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Risk Factors Dashboard

Once a year, publicly traded companies issue a comprehensive report of their business, called a 10-K. A component mandated in the 10-K is the ‘Risk Factors’ section, where companies disclose any major potential risks that they may face. This dashboard highlights all major changes and additions in new 10K reports, allowing investors to quickly identify new potential risks and opportunities.

Risk Factors - CROX

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Item 1A. Risk Factors of this Annual Report on Form 10-K, elsewhere throughout this Annual Report on Form 10-K, and those described from time to time in our past and future reports filed with the Securities and Exchange Commission (the “SEC”). Caution should be taken not to place undue reliance on any such forward-looking statements. Moreover, such forward-looking statements speak only as of the date of this Annual Report on Form 10-K. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Risks Factors Summary

Our business is subject to a number of risks and uncertainties, including those described in Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K. Risk Factors of this Annual Report on Form 10-K for more information. Risk Factors of this Annual Report on Form 10-K for more information. These risks include, but are not limited to, the following:

• our substantial dependence on the value of our brand and our failure to strengthen and preserve this value;
• the significant competition that we face;
• introducing new products, which may be difficult and expensive;
• our failure to adequately protect our trademarks and other intellectual property rights and counterfeiting of our brand;
• our failure to continue to obtain or maintain high-quality endorsers of our products;
• our reliance on technical innovation to compete in the market for our products;
• the COVID-19 pandemic;
• supply chain disruptions, which could interrupt product manufacturing and global logistics and increase product costs;
• our dependence on third-party manufacturers located outside of the U.S.;
• our dependence on the global supply chain and impacts of supply chain constraints and inflationary pressure;
• our inability to accurately forecast consumer demand;
• our third-party manufacturing operations, which must comply with labor, trade, and other laws;
• our dependence on a number of suppliers for key production materials, and any disruption in the supply of such materials;
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• changes in foreign exchange rates, most significantly but not limited to the Euro, South Korean Won, and Chinese Yuan, or other global currencies;
• the fact that we conduct significant business activity outside the U.S., which exposes us to risks of international commerce;
• changes in global economic conditions, which may adversely affect consumer spending and the financial health of our customers and others with whom we do business;
• our inability to successfully execute our long-term growth strategy, maintain or grow our current revenue and profit levels, or accurately forecast demand and supply for our products;
• our significant reliance on the use of information technology;
• our online e-commerce sites, or those of our customers, not functioning effectively;
• the dependence of our financial success in part on the strength of our relationships with, and the success of, our wholesale and distributor customers;
• the substantial fixed costs we incur with respect to company-operated retail stores;
• if substantial investments in businesses and operations fail to produce expected returns;
• our dependence on employees across the globe;
• periodic litigation, which could result in unexpected expenditures of time and resources;
• global climate change, including extreme weather conditions, natural disasters, public health issues, or other events outside of our control, as well as related regulations;
• the provisions in our restated certificate of incorporation, amended and restated bylaws, and Delaware law that could discourage a third-party from acquiring us;
• the significant operating and financial restrictions that our Revolving Credit Agreement (as defined herein) and the Indentures (as defined herein) each impose, and those that we expect the Term Loan B Credit Agreement (as defined herein) will impose, on us and certain of our subsidiaries, which may prevent us from capitalizing on business opportunities;
• changes in the method for determining LIBOR (as defined herein) and/or the replacement of LIBOR;
• our indebtedness as well as the ability to meet payment obligations under our Revolving Credit Agreement and the Notes (as defined herein);
• our ability to incur substantially more debt;
• that we may be required to record impairments of long-lived assets or incur other charges relating to our company-operated retail operations;
• the fluctuations to which our quarterly revenues and operating results are subject;
• the risks of maintaining significant cash abroad;
• changes in tax laws and unanticipated tax liabilities and adverse outcomes from tax audits or tax litigation;
• our failure to meet analyst and investor expectations;
• our ability to realize the benefits from the HEYDUDE Acquisition being substantially dependent on our ability to continue to grow HEYDUDE;
• the announcement and pendency of the HEYDUDE Acquisition;
• the failure to complete the HEYDUDE Acquisition in a timely manner or at all;
• the incurrence by us of substantial indebtedness in connection with the financing of the HEYDUDE Acquisition; and
• the transaction fees and costs that we will incur in connection with the HEYDUDE Acquisition.
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Crocs, Inc.
Table of Contents to the Annual Report on Form 10-K
For the Year Ended December 31, 2021

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PART I

ITEM 1. Business

The Company

Crocs, Inc. and our consolidated subsidiaries (collectively, the “Company,” “Crocs,” “we,” “us,” or “our”) are engaged in the design, development, worldwide marketing, distribution, and sale of casual lifestyle footwear and accessories for women, men, and children. and our consolidated subsidiaries (collectively the “Company,” “Crocs,” “we,” “us,” or “our”) are engaged in the design, development, worldwide marketing, distribution, and sale of casual lifestyle footwear and accessories for women, men, and children. We strive to be the world leader in innovative casual footwear, combining comfort and style with a value that consumers want. The vast majority of shoes within our collection contain Croslite™ material, a proprietary, molded footwear technology, delivering extraordinary comfort with each step.

We run our business across three geographic regions: the Americas, Asia Pacific, and Europe, Middle East, and Africa (“EMEA”), which are discussed in more detail in “Business Segments and Geographic Information” below.Sales and MarketingWe run our business across three geographic regions: the Americas, Asia Pacific, and Europe, Middle East, and Africa (“EMEA”), which are discussed in more detail in “Business Segments and Geographic Information” below. Within these regions, we prioritize five core markets where we believe the greatest opportunities for growth exist: (i) China, (ii) Japan, (iii) South Korea, (iv) the U.S., and (v) Western Europe.

Our Vision

Our brand philosophy has our consumer at its heart. As a global brand “of the people, for the people,” we have successfully created a brand with a broad democratic appeal and accessible price points that is aligned with global megatrends such as casualization and personalization. Our brand philosophy and vision has been an important driver of our results and we believe will continue to be important as we realize the full potential of our brand. To that end, in 2021, we continued our message of “Come As You Are” in all regions and channels.

Our growth framework is driven by four strategic areas of focus: (i) growing digital sales, (ii) gaining market share in sandals, (iii) growth opportunities in Asia, and (iv) ongoing product and marketing innovation.

Growing Digital Sales

Digital sales include sales directly to consumers through our company-owned websites, third-party marketplaces, and wholesale sales to our global e-tailers. Our digital sales in 2021 were 36.7% of revenues, compared to 41.5% of revenues in 2020, which was higher than 2021 partially as a result of consumer migration to online shopping during the COVID-19 pandemic, and 31.1% of revenues in 2019. We plan to grow our percentage of digital sales by elevating our consumer experience, personalizing the consumer journey, and investing in capabilities to grow consumer lifetime value. We believe our digital connection with our consumers will allow us to remain nimble and maximize the full potential of the Crocs brand, while staying focused on the online channels in which our consumers are increasingly shopping.

Gaining Sandals Market Share

Sandals have long been a focus of the Company, as a large and accessible growth avenue for the brand. While we have increased sales of sandals in recent years, we believe there is an opportunity for additional growth. We discuss sandals in more depth under “Innovation in Products” below.

Growth Opportunities in Asia

As a brand with a well-established global footprint, we believe we have a long-term sales growth opportunity in the Asia Pacific segment. Our five core markets include three markets in Asia: China, Japan, and South Korea. China, in particular, which is the second largest footwear market in the world and represented about 20% of global footwear sales in 2020, is a key focus for us. Our strategy for China growth focuses on penetrating the digital channel, investing in an ‘always on’ marketing playbook to drive brand awareness and relevance, driving store growth and increased productivity within our mono-branded partner portfolio, and opening and operating a focused set of stores within major cities and in key outlet centers.

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Innovation in Products and Marketing

Products

Since we first introduced a single-style clog in six colors in 2002, we have grown to be a world leader of innovative, casual footwear for women, men, and children. Recognized globally for our unmistakable iconic clog silhouette, we have taken the successful formula of a simple design aesthetic, paired it with modern comfort, and expanded into a wide variety of casual footwear products including sandals—wedges, flips, and slides—that meet the needs of the whole family. Our mission of “everyone comfortable in their own shoes” continued in 2021 as we continued to bring to our consumers new silhouettes, compelling collaborations, trend-right colors and graphics, Crocs socks, and increased personalization through our Jibbitz™ charms accessories.

We offer a broad portfolio of all-season products, while remaining true to our core molded footwear heritage. The vast majority of Crocs™ shoes feature Croslite™ material, a proprietary, revolutionary technology that gives each pair of shoes the soft, comfortable, lightweight, non-marking, and odor-resistant qualities that our fans know and love. We also use Croslite™ material formulations in connection with material technologies used in our visible comfort collections, such as our LiteRide™ products. LiteRide™ features comfort-focused, proprietary foam insoles which are soft, lightweight, and resilient.

At the heart of our brand’s DNA are our clogs, sandals, and Jibbitz™ charms — key product pillars that we believe will drive the majority of our long-term growth.At the heart of our brand’s DNA are our clogs, sandals, and Jibbitz™ charms.

Clogs

The Classic Clog, our most iconic style for adults and children, embodies our innovation in molding, simplicity of design, and all-day comfort. The clog product silhouette is comfortable, versatile, and accessible. It provides a blank canvas for self-expression, while naturally lending itself to innovation, including the silhouette’s expansion into height, sport, adventure, and enhanced visible comfort technologies. Our product innovation and marketing over the past several years has driven clog relevance, which in turn has created brand relevance to consumers and led to increased sales. On-trend color and prints create highly compelling newness, allowing us to highlight the latest trends in our seasonal launches. Additionally, we have made our clog a year-round silhouette via innovations such as fuzz, used in our lined footwear collection.

We anticipate the clog market will continue to expand as many new brands enter the category in the luxury, sports, and fashion spaces, and that we will continue to increase our consumer base through product design and marketing activations. We intend to continue to drive future clog growth and relevance around the world.

Sandals

We believe sandals are a natural extension of our brand, leveraging our signature molding technology to provide casual, comfortable footwear for a variety of wearing occasions. The sandals silhouette category allows us to access new consumers and broader wearing occasions as well as convert our existing clog consumers. The current sandals market is fragmented with no single dominant player, which we believe offers us the opportunity to expand. Unlike clogs where our focus is on driving relevance, with sandals, our focus is on and opportunity lies with driving awareness and consideration.

Our expectation for the potential future growth of sandals is driven by several factors. First, clog relevance with consumers has converted to interest in sandals. Our recent brand metric studies show high levels of sandal consideration from consumers, matching clog consideration in many markets. This has been driven through marketing investments which have focused advertising campaigns and collaborations on the sandal silhouette and sandal product design that incorporates personalization. Additionally, while sandals are more seasonal than clogs, they still represent a year-round opportunity, particularly in the digital channel and our warmer markets.

Personalization

Personalization has been part of our culture since the very first pair of Crocs was created. Jibbitz™ charms enhance the consumer experience by providing an outlet for customization and self-expression, driving overall consumer engagement and retention, and heightening our message of “Come As You Are™” in all channels and regions. Jibbitz™ charms enhance the consumer experience by providing an outlet for customization and heightening our message of “Come As You Are™. Personalization is a unique selling proposition and is an important part of our brand. Jibbitz™ drive high levels of engagement and purchase frequency. We intend to continue to position personalization at the heart of our brand experience, and expect it will continue to be a strong driver of sales in both the clog and sandal categories.

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Our products also meet the needs of the entire family. We enjoy licensing partnerships with Disney, including Marvel and Lucasfilm, Warner Bros. We enjoy licensing partnerships with Disney, including Marvel and Lucasfilm, Universal Studios, Nintendo, and Warner Bros. , Nintendo, and Nickelodeon, among others, which allow us to bring popular global franchises and characters to life on our product in a fun, exciting way., among others, which allow us to bring popular global franchises and characters to life on our product in a fun, exciting way.

Marketing

We concentrate our marketing efforts on our five core markets to increase customer awareness of both our brand and our full product range. Each season, we focus on presenting a compelling brand story and experience for our new product introductions as well as our on-going core products. We employ social and digital marketing centered on showcasing our clog and sandal silhouettes and our Jibbitz™ charms. We are growing our clog silhouette with new colors, graphics, licensed images, embellishments, and accessories, such as Jibbitz™ charms, that allow for personalization. We continue to invest in globally integrated advertising campaigns, as well as designer, celebrity and influencer, and brand partnerships, ranging from popular artists like Justin Bieber to a wide range of well-known brands such as Balenciaga and Hidden Valley Ranch. Innovation is not only core to our brand values; it is at the forefront of how we drive consumer acquisition and engagement. We strive to listen and respond quickly to our fans to give them new and innovative reasons to continue to choose Crocs. See Note 1 — Basis of Presentation and Summary of Significant Accounting Policies in the accompanying notes to the consolidated financial statements included in Part II - Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for information on total marketing costs for the year.

HEYDUDE Acquisition

On December 22, 2021, we entered into a definitive agreement to acquire the HEYDUDE brand (the “HEYDUDE Acquisition”), a privately-owned casual footwear brand, pursuant to a Securities Purchase Agreement (the “Securities Purchase Agreement”).

The HEYDUDE Acquisition will further diversify our product portfolio under two brands. The HEYDUDE brand provides an ultra-light and comfortable casual footwear product that aligns with our vision. The Securities Purchase Agreement provides that we will purchase all of the issued and outstanding equity securities of HEYDUDE for a purchase price of $2.05 billion in cash (the “Cash Consideration”) and 2,852,280 in Crocs shares to be issued to one of the sellers (the “Equity Consideration Shares”). The Equity Consideration Shares will be subject to a lock-up period beginning on the closing date (the “Closing Date”) of the HEYDUDE Acquisition and continuing to, and including, the date that is 12 months after the Closing Date, provided that (a) on the date that is six months after the Closing Date, 50% of the Equity Consideration Shares will be released from the lock-up, and (b) on the date that is twelve months after the Closing Date, the remaining 50% of the Equity Consideration Shares will be released from the lock-up. The Cash Consideration is subject to adjustment based on, among other things, the cash, indebtedness, transaction expenses, and working capital of HEYDUDE as of the closing of the HEYDUDE Acquisition. We expect to finance the Cash Consideration by entering into the $2.0 billion Term Loan B Facility (as defined herein) and borrowing $50.0 million under the Revolving Facility (as defined herein).

The HEYDUDE Acquisition is expected to close in February 2022, subject to customary closing conditions.

The foregoing description of the Securities Purchase Agreement and the transactions contemplated thereby do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Securities Purchase Agreement, a copy of which is attached as Exhibit 2.1 to our Current Report on Form 8-K, filed on December 23, 2021.

Environmental, Social, and Governance (“ESG”) Initiatives

As one of the world’s largest footwear companies, we strive to make a positive impact on the global footwear industry and our planet by committing to transparent, socially conscious, and sustainable business practices. All information in the below ESG discussion pertains to the Crocs brand as of December 31, 2021.

Through our established ESG Program, we intend to continuously advance our sustainable business practices with the goal of consistently delivering products that exceed customer and consumer expectations. We believe the progress of our ESG efforts is best served by disclosing goals and relevant metrics, and, to this end, we have aligned our program with the United Nations Sustainable Development Goals (“SDGs”) and the Sustainability Accounting Standards Board (“SASB”) framework for reporting and disclosure guidance in order to share our ESG progress. We believe the progress of our ESG efforts is best served by disclosing goals and relevant metrics, and, to this end, we are aligning our program with the United Nations Sustainable Development Goals (“SDGs”) and the Sustainability Accounting Standards Board (“SASB”) framework for reporting and disclosure in order to establish specific goals, targets, and policies to enhance our ESG progress. Our ESG initiatives complement our Green Comes in Every Colorcampaign, which is focused on providing Comfort Without Carbon, Comfort for our Communities, and Comfort for all People.

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Additional information related to our ESG initiatives and achievements will be published in our fiscal year 2021 ESG Report in the first half of 2022, which will be available on the Investor Relations section of our website located at www.crocs.com. The content provided in our ESG Report or accessible through our website is not incorporated by reference as part of this Annual Report on Form 10-K.

Environmental

We are committed to reducing our impact on the environment by focusing on sustainability initiatives in our operations and throughout our supply chain and product lifecycle.

In 2021, we established our ambition of becoming a Net Zero brand by 2030. We also identified four areas of focus for our sustainability strategy: (i) transitioning to more sustainable product ingredients; (ii) responsible resource use; (iii) implementing more environmentally friendly packaging; and (iv) exploring sustainable solutions for product end of life.

Our transition to more sustainable ingredients was highlighted by our announcement of production on our “shoe of the future” powered by a new bio-based Croslite. This more sustainable Croslite incorporates Dow’s new ECOLIBRIUMTM Technology that transforms sustainably-sourced waste and by-products from other industries into a shoe that has all the comfort you expect from Crocs but with a lower environmental impact than other materials. During 2021, we also eliminated leather from our product line to become a 100% vegan brand.

To keep shoes on feet and out of landfills, we donated thousands of unsold Crocs to those in need around the world. We also announced our partnership with ThredUP to give previously used items a second life and help create a more comfortable world.

We remain a member of the Sustainable Apparel Coalition to ensure our efforts are aligned with industry guidance and best practices. We also continue to leverage the Higg Index suite of tools for baselining and establishing goals across emissions, energy and water use, and waste reduction/disposal for both our internal brand activities as well as our factory partners.We have also joined the Sustainable Apparel Coalition (“SAC”) for the purpose of baselining and establishing goals across emissions, energy and water use, and waste reduction/disposal for both our internal brand activities as well as our factory partners. We continue working to align with Science-Based Targets for the purpose of developing meaningful GHG emissions reduction goals that support the prevention of climate change. Crocs is also working to align with Science-Based Targets for the purpose of developing meaningful GHG emissions reduction goals that support the prevention of climate change.
Social

Human Capital

At Crocs, our vision to make “everyone comfortable in their own shoes” starts with our people. As of December 31, 2021, we employed approximately 5,770 employees in the Americas, EMEA, and Asia Pacific. As of December 31, 2020, we employed approximately 4,600 employees in the Americas, EMEA, and Asia Pacific. This includes approximately 3,300 employees in our retail stores, 1,400 employees at our corporate/regional offices, and 1,000 employees at our distribution centers. This includes approximately 2,600 employees in our retail stores, 1,000 employees at our corporate/regional offices, and 1,000 employees at our distribution centers.

We are committed to the health and safety of our employees and customers. In response to COVID-19, our corporate offices, retail stores, and distribution centers have maintained various elevated safety protocols, in accordance with local guidelines and regulations. To support our workforce, we also implemented a supplemental sick policy in 2020 for our U.S. workforce with additional hours available for paid time off related to COVID-19, which we continued for 2021 and 2022.

To ensure that we remain an employer of choice for what we believe is the most talented workforce in the footwear industry, we have implemented initiatives across our business and geographies to develop leadership capabilities, enable meaningful professional experiences, offer a compelling employee value proposition, and create a transparent, collaborative culture that “celebrates one-of-a-kinds and stands together with all different kinds.” We are also committed to an equitable total rewards philosophy as well as pay transparency in all regions.

We are proud of our culture of inclusion, which encompasses regular employee listening, employee-led inclusivity councils, and diversity at all levels. Crocs strives to create a culture of inclusion while creating a comfortable workplace through progressive people-practices where employees can freely contribute equally regardless of gender, age, race, ethnicity, national origin, disability, religion, immigration status, or sexual orientation, gender identity or expressions. Our Code of Ethics codifies these values. Crocs is also a premier partner of the UN Foundation’s #EqualEverywhere: Champions for Change Campaign promoting their global push for gender equality.

Investing in talent is a key component of our human capital strategy. Crocs is committed to identifying and developing the next generation of leadership. We conduct an annual talent and succession review with our CEO and Board of Directors (“Board”)
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with a focus on accelerating talent development, strengthening succession pipelines, and advancing diversity representation for our most critical roles.

We continue to emphasize employee development and training. We have established a culture of learning and development, with robust training at all levels on a wide range of topics from Cultivating a Sense of Belonging, Thriving through Adversity (for instance, during the COVID-19 pandemic), Guiding Dynamic Decision Making, and Facilitating Team Communication. We have established a culture of learning and development, with robust training at all levels on a wide range of topics from Leading for Respect and Inclusion, Thriving through Adversity (for instance, during the COVID-19 pandemic), Leading for Innovation, and Facilitating Team Communication.

Crocs is committed to providing an employee value proposition that is compelling, market-competitive, and performance-based. Our compensation programs, practices, and policies reflect our commitment. We aim to generally position total direct compensation within a competitive range of the market median, with differentiation based on tenure, skills, proficiency, and performance to attract and retain key talent, and have taken aggressive steps to advance hourly wages for our workforce across the globe, including increasing our hourly workers’ average wage above $15 per hour in the U.S. and Puerto Rico as of December 31, 2021. Additionally, all full- and part-time employees based in North America are eligible for sick leave accrual based on hours worked, and we follow all applicable illness and leave requirements globally.

Our regular employee engagement surveys reflect a highly engaged global workforce, with, among others, high scores returned by employees recommending “Crocs as a great place to work” and saying “it is easy for people with diverse backgrounds to be accepted.”

Social Capital

At Crocs, we strive to ensure our products are sourced, produced, and delivered to our customers in a manner that upholds international labor and human rights standards. To this end, we have implemented measures to ensure our supply chain complies with these standards, including utilizing internal and external parties to conduct both scheduled and unannounced social compliance reviews. We also maintain a factory Social Compliance Code of Conduct and a certification process – our contracted factories and direct suppliers sign an annual Statement of Compliance, verifying that their operations are in compliance with all local laws and customs regarding hiring practices, wages, and working conditions, as well as our Code of Conduct. We also maintain a factory Social Compliance Code of Conduct and a certification process – our contracted factories and direct suppliers sign an annual Statement of Compliance, verifying that their operations are in 3Table of Contentscompliance with all local laws and customs regarding hiring practices, wages, and working conditions, as well as our Code of Conduct. We recently joined the Fair Labor Association in an effort to provide further resources and transparency for protecting worker rights throughout our supply chain.

We also monitor chemicals and substances in our supply chain for compliance with legal and regulatory requirements consistent with our Restricted Substances Policy and expect our contracted factories and suppliers to take a proactive stance in eliminating any hazardous chemicals or substances in the manufacture of Crocs products. We recently joined the Apparel & Footwear International RSL Management Working Group to help reduce the use and impact of harmful substances in our supply chain.

Community

Giving back to the community is extremely important to us. Through our global “Crocs Cares” program, we focus on providing shoes, funds, and employee time to address timely human needs, to support social inclusion and equality, and to enable our employees to collaborate and give back within their local communities. Through our global “Crocs Cares” program, we focus on providing shoes to address human needs, funds to support those in need, and time to enable our employees to support their local communities. In the past two years alone, we have donated over one million pairs of shoes, including our donation in 2020 of over 860,000 pairs of shoes to frontline healthcare workers and other organizations around the world as part of our “A Free Pair for Healthcare” program and additional donations in 2021 of 150,000 pairs of shoes across multiple organizations. Additionally, thanks to the generosity of our consumers in 2021, we also raised nearly $2.5 million for Feeding America, enabling over 25 million meals for those in need.

Governance

At Crocs, we have strong corporate governance mechanisms in place, along with robust internal controls over our financial reporting framework. We also have Enterprise Risk Management and Ethics & Compliance program frameworks, with regular updates provided to our Board and its committees. For our ESG efforts, Crocs has established an ESG/sustainability management and oversight framework under the direction of our Executive Vice President, Chief Legal and Risk Officer. The Governance and Nominating Committee of our Board, comprised of three independent directors, oversees our ESG efforts and receives quarterly updates on the progress of our ESG program.

Our commitment to diversity and inclusion is reflected in our Board, consisting of 38% female representation and 13% racial/ethnic minority representation as of December 31, 2021.

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We also continue to conduct annual in-person and online compliance training for all corporate employees as well as retail and distribution center management and maintain a global ethics hotline, which is administered by our Legal department.

Distribution Channels

The broad appeal of our footwear has allowed us to market our products in more than 85 countries through two distribution channels: wholesale and direct-to-consumer (“DTC”). Our wholesale channel includes domestic and international multi-brand retailers, mono-branded partner stores, e-tailers, and distributors; our DTC channel includes retail, in which we sell through company-operated stores, and e-commerce, in which we sell through company-operated e-commerce sites and third-party marketplaces. Our wholesale channel includes domestic and international multi-brand retailers, mono-branded partner stores, e-tailers, and distributors; our retail channel consists of company-operated stores; and our e-commerce channel includes company-operated e-commerce sites and third-party marketplaces.