Core Viewpoint - Crocs plans to reduce orders for the second half of the year due to a concerning consumer environment, leading to a significant drop in stock value and a weaker-than-expected financial forecast [1][3]. Group 1: Consumer Behavior and Market Environment - The U.S. consumer is exhibiting cautious behavior regarding discretionary spending, influenced by current and anticipated price increases, which may further impact consumer choices [2]. - Retail partners are responding to this environment by reducing their open-to-buy dollars for future seasons [2]. Group 2: Financial Performance and Forecast - Crocs reported a net loss of $492.3 million, or $8.82 per share, for the second quarter, compared to a net income of $228.9 million, or $3.77 per share, in the same period last year, primarily due to a $737 million non-cash impairment charge related to its Heydude brand [7]. - Revenue for the second quarter was $1.15 billion, reflecting a 3.4% increase year-over-year and aligning with LSEG estimates [8]. - The company expects third-quarter revenue to decline between 9% to 11% year-over-year, with an adjusted operating margin forecasted at around 18% to 19%, down from 25.4% in the same quarter last year [6]. Group 3: Strategic Actions and Cost Management - To protect profitability, Crocs is reducing promotional activities and taking back older inventory to reset retail partners with new stock [4]. - The company has implemented $50 million in cost savings, which, while impacting short-term topline performance, is aimed at driving margin dollars and supporting long-term cash flow generation [5].

Core Viewpoint - Crocs' stock price plummeted by 29.2% due to disappointing earnings guidance and concerns over weak U.S. consumer spending, marking its largest single-day decline since October 2011 [1]. Financial Performance - For Q3, Crocs expects revenue to decline by 9% to 11% year-over-year, contrasting with analysts' expectations of slight growth [2]. - In Q2, Crocs reported a net loss of $492.3 million, primarily due to over $700 million in impairment charges related to the $2.5 billion acquisition of the HEYDUDE brand [3]. - Despite a 3.4% year-over-year revenue increase to $1.1 billion in Q2, the significant loss highlights challenges in business integration and valuation [3]. Market Conditions - The CEO Andrew Rees noted that U.S. consumers are being extremely cautious with discretionary spending, leading to decreased foot traffic and a reluctance to visit stores, particularly affecting wholesale and outlet operations [2]. - Concerns over current and potential price increases may further suppress consumer spending [2]. Competitive Landscape - Crocs faces challenges from changing consumer preferences, with a shift away from "ugly shoes" and a resurgence of traditional athletic footwear, especially with upcoming major sporting events like the 2026 FIFA World Cup and the 2028 Los Angeles Olympics [3]. - The company is expected to encounter intensified competition from traditional sports brands [3]. Tariff and Cost Pressures - CFO Susan Healy indicated that tariffs based on current sourcing locations are projected to impact approximately $40 million in the second half of 2025, with an annual effect of $90 million [3]. - The company is reducing discounting to cope with rising costs, which may further suppress sales [3].

Core Viewpoint - Crocs is facing significant challenges due to a disappointing earnings outlook and a pessimistic assessment of U.S. consumer spending, leading to a sharp decline in stock price and a decrease in customer traffic [1][2][3] Group 1: Earnings Outlook and Stock Performance - After releasing a disappointing earnings forecast, Crocs' stock plummeted by 29.2%, reaching its lowest point in nearly three years, marking the heaviest single-day loss since October 2011 [2] - The company warned that third-quarter revenue is expected to decline by 9% to 11% year-over-year, contrasting with analysts' expectations of slight growth [2] Group 2: Consumer Behavior and Market Trends - Crocs' CEO Andrew Rees noted that U.S. consumers are being very cautious with non-essential spending, leading to a decline in store traffic [5] - The management indicated that the impact will be most severe in wholesale and outlet channels, which cater to lower-income consumers [5] - The broader consumer market is experiencing a downturn, with reports indicating that lower-income customers are cutting back on fast food consumption to save money [6] Group 3: Fashion Trends and Competition - The "ugly shoe" trend that previously boosted Crocs' growth is reportedly cooling off, with a resurgence of athletic footwear styles [7] - Rees acknowledged that consumer tastes are changing, and upcoming major sporting events may favor traditional athletic brands like Nike and Adidas, increasing competition for Crocs [8] Group 4: Financial Challenges and Tariff Impacts - Crocs reported a net loss of $492.3 million for the second quarter, primarily due to over $700 million in impairment related to the $2.5 billion acquisition of the casual shoe brand HEYDUDE [9][10] - Despite a 3.4% year-over-year revenue growth to $1.1 billion, the significant loss highlights challenges in business integration and value assessment [10] - Tariff policies are expected to impact the company significantly, with projected costs of approximately $40 million in the second half of 2025 and up to $90 million annually [11]

Core Viewpoint - Crocs is facing a significant decline in consumer interest and macroeconomic challenges, leading to a sharp drop in stock price and disappointing revenue forecasts [1][2]. Group 1: Financial Performance - Crocs' stock price fell by 29.2%, reaching its lowest point in nearly three years after a disappointing earnings outlook [1]. - The company expects third-quarter revenue to decline by 9% to 11% year-over-year, contrary to analyst expectations of slight growth [1]. - In the second quarter ending June 30, Crocs reported a net loss of $492.3 million, primarily due to over $700 million in impairment related to the $2.5 billion acquisition of HEYDUDE [7][8]. Group 2: Consumer Behavior - CEO Andrew Rees noted that American consumers are being very cautious with discretionary spending, leading to decreased foot traffic in stores [2]. - The tightening of consumer wallets is particularly affecting low-income groups, which are more sensitive to price changes [4]. Group 3: Market Trends - The "ugly shoe" trend that previously boosted Crocs' growth may be waning, with a resurgence of interest in athletic footwear [5][6]. - Upcoming major sporting events, such as the 2026 World Cup and the 2028 Los Angeles Olympics, are expected to favor traditional sports brands like Nike and Adidas, increasing competition for Crocs [6]. Group 4: Regulatory and Cost Pressures - Tariff policies are projected to impact Crocs significantly, with an estimated $40 million hit in the second half of 2025 and an annual impact of up to $90 million [9]. - In response to rising costs, the company is reducing discounting, which may further suppress sales [9].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________________________ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 000-51754 _________________________________________________________ ...

Group 1 - The core point of the article is that Crocs Inc. (CROX.US) experienced a significant stock drop of over 28.5%, reaching a new low since January of the previous year, due to a forecasted decline in Q3 revenue [1] - For Q2, Crocs reported revenue of $1.15 billion, a year-over-year increase of 3.6%, surpassing analyst expectations of $1.14 billion [1] - The adjusted earnings per share for the second quarter were $4.23, which is higher than the $4.01 reported in the same period last year and above the analyst forecast of $4.00 [1] Group 2 - The company anticipates a revenue decline of approximately 9% to 11% for Q3, contrasting with analyst expectations of a 0.3% growth [1] - The adjusted operating margin is projected to be around 18% to 19%, which includes an expected negative impact of approximately 170 basis points from announced and pending tariffs [1]

Shares of Crocs have returned +0.4% over the past month versus the Zacks S&P 500 composite's +1.2% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Here is how Crocs performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: View all Key Company Metrics for Crocs here>>> The reported revenue represents a surprise of +0.83% over the Zacks Consensus Estimat ...

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Financial Data and Key Metrics Changes - The company reported second quarter revenues of $1,100 million, a 3% increase compared to the prior year [7] - Crocs brand revenues reached $960 million, growing 4% year-over-year, driven by a 16% increase in international sales [7] - Adjusted gross margins improved to 61.7%, up 30 basis points from the previous year, while adjusted operating margin was approximately 27% [7][30] - Adjusted diluted earnings per share were $4.23, reflecting a 5% increase compared to the prior year [7][32] Business Line Data and Key Metrics Changes - Crocs brand saw growth across all key product pillars, including clogs, sandals, and Jibbitz charms [15] - The Hey Dude brand experienced a revenue decline of 4% year-over-year, although this was an improvement from the first quarter [7] - Direct-to-consumer (DTC) sales for Crocs were up 3%, while wholesale sales increased by 6% [28] Market Data and Key Metrics Changes - International revenue for Crocs grew by 16%, with significant contributions from China and India, where revenue growth exceeded 30% [19][20] - North American revenues declined by 6% year-over-year, primarily due to reduced discounting strategies [28] - The company's international business now represents over 50% of Crocs brand revenue [19] Company Strategy and Development Direction - The company is focusing on long-term brand health and profitability by reducing promotional activities and managing inventory conservatively [11][12] - Strategic initiatives include diversifying the product offering and enhancing international growth, which has increased from 38% of Crocs brand sales in 2022 to 52% in the second quarter [14] - The company is also investing in digital-led marketing strategies to maintain brand engagement and drive sales [17][18] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious consumer environment in the U.S., impacting discretionary spending and retail order books [10][11] - The outlook for the second half of the year is challenging, with expectations of revenue declines in North America, but growth anticipated in international markets [36] - Management emphasized the importance of making bold decisions to sustain cash flow and brand health during uncertain times [11] Other Important Information - The company has initiated $50 million in cost savings and is exploring further opportunities to reduce expenses [13][30] - Inventory levels increased by 7% year-over-year, partly due to elevated costs from tariffs [32] - The company repurchased approximately 1.3 million shares during the quarter, totaling $133 million [33] Q&A Session Summary Question: Outlook for Crocs North America and Q3 - Management acknowledged several factors affecting the North American market, including cautious consumer behavior and intentional reductions in discounting to protect brand health [41][43] Question: Impact of Wholesale Pullback - Management confirmed that the guidance reflects current order books and conservative assumptions regarding returns and cancellations, with some loss of shelf space to athletic brands noted [72] Question: Performance Disparity Between Hey Dude DTC and Wholesale - Management attributed the stronger DTC performance to new distribution points and emphasized the need for inventory cleanup in the wholesale channel [95] Question: Marketing Strategy for Hey Dude - Management reported positive trends from recent marketing shifts and plans to continue investing in the brand while focusing on core consumers [104][106]

Financial Data and Key Metrics Changes - The company reported second quarter revenues of $1,100 million, a 3% increase compared to the prior year [6][26] - Crocs brand revenues were $960 million, up 4% year-over-year, driven by a 16% growth in international markets [6][26] - Adjusted gross margins improved to 61.7%, gaining 30 basis points from the previous year [6][28] - Adjusted diluted earnings per share increased by 5% to $4.23 [6][31] - Free cash flow reached $269 million, allowing for share repurchases and debt repayment [7][32] Business Line Data and Key Metrics Changes - Crocs brand saw a 4% revenue increase, while Hey Dude revenues decreased by 4% [6][26] - The Crocs brand's wholesale revenue grew by 6%, while direct-to-consumer (DTC) sales increased by 3% [26] - Hey Dude's adjusted gross margin improved to 50.2%, up 110 basis points due to distribution efficiencies [28] Market Data and Key Metrics Changes - International revenue for Crocs grew by 16%, with China reporting over 30% growth [17][26] - North American revenues declined by 6% due to reduced discounting strategies [19][26] - The international business now represents over 50% of Crocs brand revenue [17][60] Company Strategy and Development Direction - The company is focusing on long-term brand health and profitability by reducing promotional activities and managing inventory conservatively [9][10] - Strategic actions include amplifying measures to protect brand health and profitability, particularly for the Crocs brand [9][10] - The company aims to diversify its offerings and strengthen its position in the casual footwear segment [11][12] Management's Comments on Operating Environment and Future Outlook - Management noted cautious consumer behavior in the U.S. impacting discretionary spending [8][9] - The outlook for the second half of the year is concerning, with anticipated challenges in retail order books [9][35] - Management emphasized the importance of international growth as a key driver for future performance [45][60] Other Important Information - The company has initiated $50 million in cost savings and is exploring further opportunities [11][30] - A non-cash impairment charge of $737 million on Hey Dude's intangible assets was reported due to a longer stabilization timeline [30] - The company plans to continue share repurchases and debt repayment while maintaining a target net leverage range of 1 to 1.5 times [32][36] Q&A Session Summary Question: Outlook for Crocs North America and Q3 - Management acknowledged several factors affecting North America, including cautious consumer behavior and intentional pullbacks on discounting to protect brand health [41][43] Question: Share Loss to Competitors - Management noted a trend towards athletic brands impacting market share but believes Crocs can maintain its position through innovation and product offerings [50][52] Question: International Business Growth - Management expressed confidence in the international business, highlighting strong growth in China and India, and expects mid-teens growth trajectory [60][92] Question: Impact of Tariffs and Pricing Strategy - Management indicated that tariffs will impact margins, but they plan selective price increases and cost-saving measures to mitigate effects [65][66] Question: Inventory Management and SKU Count - Management confirmed cautious planning for inventory receipts and emphasized the importance of maintaining product freshness while managing costs [116][120]