This report and the information incorporated by reference in this report contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. We sometimes use words such as "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "project," "see," "will," and similar expressions, as they relate to us, our management and our industry, to identify forward-looking statements. Forward-looking statements relate to our expectations, beliefs, plans, strategies, prospects, future performance, anticipated trends and other future events. Specifically, this report and the information incorporated by reference in this report contain forward-looking statements relating to, among other things:

†          our global business, growth, operating, investing, and financing
strategies;

†          our product, distribution channel, and geographic mix;

†          the success of new products, new brands, and other growth
initiatives;

†          the impact of seasonality on our operations;

†     expectations regarding our net sales and earnings growth and other
financial metrics;

†     our development of worldwide distribution channels;

†     trends affecting our financial condition, results of operations, or cash
flows;

†     our expectations for expansion of our retail and eCommerce capabilities;

†     overall global economic trends; and

† reliability of overseas factory production and storage and availability of raw materials.

We have based our forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business. Actual results may differ materially. Some of the risks, uncertainties and assumptions that may cause actual results to differ from these forward-looking statements are described in Part II, Item 1A, "Risk Factors." In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this report and the information incorporated by reference in this report might not happen. You should read this report in its entirety, together with the documents that we file as exhibits to this report and the documents that we incorporate by reference in this report with the understanding that our future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements and we assume no obligation to update such forward-looking statements publicly for any reason.

References to "Deckers," "we," "us," "our," or similar terms refer to Deckers Outdoor Corporation together with its consolidated subsidiaries. Unless otherwise specifically indicated, all amounts herein are expressed in thousands, except for share quantity, per share data, and selling prices. The following discussion of our financial condition and results of operations should be read together with our condensed consolidated financial statements and the accompanying notes to those statements included elsewhere in this document.

Overview

You should read this report in its entirety, together with our Annual Report on Form 10-K, filed with the SEC on February 29, 2012, and the documents that we file as exhibits to these reports and the documents that we incorporate by reference in these reports.

We are a leading designer, producer, marketer, and brand manager of innovative, high-quality footwear, apparel, and accessories. We market our products primarily under three proprietary brands:

† UGG®: Premier brand in luxury and comfort footwear, handbags, apparel, and cold weather accessories;

†          Teva®: High performance, action-outdoor footwear and sandals; and

†          Sanuk®: Innovative action sport footwear brand rooted in the surf
community.

Our financial condition and results of operations include the operations of the Sanuk brand beginning July 1, 2011, the acquisition date. In addition to our primary brands, our other brands include TSUBO®, a line of high-end casual footwear that incorporates style, function and maximum comfort; Ahnu®, a line of outdoor performance and lifestyle footwear; and MOZO®, a line of footwear that combines running shoe technology with work shoe toughness for individuals that spend long hours working on their feet.

We sell our brands through our quality domestic retailers and international distributors and retailers, as well as directly to our end-user consumers through our eCommerce business and our retail stores. Independent third parties manufacture all of our products. In

January 2011, we converted from a distributor model to a wholesale model for the UGG and Teva brands in the United Kingdom (UK) and Ireland and the UGG brand in Benelux and France. On April 2, 2012, we purchased the remaining interest in our Chinese joint venture. Prior to this purchase, we already had a controlling interest in this entity, and therefore, the subsidiary has been and will continue to be consolidated with our operations.

We believe that our business has been, and will continue to be, impacted by several important trends affecting our end markets:

† The prolonged US and global economic conditions have adversely impacted businesses worldwide in general. Some of our customers have been, and more may be, adversely affected, which in turn has, and may continue to, adversely impact our financial results.

† The sheepskin used in certain UGG products is in high demand and limited supply, and there have been significant increases in the prices of sheepskin.

† The markets for casual, outdoor, and athletic footwear have grown significantly during the last decade. We believe this growth is a result of the trend toward casual dress in the workplace, increasingly active outdoor lifestyles, and a growing emphasis on comfort.

† We believe that consumers are more often seeking footwear designed to address a broader array of activities with the same quality, comfort, and high performance attributes they have come to expect from traditional athletic footwear.

† We believe that consumers have narrowed their footwear product breadth, focusing on brands with a rich heritage and authenticity as market category creators and leaders.

† We believe that consumers have become increasingly focused on luxury and comfort, seeking out products and brands that are fashionable while still comfortable.

† We believe that there is an emerging sustainable lifestyle movement happening all around the world, and consumers are demanding that brands and companies become more environmentally responsible.

By emphasizing our brands' images and our focus on comfort, performance, and authenticity, we believe we can continue to maintain a loyal consumer following that is less susceptible to fluctuations caused by changing fashions and changes in consumer preferences. We have also responded to consumer focus on sustainability by establishing objectives, policies, and procedures to help us drive key sustainability initiatives around human rights, environmental sustainability, and community affairs.

We have experienced costs increases, most significantly with sheepskin. We attempt to cover the full amount of our sheepskin purchases under fixed price contracts. We continually strive to contain our material costs through increasing the mix of non-sheepskin products, exploring new footwear materials and new production technologies, and utilizing lower cost production, including in the US from where we have begun sourcing product this year. Also, refer to Item 3. Quantitative and Qualitative Disclosures about Market Risk for further discussion of our commodity price risk.

Below is an overview of the various components of our business, including some key factors that affect each business and some of our strategies for growing each business.

UGG Brand Overview

The UGG brand has become well-known throughout the US as well as internationally. Over the past several years, our UGG brand has received increased global media exposure including increased print media in ads and cooperative advertising with our customers, which has contributed to broader public awareness of the brand and significantly increased demand for the collection. We believe that the increased global media focus and demand for UGG products were driven by the following:

†          consumer brand loyalty, due to the luxury and comfort of UGG
footwear;

†          continued innovation of new product categories and styles, including

† increased marketing for women and men in high-end magazines and in out of home and digital advertising;

†          a targeted UGG for Men campaign featuring Tom Brady;

†          targeted marketing at prospective consumers in new catalogs and
direct mail pieces;

†          successful targeting of higher-end distribution;

†          expanded product assortment purchases from existing accounts;

†          adoption by high-profile celebrities as a favored footwear brand;

†          increased media attention that has enabled us to introduce the brand
to consumers much faster than we would have otherwise been able to;

†          increased exposure to the brand driven by our concept stores that
showcase all of our product offerings;

†          continued expansion of worldwide retail through new UGG Australia
stores;

†          continued geographic expansion across the US and internationally; and

†

††

†

† expansion of our shop-in-shop program worldwide.

We believe the luxury and comfort features of UGG products will continue to drive long-term consumer demand. Recognizing that there is a significant fashion element to UGG footwear and that footwear fashions fluctuate, our strategy seeks to prolong the longevity of the brand by offering a broader product line suitable for wear in a variety of climates and occasions and by limiting distribution to selected higher-end retailers. As part of this strategy, we have increased our product offering, including a growing spring line, an expanded men's line, and a fall line that consists of a range of luxurious collections for both genders, an expanded kids' line, as well as handbags, cold weather accessories, and apparel. We have also recently expanded our marketing and promotional efforts, which we believe has contributed, and will continue to contribute, to our growth. We believe that the evolution of the UGG brand and our strategy of product diversification also will help decrease our reliance on sheepskin, which is in high demand and subject to price volatility. Nonetheless, we cannot assure investors that our efforts will continue to provide UGG brand growth.

Teva Brand Overview

We believe that our Teva brand is positioned to be a leading innovative, global, action-outdoor brand, with over 25 years of contributions to the outdoor experience. The Teva brand pioneered the water sport sandal category in 1984, and today our brand mission is to revolutionize the outdoors. Leveraging our core performance competencies in footwear and delivering our brand promise to help our consumers Live Better Stories™, we are focused on driving growth through innovation in the emerging action-outdoor space through off-road trail activities, freestyle mountain bike riding, action water sports, and other action-outdoor lifestyle products.

Our efforts to expand the Teva brand beyond sandals, while embracing our core water-based competencies, contributed to significant revenue growth over the past few years. Additionally, our broader range of footwear demonstrated strong retail sell-through across all channels, and we believe that our retail partners have viewed both our product and marketing innovations as relevant and compelling.

We see an opportunity to grow the Teva brand significantly outside of the US. In January 2011, we converted our Teva brand international business from an independent distributor to a wholesale model in the UK, including Scotland and Ireland, which now affords us the opportunity to better drive our brand building and growth initiatives in this influential market. This year, our Teva brand was re-launched in the Japanese market with strong results in the first quarter. In 2013, we plan to further our Teva brand's global expansion in Asia and Latin America. Within the US, we see strong growth opportunities within our current core channels of distribution, outdoor specialty and sporting goods, as our product assortment evolves and expands. We continue to see strong sandal sales and growth in our closed-toe offerings. Also, through effective product and distribution segmentation, we see significant expansion opportunities within the family value, department store, better footwear, and action sports channels. However, we cannot assure investors that these efforts will be successful.

Sanuk Brand Overview

We believe that the Sanuk brand is an ideal addition to the Deckers family of brands and that each of our brands can leverage off each others' distribution channels. The Sanuk business is a profitable business that we believe provides for substantial growth opportunities within the action sports market, as well as other markets and channels in which Deckers is already established, including retailers such as Dillard's, Journey's, Nordstrom, Zappos.com, and REI. In the 14 years since its inception, the Sanuk brand has consistently brought creativity, fun, and comfort to the line of sandals and shoes for men, women, and children. We plan to continue to build on the Sanuk brand's authentic position in the surf and outdoor markets through its relationships with prominent professional athletes, including surfers, bouldering athletes, and rock climbers, known as much for their unique personal styles and charisma as for their specialized talents.

Other Brands Overview

Our other brands consist of TSUBO, Ahnu, and MOZO. Our other brands are all sold through most of our distribution channels, with the majority through wholesale channels.

TSUBO, meaning pressure point in Japanese, is marketed as high-end casual footwear for men and women. The brand is the synthesis of ergonomics and style, with a full line of sport and dress casuals, boots, sandals and heels constructed to provide consumers with contemporary footwear that incorporates style, function, and maximum comfort. We are positioning the TSUBO brand as the premium footwear solution for people in the city. We are continuing to create products to address consumers' unique needs of all-day comfort, innovative style, and superior quality.

The Ahnu brand is an outdoor performance and lifestyle footwear brand for men and women. The name Ahnu is derived from the Celtic goddess representing the balance of well-being and prosperity. The brand focuses primarily on women consumers offering style and comfort for active women on both trails and pavement. The product goal is to achieve uncompromising footwear performance by

developing footwear that will provide the appropriate balance of traction, grip, flexibility, cushioning, and durability for a variety of outdoor activities - whether on trails, beaches, or sidewalks.

The MOZO brand strives to deliver revolutionary footwear for creative, passionate, and talented professionals that spend long hours working on their feet. Our high-performance footwear is designed to the standards of these professionals, not just their workplace. In 2011, MOZO introduced The Chef Signature Collection: footwear designed by Marcus Samuelsson, Aaron Sanchez, and Chris Cosentino. This collection put the MOZO brand in the press for the first time and allowed the brand to open up new distribution opportunities. We have recently expanded our distribution to include large on-line retailers and the health care worker market.

We expect to leverage our design, marketing, and distribution capabilities to grow our other brands over the next several years, consistent with our mission to build niche brands into global market leaders. Nevertheless, we cannot assure investors that our efforts to grow these brands will be successful.

eCommerce Overview

Our eCommerce business, which sells all of our brands, allows us to reinforce our relationship with the consumer. eCommerce enables us to meet the growing demand for our products, sell the products at retail prices, and provide significant incremental operating income. The eCommerce business provides us an opportunity to communicate to the consumer with a consistent brand message that is in line with our brands' promises, drives awareness of key brand initiatives, and offers targeted information to specific consumer segments. Our websites also drive wholesale and distributor sales through brand awareness and directing consumers to retailers that carry our brands, including our own retail stores. In recent years, our eCommerce business has had significant revenue growth, much of which occurred as the UGG brand gained popularity and as consumers continued to increase internet usage for footwear and other purchases.

Managing our eCommerce business requires us to focus on the latest trends and techniques for web design and marketing, to generate internet traffic to our websites, to effectively convert website visits into orders, and to maximize average order sizes. We plan to continue to grow our eCommerce business through improved website features and performance, increased marketing, expansion into more international markets, and utilization of mobile and tablet technology. Nevertheless, we cannot assure investors that revenue from our eCommerce business will continue to grow.

Retail Stores Overview

Our retail stores are predominantly UGG Australia concept stores and UGG Australia outlet stores. Our retail stores enable us to directly impact our customers' experience, meet the growing demand for these products, sell the products at retail prices and provide us with incremental operating income. In addition, our UGG Australia concept stores allow us to showcase our entire product line including footwear, accessories, handbags, and outerwear; whereas, a retailer may not represent all of these categories. Through our outlet stores, we sell some of our discontinued styles from prior seasons, plus products made specifically for the outlet stores. We sell Teva products as well as some of our other brands through our UGG Australia outlet stores.

As of March 31, 2012, we had a total of 46 retail stores worldwide. These stores are company-owned and operated and include our China stores, which were owned and operated with our joint venture partner. On April 2, 2012, we purchased the remaining interest in our Chinese joint venture. During 2012, we plan to open additional retail stores, with the majority in international locations, with the total being more than the number of stores we opened in 2011. We intend to continue opening more retail stores worldwide beyond 2012.

Seasonality

Our business is seasonal, with the highest percentage of UGG brand net sales occurring in the third and fourth calendar quarters and the highest percentage of Teva and Sanuk brand net sales occurring in the first and second calendar quarters of each year. Our financial results include the Sanuk brand beginning July 1, 2011. Our other brands do not have a significant seasonal impact.

                                          2012
                           First     Second     Third    Fourth
                          Quarter    Quarter   Quarter   Quarter
Net sales                $ 246,306
Income from operations   $  11,933




                                                    2011
                                  First      Second       Third      Fourth
                                 Quarter     Quarter     Quarter     Quarter
Net sales                       $ 204,851   $ 154,222   $ 414,358   $ 603,852
Income (loss) from operations   $  28,195   $ (10,798 ) $  90,661   $ 176,780

With the large growth in the UGG brand over the past several years, net sales in the last half of the year have exceeded net sales for the first half of the year. Given our expectations for our brands, we currently expect this trend to continue. Nonetheless, actual results could differ materially depending upon consumer preferences, availability of product, competition, and our wholesale and distributor customers continuing to carry and promote our various product lines, among other risks and uncertainties.

Results of Operations



Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011



The following table summarizes the Company's results of operations:



                                         Three Months Ended March 31,
                               2012                  2011                 Change
                         Amount        %       Amount        %       Amount        %
Net sales               $ 246,306     100.0 % $ 204,851     100.0 % $  41,455      20.2 %
Cost of sales             133,018      54.0     102,373      50.0      30,645      29.9
Gross profit              113,288      46.0     102,478      50.0      10,810      10.5
Selling, general and
administrative
expenses                  101,355      41.2      74,283      36.3      27,072      36.4
Income from
operations                 11,933       4.8      28,195      13.8     (16,262 )   (57.7 )
Other income, net            (401 )    (0.2 )      (138 )    (0.1 )      (263 )  (190.6 )
Income before income
taxes                      12,334       5.0      28,333      13.8     (15,999 )   (56.5 )
Income taxes                4,299       1.7       8,500       4.1      (4,201 )   (49.4 )
Net income                  8,035       3.3      19,833       9.7     (11,798 )   (59.5 )
Net income
attributable to the
noncontrolling
interest                     (148 )    (0.1 )      (655 )    (0.3 )       507      77.4
Net income
attributable to
Deckers Outdoor
Corporation             $   7,887       3.2 % $  19,178       9.4 % $ (11,291 )   (58.9 )%

Overview. The Sanuk brand operations are included in our results of operations effective upon our acquisition date of July 1, 2011. The increase in net sales was primarily due to the addition of Sanuk product sales as well as an increase in UGG retail sales. The decrease in income from operations resulted primarily from a reduction in gross margin and higher selling, general and administrative expenses.

Net Sales. The following tables summarize net sales by location, brand, and distribution channel:

                                                     Three Months Ended March 31,
                                                                            Change
                                                 2012        2011       Amount      %
Net sales by location:
US                                             $ 170,558   $ 148,122   $ 22,436    15.1 %
International                                     75,748      56,729     19,019    33.5
Total                                          $ 246,306   $ 204,851   $ 41,455    20.2 %

Net sales by brand and distribution channel:
UGG:
Wholesale                                      $  91,934   $  91,084   $    850     0.9 %
eCommerce                                         20,058      22,088     (2,030 )  (9.2 )
Retail stores                                     46,079      35,255     10,824    30.7
Total                                            158,071     148,427      9,644     6.5
Teva:
Wholesale                                         48,409      49,486     (1,077 )  (2.2 )
eCommerce                                          1,347         852        495    58.1
Retail stores                                         74          71          3     4.2
Total                                             49,830      50,409       (579 )  (1.1 )
Sanuk:
Wholesale                                         32,272           -     32,272       *
eCommerce                                            107           -        107       *
Retail stores                                          -           -          -       -
Total                                             32,379           -     32,379       *
Other:
Wholesale                                          5,787       5,452        335     6.1
eCommerce                                            193         520       (327 ) (62.9 )
Retail stores                                         46          43          3     7.0
Total                                              6,026       6,015         11     0.2
Total                                          $ 246,306   $ 204,851   $ 41,455    20.2 %

Total eCommerce                                $  21,705   $  23,460   $ (1,755 )  (7.5 )%

Total Retail stores                            $  46,199   $  35,369   $ 10,830    30.6 %

The increase in net sales was primarily driven by the addition of the Sanuk brand and increased UGG retail sales. We experienced an increase in the number of pairs sold through the addition of our Sanuk wholesale segment and continued retail growth, partially offset by a decrease in pairs sold in our UGG, Teva, and other brands wholesale segments and our eCommerce segment. This resulted in an increase in the overall volume of footwear sold for all brands of 29.8% to approximately 6.1 million pairs sold for the three months ended March 31, 2012 from 4.7 million pairs for the three months ended March 31, 2011. Our weighted-average wholesale selling price per pair decreased to $31.64 for the three months ended March 31, 2012 from $34.24 for the three months ended March 31, 2011. The decreased average selling price was primarily due to the addition of our Sanuk wholesale segment, which has lower overall average selling prices due to the nature of the brand, partially offset by increases in all other segments excluding eCommerce.

Wholesale net sales of our UGG brand increased primarily due to an increase in the average selling price, partially offset by a decrease in the volume of pairs sold. We believe the decrease in volume was partially due to the unusually warm weather in many of our markets. We cannot assure investors that UGG brand sales will continue to grow at their past pace.

Wholesale net sales of our Teva brand decreased primarily due to a decrease in the volume of pairs sold, partially offset by an increase in the average selling price.

. . .