Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Performance was driven by a successful transition to a four-season brand, with closed-toe penetration increasing 500 basis points as management expands usage occasions beyond traditional sandals.
Direct-to-Consumer (DTC) growth of 16% outpaced wholesale for the first time in two years, fueled by a 50% increase in own retail revenue and high single-digit same-store sales. Management attributed the 23% constant currency growth in APAC to high-quality, premium positioning, specifically noting that China grew over 50% and now represents the company's highest Average Selling Price (ASP) market. Strategic scarcity and disciplined distribution maintained a 93% full-price realization in EMEA despite a broader market environment characterized by heavy promotional activity.
Operational complexity from non-Boston closed-toe silhouettes created a slight margin drag, but management views this as a positive trade-off for higher absolute profit dollars per pair. The Americas business saw 20% plus sell-out growth at key youth and sporting goods partners, indicating successful brand resonance with younger 'footbed newbie' consumers. Full-year revenue guidance was raised to 15% constant currency growth, reflecting sustained momentum in digital conversion and retail footprint expansion.
Management expects the APAC region to continue growing at twice the pace of other segments, supported by a retail-led strategy and localized brand activations in China. Future margin expansion is expected to come from in-sourcing production of complex closed-toe and boot executions currently handled by contract manufacturers in Portugal. The company plans to reach approximately 140 owned retail doors by the end of fiscal 2026 to capture more in-person shopping demand and enhance brand storytelling.
Guidance assumes a blended tariff rate of just over 15% in Q4, which is expected to be relatively neutral year-over-year following new agreements with the European Union. Middle East conflicts resulted in higher logistics costs and localized demand impacts in the UAE, though management mitigated this by adjusting delivery routes. A significant increase in the inventory-to-sales ratio to 37% was primarily driven by capitalized tariffs, FX effects, and the consolidation of the Australia business.
The effective tax rate was raised to 30%-31% for the year due to non-deductible expenses related to debt refinancing and an Accelerated Share Repurchase (ASR) program. Net leverage increased to 1.8x following share repurchases, though management has a net leverage target for the end of fiscal 2026 of 1.6x to 1.7x while seeking further buyback opportunities. Nvidia-level potential. 30M+ investors trust Moby to find it first.
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