Crocs, Inc. reported net earnings fell 27.0 percent in the third quarter as sales declined 6.8 percent, but results exceeded company guidance and was well above Wall Street estimates. EPS guidance provided for the fourth quarter was also above Wall Street targets.  Croc brand’s sales slipped 2.5 percent in the third quarter while HeyDude’s sales fell 21.6 percent.

Revenues were down 6.8 percent on a constant currency basis. Crocs had guided for revenues constant currency basis to be down approximately 11 percent to 9 percent. Crocs’ operating margin was 20.8 percent compared to guidance calling for an operating margins in the range of 18 percent to 19 percent, including an anticipated negative impact of approximately 170 basis points from announced and pending tariffs.

Adjusted earnings per share of $2.92 compared to Wall Street’s consensus target of $2.36. Sales of $996 million were slightly above analysts’ consensus target of $961.5 million.

“Our third-quarter performance was driven by disciplined execution against our brand strategies, as well as greater product and go-to-market innovation. The strength of our profitability and cash flow enabled us to repurchase 2.4 million of our outstanding shares and pay down $63 million of debt during the quarter, both fundamental levers of our value creation model. While our results came in ahead of expectations, we believe both of our brands have greater potential, and are working to re-gain momentum in the marketplace,” said Andrew Rees, Chief Executive Officer.

Rees continued, “As we look forward, in addition to the $50 million of gross cost savings in 2025, we have identified an incremental $100 million of gross cost savings, and are committed to driving operating leverage in 2026.”

Third  Quarter 2025 Operating Results
(Compared to the Same Period Last Year)

  • Consolidated revenues were $996 million, a decrease of 6.2 percent, or 6.8 percent on a constant currency basis. Direct-to-consumer (“DTC”) revenues grew 1.6 percent, or 0.9 percent on a constant currency basis. Wholesale revenues decreased 14.7 percent, or 15.1 percent on a constant currency basis.
  • Gross margin, on a reported and adjusted basis, declined 110 basis points to 58.5 percent compared to 59.6 percent.
  • Selling, general, and administrative expenses (“SG&A”), on a reported and adjusted basis, increased 3.3 percent to $375 million from $364 million, and represented 37.7 percent of revenues compared to 34.2 percent.
  • Income from operations, on a reported and adjusted basis, decreased 23.0 percent to $208 million from $270 million, resulting in operating margin of 20.8 percent compared to 25.4 percent.
  • Net earnings fell 27.0 percent to $145.8 million from $199.8 million a year ago.
  • Diluted earnings per share of $2.70 decreased 19.6 percent from diluted earnings per share of $3.36. Adjusted diluted earnings per share of $2.92 decreased 18.9 percent from $3.60.
  • During the quarter, we repurchased approximately 2.4 million shares for $203 million at an average share price of $83.03. At quarter-end, $927 million of share repurchase authorization remained available for future repurchases. We repaid $63 million of debt.

Third Quarter 2025 Brand Summary
(Compared to the Same Period Last Year)

  • Crocs Brand: Revenues decreased 2.5 percent to $836 million, or 3.2 percent on a constant currency basis.
    • Channel
      • DTC revenues increased 2.0 percent to $472 million, or 1.2 percent on a constant currency basis.
      • Wholesale revenues decreased 7.9 percent to $364 million, or 8.4 percent on a constant currency basis.
    • Geography
      • North America revenues decreased 8.8 percent to $448 million, or 8.8 percent on a constant currency basis.
      • International revenues increased 5.8 percent to $389 million, or 4.2 percent on a constant currency basis.
  • HeyDude Brand: Revenues decreased 21.6 percent to $160 million, or 21.7 percent on a constant currency basis.
    • Channel
      • DTC revenues decreased 0.5 percent to $91 million, or 0.7 percent on a constant currency basis.
      • Wholesale revenues decreased 38.6 percent to $69 million, or 38.7 percent on a constant currency basis.

Balance Sheet and Cash Flow
(September 30, 2025, as compared to September 30, 2024)

  • Cash and cash equivalents were $154 million compared to $186 million.
  • Inventories were $397 million compared to $367 million.
  • Total borrowings were $1,318 million compared to $1,422 million.
  • Capital expenditures were $45 million compared to $51 million.

Financial Outlook

Fourth Quarter 2025
For the fourth quarter of 2025, Crocs expect:

  • Revenues to be down approximately 8 percent compared to the fourth quarter of 2024, at currency rates as of October 27, 2025.
    • Crocs Brand to be down approximately 3 percent compared to fourth quarter 2024.
    • HeyDude Brand to be down mid-20 percent approximately compared to fourth quarter 2024.
  • Non-GAAP adjustments to be approximately $10 million primarily associated with cost reduction initiatives.
  • Adjusted operating margin to be approximately 15.5 percent.
  • GAAP effective tax rate to be approximately 20 percent and adjusted effective tax rate to be approximately 16 percent.
  • Adjusted diluted earnings per share to be in the range of $1.82 to $1.92. Adjusted diluted earnings per share guidance does not assume any impact from potential future share repurchases.

Analysts’ consensus estimates had called for sales to decline 6.7 percent and EPS of $1.75.

Separately, Crocs expects capital expenditures of $70 million to $75 million for full year 2025.

Image courtesy Crocs