What changed in this filing

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Item 1A. Risk Factors

2025-08-07 compared with 2025-05-08 · 32 added, 26 removed, 336 unchanged (15% of the section changed)

8 unchanged sentences

The changes in U.S.

global trade policy, and ongoing uncertainty around future tariff rates, have had and may continue to have, an adverse impact on our business, financial condition and operating results and may (and in many cases, have):

global trade policy, and ongoing uncertainty around future tariffs, have had and may continue to have, an adverse impact on our business, financial condition and operating results and may (and in many cases, have):

• Reduce our ability to achieve planned consumer demand at our stores, (see "We May Not Realize Returns on Our Fixed Cost Investments in Our DTC Business Operations");

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or global recession (see "We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or Wholesale Customer Demand for Our Products and Lead to a Decline in Sales and/or Earnings" and "We May Incur Additional Expenses, Be Unable to Obtain Financing, or Be Unable to Meet Financial Covenants of Our Financing Agreements as a Result of Downturns in the Global Markets");

• Cause disruptions in the supply chain, including the timeliness of product deliveries and the ability to deliver product (see “Our Reliance on Contract Manufacturers, Including Our Ability to Enter Into Purchase Order Commitments with Them and Maintain Quality Standards of Our Products and Standards of Manufacturing Processes at Contract Manufacturers, May Result in Lost Sales and Impact Our Gross Margin and Results of Operations”, “For Certain Materials We Depend on a Limited Number of Suppliers, Which May Cause Increased Costs or Production Delays” and “Our Success Depends on Our Third-Party Logistics Providers and Our Third-Party Distribution Facilities”);

• Cause disruptions in the supply chain, including the timeliness of product deliveries and the ability to deliver product (see “Our Reliance on Contract Manufacturers, Including Our Ability to Enter Into Purchase Order Commitments with Them and Maintain Quality Standards of Our Products and Standards of Manufacturing Processes at Contract Manufacturers, May Result in Lost Sales and Impact Our Gross Margin and Results of Operations”, “For Certain Materials We Depend on a Limited Number of Suppliers, Which May Cause Increased Costs or Production Delays”, "Volatility in the Availability of and Prices for Raw Materials We Use in Our Products Could Have a Material Adverse Effect on Our Revenues, Costs, Gross Margins and Profitability", and “Our Success Depends on Our Third-Party Logistics Providers and Our Third-Party Distribution Facilities”);

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operations, as the prices of goods ranging from building materials to automobiles increase in response to new tariffs;

• Result in supply chain finance issues or otherwise impair the health of our contract manufacturers (see “Our Reliance on Contract Manufacturers, Including Our Ability to Enter Into Purchase Order Commitments with Them and Maintain Quality Standards of Our Products and Standards of manufacturing Processes at Contract Manufacturers, May Result in Lost Sales and Impact our Gross Margin and Results of Operations”);

• Result in supply chain finance issues or otherwise impair the financial health of our contract manufacturers (see “Our Reliance on Contract Manufacturers, Including Our Ability to Enter Into Purchase Order Commitments with Them and Maintain Quality Standards of Our Products and Standards of manufacturing Processes at Contract Manufacturers, May Result in Lost Sales and Impact our Gross Margin and Results of Operations”);

• Cause any number of other disruptions to our business, the risks of which may be otherwise identified herein.

In addition, the impact of U.S.

global trade policy changes may also exacerbate other risks discussed in this Item 1A, any of which could have a material adverse effect on us.

global trade policy changes may also exacerbate other risks discussed in this Item 1A, any of which could have a material adverse effect on our results of operations, financial condition or cash flows.

New or increased tariffs or other trade restrictions, retaliatory actions, or anti-American sentiment could also exacerbate the risks outlined above and in this Item 1A.

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Our brands have wide recognition, and our success has been due in large part to our ability to maintain, enhance and protect our brand image and reputation and our consumers' and customers' connection to our brands.

Our continued success depends in part on our ability to adapt to a rapidly changing media environment, including our increasing reliance on social media

Our continued success

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and online dissemination of advertising campaigns.

depends in part on our ability to adapt to a rapidly changing media environment, including our increasing reliance on social media and online dissemination of advertising campaigns.

In addition, consumer and customer sentiment could be shaped by our sustainability policies and related design, sourcing and operational decisions.

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If there are supply disruptions or price increases for raw materials we use in our products and we are unable to obtain sufficient raw materials to meet production needs or offset rising costs by increasing the price of our products or achieving efficiency improvements, we could experience negative impacts to our sales and profitability.

Additionally, should U.S.

tariffs be imposed based on origin of raw materials, the tariffs applicable to us might meaningfully increase.

For our Spring 2025 and Fall 2025 inventory combined, we sourced roughly 32% of our footwear raw materials and roughly 31% of our apparel raw materials for the U.S.

market from China.

We may need to seek sourcing of raw materials in alternative countries, which may not be available at all or in a timely manner.

For Certain Materials We Depend on a Limited Number of Suppliers, Which May Cause Increased Costs or Production Delays.

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As an innovative company, some of our materials are highly technical and/or proprietary and may be available from only one source or a very limited number of sources.

As a result, from time to time, we may have difficulty satisfying our material requirements.

Although we believe that we can identify and qualify additional contract manufacturers to produce or supply these materials or alternative materials as necessary,

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there are no guarantees that additional contract manufacturers will be available.

Although we believe that we can identify and qualify additional contract manufacturers to produce or supply these materials or alternative materials as necessary, there are no guarantees that additional contract manufacturers will be available.

In addition, depending on the timing, any changes in sources or materials may result in increased costs or production delays.

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This could result in a decision to delay, modify, or terminate certain initiatives related to our strategic priorities.

Initiatives to Upgrade Our Business Processes and Information Technology Systems to Optimize Our Operational and Financial Performance Involve Many Risks Which Could Result in, Among Other Things, Business Interruptions, Higher Costs and Lost Profits.

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We regularly implement business process improvement and information technology initiatives intended to optimize our operational and financial performance.

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If we or our existing third-party cloud-based solution providers experience interruptions in service regularly or for a prolonged basis, or other similar issues, our business could be seriously harmed and, in some instances, our consumers and customers may not be able to purchase our products, which could significantly and negatively affect our sales.

While we maintain cyber liability insurance policies for coverage in the event of a cybersecurity incident, we cannot be certain that our existing coverage will continue to be available on acceptable terms or will be available, and in sufficient amount, to cover the potentially significant losses that could result from a cybersecurity incident or that the insurer will not deny coverage as to any future claims.

While we maintain cyber liability insurance policies for coverage in the

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event of a cybersecurity incident, we cannot be certain that our existing coverage will continue to be available on acceptable terms or will be available, and in sufficient amount, to cover the potentially significant losses that could result from a cybersecurity incident or that the insurer will not deny coverage as to any future claims.

If we and/or our cloud-based solution providers are not successful in preventing or effectively responding to outages or cyberattacks, our financial condition, results of operations and cash flow could be materially and adversely affected.

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As we strive to achieve product innovations, extend our brands into new product categories and expand the geographic scope of our marketing, we face a greater risk of inadvertent infringements of third-party rights or compliance issues with regulations applicable to products with technical features or components.

We may become subject to litigation based on allegations of infringement or other improper use of intellectual property rights of third-parties.

We may become subject to litigation based on allegations of infringement or other improper

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use of intellectual property rights of third-parties.

In addition, failure to successfully obtain and maintain patents on innovations could negatively affect our ability to market and sell our products.

We regularly discover products that are counterfeit reproductions of our products or that otherwise infringe on our proprietary rights.

Increased instances of counterfeit manufactured products and sales may adversely affect our sales and the reputation of our brands and

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result in a shift of consumer preference away from our products.

Increased instances of counterfeit manufactured products and sales may adversely affect our sales and the reputation of our brands and result in a shift of consumer preference away from our products.

The actions we take to establish and protect trademarks and other proprietary rights may not be adequate to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as violations of proprietary rights.

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The Company does not anticipate that adjustments relative to these findings will result in material changes to its financial condition, results of operations or cash flows.

Changes to the U.S.

tax laws being proposed by the U.S.

presidential administration may impact our U.S.

corporate tax rate.

Although we cannot predict whether or in what form these proposals will pass, several of the proposals considered, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense and cash flows.

WE OPERATE GLOBALLY AND ARE SUBJECT TO SIGNIFICANT RISKS IN MANY JURISDICTIONS

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On July 4, 2025, Public Law No:

119-21") was enacted in the U.S.

The legislation includes, among other provisions, changes to U.S.

corporate income tax law including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act.

We are assessing the impact of the legislation, which could impact our future effective tax rate, tax liabilities, and the amount of cash paid for income taxes.

WE OPERATE GLOBALLY AND ARE SUBJECT TO SIGNIFICANT RISKS IN MANY JURISDICTIONS

Global Regulation and Economic and Political Conditions, as well as Potential Changes in Regulations, Legislation and Government Policy, May Negatively Affect Our Business.

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dollars they are able to obtain.

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We employ several strategies in an effort to mitigate this transactional currency risk, but these strategies may not fully mitigate the negative effects of adverse foreign currency exchange rate fluctuations on the cost of our finished goods in a given period and there is no assurance that price increases will be accepted by our wholesale customers, international distributors or consumers.

Our gross margins are adversely affected whenever we are not able to offset the full extent of finished goods cost increases caused by adverse fluctuations in foreign currency exchange rates.

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Currency exchange rate fluctuations may also create indirect risk to our business by disrupting the business of independent finished goods manufacturers from which we purchase our products.

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We expect to fund our future capital expenditures with existing cash, expected operating cash flows and credit facilities, but, if the need arises to finance additional expenditures, we may need to seek additional funding.

Our ability to obtain additional financing will depend on many factors, including prevailing market conditions, our financial condition and our ability to negotiate favorable terms and conditions.

Our ability to obtain additional financing will depend on many

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factors, including prevailing market conditions, our financial condition and our ability to negotiate favorable terms and conditions.

Financing may not be available on terms that are acceptable or favorable to us, if at all.

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If we were to borrow under our credit agreements, we would be subject to market interest rates and may incur additional interest expense when borrowing in a high interest rate environment.

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Acquisitions Are Subject to Many Risks.

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We may not be able to attract qualified new employees or retain existing employees, which may have a material adverse effect on our financial condition, results of operations or cash flows.

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We License our Proprietary Rights to Third Parties and Could Suffer Reputational Damage to Our Brands if We Fail to Choose Appropriate Licensees.

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The misuse of a brand by or negative publicity involving a licensee could have a material adverse effect on that brand and on us.

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In addition, from time to time we license the right to operate retail stores for our brands to third-parties, primarily to our independent international distributors.

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Certain Shareholders Have Substantial Control Over Us and Are Able to Influence Corporate Matters.

As of March 31, 2025, three related shareholders, Timothy P.

As of June 30, 2025, three related shareholders, Timothy P.

Boyle, Joseph P.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors