Crocs Inc. hiked its guidance for the year after reporting second-quarter results topped expectations but shares were still down about 10 percent in late-afternoon trading Thursday as guidance for the current quarter missed analyst expectations and management reiterated that Crocs Brand’s sales in North America are expected to decline for the full year despite improving trends.

Crocs’ North American sales grew slightly in Q1, snapping a streak of five consecutive negative-growth quarters. The increase was led by a 5 percent gain in the direct-to-consumer channel, led by marketplace outperformance and despite a continued year-over-year reduction in promotional activity. This growth was in part offset by the continued weakness in wholesale sales.

Croc’s officials also confirmed it continues to expect sales in North America to be down for the year despite the second-quarter growth, with declines led by the wholesale channel

In the Q&A section of Crocs’ analyst call, Andrew Rees, CEO, said he remains “supremely confident in the future growth trajectory of both of our brands,” also including HeyDude. He noted that Crocs brand revenue topped $1 billion for the first time in a single quarter.

“Returning to growth, specifically in North America for both brands, also a very high priority,” added Rees. “From a Crocs perspective, we will not be returning to growth here in 2026, but we will meaningfully reduce the rate of decline that we saw in 2025. That has been driven by, I think, very important and sustainable underpinnings.”

The primary driver of Crocs return to growth in North America is diversification, according to Rees. He highlighted that the Crocs brand saw “blockbuster sandal season” in North America, and is also making progress diversifying its clog portfolio beyond the classic clog, with successes cited including the return of the Crocband; introduction of Echo 2.0 and Crafted, a materialized clog; most recently, the launch of a recovery clog.

Rees also said the ballet flat “has been a really great success around the world. More in Asia than the U.S., but that’s another opportunity to further diversify.”

Rees added that while the investment community is “super focused on North American growth,” the company is seeing “very sustainable and strong international growth.”

Rees added, “Obviously, the number of consumers outside of North America in some of these big markets are very substantial indeed. We continue to see a long runway of strong international growth. I would highlight, and I think we’ve highlighted this a couple of times, the flow-through of that growth to profitability from our international business is as strong as our North American business. We see our ability to drive very meaningful growth in shareholder value from both growth internationally and growth here in North America.”

Sales in the second quarter rose 2.6 percent while guidance had called for revenues to be down slightly. Crocs Brand saw 4.3 percent growth versus guidance calling for 1 percent to 3 percent growth. HeyDude’s revenues decreased 5.7 percent versus guidance forecasting a decline in the range of 14 percent to 12 percent. Adjusted EPS was $4.55 against guidance in the range of $4.15 to $4.35.

“We delivered a stronger-than-expected second quarter, driven by broad consumer demand for both brands and consistent execution of our brand strategies,”said Rees. “This fueled our powerful value creation engine, generating strong free cash flow, which we turned to shareholders in the form of debt paydown and meaningful share repurchases.”

Second Quarter 2026 Operating Results
(compared to the same period last year)

  • Consolidated revenues were $1,179 million, an increase of 2.6 percent, or 2.0 percent on a constant currency basis. Direct-to-consumer (DTC) revenues grew 12.0 percent, or 11.3 percent on a constant currency basis. Wholesale revenues decreased 7.2 percent, or 7.6 percent on a constant currency basis.
  • Gross margin was 59.4 percent compared to 61.7 percent. Adjusted gross margin decreased 170 basis points to 60.0 percent compared to 61.7 percent.
  • Selling, general, and administrative expenses (SG&A) of $415 million decreased 63.5 percent from $1,136 million, and represented 35.2 percent of revenues compared to 98.9 percent. The decrease in SG&A is largely driven by noncash impairment charges related to the indefinite-lived HeyDude trademark and HeyDude Brand reporting unit goodwill of $430 million and $307 million, respectively, during the three months ended June 30, 2025. Adjusted SG&A increased 3.1 percent to $412 million, and represented 34.9 percent of revenues compared to 34.7 percent.
  • Income from operations of $286 million compared to loss from operations of $428 million resulted in operating margin of 24.2 percent compared to operating margin loss of 37.2 percent. The prior year loss from operations is driven by asset impairments, as described above. Adjusted income from operations of $296 million decreased 4.5 percent from $309 million, resulting in adjusted operating margin of 25.1 percent compared to 26.9 percent.
  • Diluted earnings per share of $4.13 compared to diluted loss per share of $8.82. The prior year loss per share is driven by asset impairments, as described above. Adjusted diluted earnings per share of $4.55 increased 7.6 percent from $4.23.
  • During the quarter, Crocs repaid $31 million of debt. Crocs repurchased approximately 2.3 million shares for $251 million at the average share price of $106.87. At quarter-end, approximately $496 million of share repurchase authorization remained available for future repurchases.

Second Quarter 2026 Brand Summary
(compared to the same period last year)

  • Crocs Brand: Revenues increased 4.3 percent to $1.0 billion, or 3.7 percent on a constant currency basis.
    • Channel
      • DTC revenues increased 12.9 percent to $559 million, or 12.0 percent on a constant currency basis. 
      • Wholesale revenues decreased 5.0 percent to $441 million, or 5.4 percent on a constant currency basis.
    • Geography
      • North America revenues increased 0.4 percent to $459 million, or 0.4 percent on a constant currency basis.
      • International revenues increased 7.8 percent to $542 million, or 6.6 percent on a constant currency basis.
  • HeyDude Brand: Revenues decreased 5.7 percent to $179 million, or 5.8 percent on a constant currency basis.
    • Channel
      • DTC revenues increased 7.2 percent to $96 million or 7.1 percent on a constant currency basis.
      • Wholesale revenues decreased 17.2 percent to $83 million, or 17.4 percent on a constant currency basis.

Balance Sheet and Cash Flow
(June 30, 2026, as compared to June 30, 2025)

  • Cash and cash equivalents were $170 million compared to $201 million. 
  • Inventories were $389 million compared to $405 million. 
  • Total borrowings were $1.31 billion compared to $1.38 billion. 
  • Capital expenditures were $39 million compared to $32 million.

Crocs, Inc. Upsizes Share Repurchase Authorization To $2.0 Billion
On July 27, 2026, the Board approved a $1.5 billion increase to its share repurchase authorization, after which approximately $2.0 billion remained available for future common stock repurchases.

Financial Outlook

Full Year 2026
For 2026, Crocs expects:

  • Revenues to be up approximately 1 percent to 2 percent compared to full year 2025, up from its previous guidance of down 1 percent to up 1 percent, at currency rates as of July 27, 2026.
    • Crocs Brand to be up approximately 2 percent to 3 percent compared to full year 2025, up from its previous guidance of flat to up 2 percent.
    • HeyDude Brand to be down approximately 4 percent to 2 percent compared to full year 2025, up from its previous guidance of down 7 percent to 5 percent.
  • Non-GAAP adjustments to be approximately $25 million, primarily associated with its cost reduction initiatives.
  • Adjusted operating margin to expand modestly from 22.3 percent.
  • GAAP effective tax rate to be approximately 23 percent and adjusted effective tax rate to be approximately 18 percent.
  • Adjusted diluted earnings per share to be in the range of $13.70 to $14.00, up from its previous guidance range of $13.20 to $13.75. Adjusted diluted earnings per share guidance does not assume any impact from potential future share repurchases.
  • Capital expenditures of $70 million to $80 million.

Third Quarter 2026
For the third quarter of 2026, Crocs expects:

  • Revenues to be approximately flat compared to the third quarter of 2025, at currency rates as of July 27, 2026.
    • Crocs Brand to be up approximately 1 percent compared to the third quarter of 2025.
    • HeyDude Brand to be down approximately 3 percent to flat compared to the third quarter of 2025.
  • Adjusted operating margin to be approximately 21.5 percent.
  • Adjusted diluted earnings per share to be in the range of $3.20 to $3.30. Adjusted diluted earnings per share guidance does not assume any impact from potential future share repurchases.

Image courtesy Crocs