Svezia - Susquehanna Financial Group, LLLP, Research Division: Okay. But that's in DTC specifically, not in wholesale.

Correct. Christopher Svezia - Susquehanna Financial Group, LLLP, Research Division: Okay. And then the 25%... Constance X. Rishwain: No, no, it actually would affect wholesale as well as they convert more and more. The mix will affect wholesale as well.

Yes. Christopher Svezia - Susquehanna Financial Group, LLLP, Research Division: Okay, I got it. Okay. And then the 25%, I think you made a comment of casual and cold weather product. What -- is that for '15 -- in other words, calendar '15 for the most part. What was it for '14? Just was it 15%? Constance X. Rishwain: Let's see. It was about -- yes, it was about 15% to 16%. Christopher Svezia - Susquehanna Financial Group, LLLP, Research Division: Okay. All right. Got it. Okay. And then just one clarifying point here. The classic business, when you guys think about it, take sort of China out the equation for a moment, but at sort of U.S. wholesale, it underperformed. You felt like either, a, from a marketing perspective, a demand perspective, whether some was attributed to weather, whether some of it was attributed to the fact that February was still strong, might have pulled some of that demand. How are you going to kind of manage that fall process as you think about fall '16? Are you feeling like retailers are going to want you to hold more inventory, a more at-once business? I'm just curious how you think about that. Constance X. Rishwain: So we historically do -- yes, we historically do stock classics for our retailers in the core colors, and we historically stock slippers as well. I think, really, they were happy overall with the performance of classics. They did sell double digits. It was really tough to make up, as we were saying, the Black Friday week, and the first couple of weeks of December were just softer than last year, but they still performed at retail. But we couldn't -- they couldn't necessarily make up the dollars in those last 3 weeks of December. But overall, for the year, classics were up. It was just for the quarter they were down, and that was really due to some few soft weeks compared to the prior year. But still, I must emphasize it really performed at double digits every week in retail sell-through.

Could be more [indiscernible] ... Constance X. Rishwain: There could be more, yes, there could be more -- yes, I believe you were talking-- there could be more at-once business next year based if they plan their pre-book down in the core, and we'll have inventory for those at-once orders. Christopher Svezia - Susquehanna Financial Group, LLLP, Research Division: Okay. Do you expect, Connie, as you go into next year, the classic business, is that expected -- from a pre-book and order backlog perspective at U.S. wholesale is expected to be up overall? Or no, based on this sort of new sort of dynamic what's happening at the business? Constance X. Rishwain: We've been moving people in -- from core to specialties for the last few years, and we saw a shift for core to specialty. We'll continue to do that. So the core pre-book may go down. We think specialty will go up, and then, of course, casual boots and weather will go up.

And that does conclude today's question-and-answer session. Mr. Martinez, at this time, I will go ahead and turn the conference back over to you for any additional or closing remarks. Angel R. Martinez: Well, thank you, all, for joining us. Let me just reiterate that it was a record quarter for this company and very proud of the adjustments that we've made, particularly in this very dynamic consumer environment with all the parts all moving, including FX now which is a whole other conversation. I'd say another thing. As we look at our UGG business, we have more consumers than ever accessing more product in more channels with more diversity than ever. And the brand continues to grow because now we see the consumers want to have their UGG in a variety of different tastes, if you will, and that bodes well for the future. That kind of gives us a much more multi-dimensional foundation around which to grow the business. The other piece of this was that it was a business that was done at primarily full margin, which is very important for our retailers. And let me underscore the flexibility of our Omni-Channel strategy, which allows us to analyze trends in the marketplace in a consumer retail brick-and-mortar environment, an E-Com environment and a wholesale environment and move the pieces around to allow us to maximize revenue and maximize profit. And that's a very important thing going forward, and I think that kind of flexibility is pretty important. So thank you, all. Much appreciate your time, and we look forward to talking to you on the next call.

Ladies and gentlemen, this does conclude today's conference. We thank you for your participation.