Financial Performance - Revenues for Q3 2025 were $996.3 million, a 6.2% decrease compared to Q3 2024, primarily due to lower unit sales volume [113]. - Crocs Brand revenues decreased by 2.5%, while HEYDUDE Brand revenues decreased by 21.6% in Q3 2025 [114]. - Gross margin for Q3 2025 was 58.5%, a decrease of 110 basis points from the previous year, mainly due to unfavorable duties and higher distribution costs [114][119]. - Income from operations decreased to $207.7 million, down 23.0% from $269.8 million in Q3 2024 [114]. - Net income for Q3 2025 was $145.8 million, or $2.70 per diluted share, compared to $199.8 million, or $3.36 per diluted share, in Q3 2024 [114]. - Total consolidated revenues for the nine months ended September 30, 2025, were $3,083.0 million, a decrease of $29.3 million, or 0.9%, compared to the same period in 2024 [129]. - Income from operations for the Crocs Brand segment was $272.7 million in Q3 2025, a decrease of $40.5 million, or 12.9%, compared to Q3 2024 [132]. - HEYDUDE Brand reported a loss from operations of $676.0 million for the nine months ended September 30, 2025, a decrease of $784.7 million, or 721.8%, compared to the same period in 2024 [140]. Expenses and Costs - Selling, general and administrative expenses (SG&A) increased to $375.3 million, representing 37.7% of revenues, up from 34.2% in Q3 2024 [114]. - Selling, general and administrative (SG&A) expenses increased by $11.8 million, or 3.3%, in Q3 2025 compared to Q3 2024, driven by a $17.6 million investment in talent and $9.4 million in higher DTC costs [121]. - SG&A expenses for the HEYDUDE Brand segment increased by $744.9 million, or 423.4%, during the nine months ended September 30, 2025, primarily due to asset impairments [141]. Liquidity and Cash Flow - The company maintained a strong liquidity position with $154.0 million in cash and cash equivalents and $862.4 million in available borrowing capacity as of September 30, 2025 [109]. - As of September 30, 2025, the company had $153.97 million in cash and cash equivalents and $862.4 million in available borrowings [145]. - Cash provided by operating activities decreased by $212.6 million, or 31.7%, for the nine months ended September 30, 2025, compared to the same period in 2024 [164]. - Cash used in financing activities decreased by $139.3 million, primarily due to a decrease in repayments, net of borrowings, of $210.2 million [166]. - Cash used in investing activities decreased by $5.7 million, or 11.3%, due to a decrease in purchases of property, equipment, and software [165]. - The company experienced a net change in cash, cash equivalents, and restricted cash of $(26.2) million for the nine months ended September 30, 2025, a decrease of 171.8% compared to the prior year [164]. Tax and Interest - The effective tax rate for Q3 2025 was 23.0%, an increase of 4.6% compared to 18.4% in Q3 2024, driven by a shift in the mix of domestic and foreign earnings [127]. - Interest expense decreased by $4.5 million, or 17.1%, in Q3 2025 compared to Q3 2024, due to lower outstanding borrowings and interest rates [126]. Operational Strategy - The company is focusing on product innovation and stricter pricing discipline to drive growth in North America for both brands [109]. - The company has begun to mitigate potential tariff impacts by diversifying sourcing and refining cost structures [109]. - Direct-to-consumer sales for the Crocs Brand increased by 2.0% in Q3 2025, while HEYDUDE Brand direct-to-consumer sales decreased by 0.5% [116]. - The company operated 427 retail locations for the Crocs Brand and 75 for the HEYDUDE Brand as of September 30, 2025, compared to 372 and 43 locations, respectively, a year earlier [144]. Debt and Financial Obligations - The company had total borrowings with a face value of $1.4 billion as of September 30, 2025, including fixed-rate Notes and variable-rate borrowings [180]. - The company has a revolving credit facility of $1.0 billion, with an additional $400.0 million available under certain conditions, and as of September 30, 2025, had $847.4 million of available borrowing capacity [149][152]. - The Term Loan B Facility was fully drawn with $500.0 million in outstanding principal, maturing on February 17, 2029 [155]. - The company had $350.0 million aggregate principal amount of 4.250% Senior Notes due March 15, 2029, and $350.0 million aggregate principal amount of 4.125% Senior Notes due August 15, 2031 [159]. - As of September 30, 2025, the company was in compliance with all financial covenants under the Credit Agreement and the Term Loan B Credit Agreement [151][156]. Impairment and Valuation - The company recognized non-cash impairment charges of $430.0 million for the HEYDUDE trademark and $307.0 million for the HEYDUDE Brand reporting unit goodwill due to downward revisions in internal forecasts [171][172]. - As of September 30, 2025, the goodwill balance was $404.7 million, down from $711.5 million as of December 31, 2024, with $403.0 million assigned to the HEYDUDE Brand segment [172]. - Management's assumptions for impairment evaluations included an annual revenue growth rate of approximately 8% and an EBITDA margin of approximately 20% [173]. - Changes in assumptions regarding revenue growth rates and discount rates could lead to additional impairment charges in future periods [174]. Currency and Interest Rate Exposure - A hypothetical 1% increase in interest rates on variable rate borrowings would increase interest expense by $6.5 million over the next twelve months [181]. - An increase of 1% in the value of the U.S. Dollar would have decreased revenues by $4.2 million and income before taxes by $0.5 million for the three months ended September 30, 2025 [183]. - A 10% appreciation in the value of the U.S. Dollar would result in a net decrease in the fair value of the derivative portfolio of $1.3 million [185]. - The company may enter into forward foreign exchange contracts to manage exposure to fluctuations in foreign currency [184]. - As of September 30, 2025, the U.S. Dollar notional value of total derivatives was $83.3 million, with an insignificant fair value for these contracts [184].

Crocs reported lower third-quarter profit and sales as demand for its namesake brand continues to fall from prior years https://t.co/wP4HKNqj23 ...

Core Insights - Crocs reported revenue of $996.3 million for the quarter ended September 2025, a year-over-year decline of 6.2% and an EPS of $2.92 compared to $3.60 a year ago, exceeding the Zacks Consensus Estimate of $968.06 million by 2.92% and delivering an EPS surprise of 22.18% [1] Revenue Performance - Crocs Brand revenue was $836.23 million, slightly above the average estimate of $822.52 million, reflecting a year-over-year decline of 2.6% [4] - HEYDUDE Brand revenue reached $160.07 million, surpassing the average estimate of $146.11 million, but showing a significant year-over-year decline of 21.6% [4] - HEYDUDE Brand wholesale revenue was $69.4 million, exceeding the estimate of $65.23 million, but down 38.6% year-over-year [4] - Crocs Brand direct-to-consumer revenue was $471.87 million, above the estimate of $435.98 million, with a year-over-year increase of 2% [4] - HEYDUDE Brand direct-to-consumer revenue was $90.67 million, surpassing the estimate of $82.99 million, but down 0.5% year-over-year [4] - Crocs Brand wholesale revenue was $364.36 million, below the estimate of $390.2 million, reflecting a year-over-year decline of 7.9% [4] Stock Performance - Crocs shares returned -0.4% over the past month, while the Zacks S&P 500 composite increased by 3.6%, indicating potential underperformance in the near term with a Zacks Rank of 4 (Sell) [3]

Financial Data and Key Metrics Changes - The company's third quarter revenue was approximately $1 billion, down 7% compared to the prior year [19] - Adjusted diluted earnings per share decreased by 19% to $2.92 [24] - Adjusted gross margin for the enterprise was 58.5%, down 110 basis points year-over-year, impacted by tariffs [21] - Adjusted operating margin was 20.8%, down 460 basis points compared to the prior year [24] Business Line Data and Key Metrics Changes - Crocs brand revenue was $836 million, down 3% year-over-year, with wholesale down 8% and direct-to-consumer (D2C) up 1% [19] - HEYDUDE brand revenue was $160 million, down 22% year-over-year, but better than expectations, with D2C down 1% [20] - International revenue for Crocs was up 4%, driven by a 23% increase in D2C performance [20] Market Data and Key Metrics Changes - North American revenues were down 9% year-over-year, with D2C down 8% and wholesale down 11% [20] - China delivered mid-20% revenue growth year-over-year, outperforming the overall market [13] - Strong growth was also observed in Japan and key markets in Western Europe [13] Company Strategy and Development Direction - The company is focusing on product innovation, particularly in clogs and sandals, and diversifying into new categories [9][10] - A strategic pullback on promotional activities is aimed at protecting brand health and driving future growth [5][6] - The company is leveraging digital and social marketing to enhance consumer engagement, including partnerships with the NFL and campaigns on TikTok [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a bifurcated North American consumer base, with affluent consumers continuing to purchase while others are more cautious [43] - The company expects revenue to decline approximately 8% in Q4, with Crocs brand down about 3% and HEYDUDE down in the mid-20% range [26] - Management is confident in returning HEYDUDE to profitability and growth despite recent challenges [38] Other Important Information - The company repurchased 2.4 million shares for $203 million during the quarter, representing about 4% of its float [25] - The company has identified $100 million in additional gross cost savings for 2026 [27] Q&A Session Summary Question: About incremental cost savings initiatives and structural deficiencies - Management highlighted efficiencies in the supply chain and reorganization efforts to drive cost savings and improve operating leverage [31][32] Question: Actions to drive improved results in North America - Management emphasized innovation in product categories and a focus on brand relevance to return to growth in North America [41][44] Question: Marketplace cleanup for HEYDUDE - Management confirmed ongoing cleanup actions in Q4, primarily through discount support, with expectations for improved sell-through [50][51] Question: Consumer spending behavior in Q4 - Management noted a cautious consumer environment, particularly among lower-income groups, impacting spending habits [60][62] Question: Store growth strategy for both brands - Management reported a pickup in store openings, particularly in Europe, with a focus on outlet stores [118][120]

Core Insights - Crocs reported quarterly earnings of $2.92 per share, exceeding the Zacks Consensus Estimate of $2.39 per share, but down from $3.6 per share a year ago, indicating an earnings surprise of +22.18% [1] - The company achieved revenues of $996.3 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.92%, but down from $1.06 billion year-over-year [2] - Crocs has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of Crocs' stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.82 on revenues of $922.54 million, and for the current fiscal year, it is $11.45 on revenues of $3.98 billion [7] Industry Context - The Textile - Apparel industry, to which Crocs belongs, is currently ranked in the bottom 19% of over 250 Zacks industries, which may negatively impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the outlook for the industry can significantly affect Crocs' stock performance [5][8]

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Financial Performance - Q3 2025 - Crocs Inc's revenue reached $996 million, a 7% increase compared to the previous year[26] - Crocs brand revenue was $836 million, up 3% year-over-year[26] - HEYDUDE brand revenue was $160 million, a 22% decrease compared to the previous year[26] - Adjusted gross margin for Crocs Inc was 58.5%, a 110 basis points increase year-over-year[26] - Adjusted operating income was $208 million, a 23% increase compared to the previous year[26] - Adjusted operating margin was 20.8%, a 460 basis points increase year-over-year[26] - Adjusted diluted EPS was $2.92[25] Financial Outlook - Q4 2025 - The company anticipates a total revenue decrease of 8% for the fourth quarter of 2025[37] - Adjusted operating margin is expected to be approximately 15.5%[37] - Adjusted diluted EPS is projected to be between $1.82 and $1.92[37] - Capital expenditures for FY 2025 are estimated to be between $70 million and $75 million[37]

Core Insights - Crocs reported a decline in third-quarter profit and sales, indicating a continued decrease in demand for its brand compared to previous years [1] Financial Performance - The company experienced lower profit and sales figures in the third quarter, reflecting a downward trend in consumer interest [1]

Financial Performance - Consolidated revenues for Q3 2025 were $996 million, a decrease of 6.2% year-over-year, with direct-to-consumer revenues growing 1.6%[6] - Income from operations decreased by 23.0% to $208 million, resulting in an operating margin of 20.8%[6] - Diluted earnings per share were $2.70, down 19.6% from $3.36 in the previous year[6] - The Crocs brand revenues decreased by 2.5% to $836 million, while HEYDUDE brand revenues decreased by 21.6% to $160 million[10] - For Q4 2025, revenues are expected to decline approximately 8% compared to Q4 2024, with Crocs brand down approximately 3% and HEYDUDE brand down mid-20%[10] - For the nine months ended September 30, 2025, the company reported a net loss of $186.4 million compared to a net income of $581.2 million in the same period of 2024[21] - GAAP revenues for the nine months ended September 30, 2025, were $3.08 billion, slightly down from $3.11 billion in 2024, indicating a decrease of about 0.9%[37] - Non-GAAP gross profit for the nine months ended September 30, 2025, was $1.83 billion, compared to $1.84 billion in 2024, reflecting a decrease of approximately 0.1%[37] - The company's GAAP operating margin for the nine months ended September 30, 2025, was 0.1%, significantly lower than 26.4% in 2024[40] - Non-GAAP operating margin for the nine months ended September 30, 2025, was 24.0%, down from 27.3% in 2024[40] - Total revenues for Q3 2025 were $996,301, a decline of 6.2% compared to $1,062,200 in Q3 2024[48] - Total HEYDUDE Brand revenues decreased by 21.6% year-over-year to $160,072 in Q3 2025[48] Cash Flow and Financial Position - Cash and cash equivalents were $154 million, down from $186 million year-over-year[10] - Cash provided by operating activities for the nine months ended September 30, 2025, was $457.9 million, down from $670.5 million in 2024, representing a decrease of approximately 31.5%[21] - The company reported cash used in financing activities of $444.4 million for the nine months ended September 30, 2025, compared to $583.7 million in 2024, a decrease of approximately 23.9%[21] - The company’s cash, cash equivalents, and restricted cash at the end of the period was $157.5 million, down from $189.5 million at the end of September 2024[21] - Free cash flow for the nine months ended September 30, 2025, was $412,781, down from $619,692 in the same period of 2024, representing a decrease of 33.4%[43] Cost Management and Savings - The company has identified an additional $100 million in gross cost savings for 2026, on top of the $50 million expected in 2025[3] - The company incurred asset impairment charges of $738.1 million for the nine months ended September 30, 2025, compared to $24.1 million in 2024[21] - The company’s non-GAAP selling, general, and administrative expenses for the nine months ended September 30, 2025, were $1.09 billion, up from $990.2 million in 2024, indicating an increase of approximately 10.1%[39] Earnings Guidance - Adjusted diluted earnings per share guidance for Q4 2025 is projected to be in the range of $1.82 to $1.92[10] - The company expects a non-GAAP diluted earnings per share of $1.82 to $1.92 for Q4 2025, with GAAP diluted earnings per share projected at $1.58 to $1.68[45] - The company anticipates incurring approximately $10 million in non-GAAP adjustments in Q4 2025, primarily related to cost reduction initiatives[45] Tax and Effective Rates - The non-GAAP effective tax rate for Q3 2025 was 16.9%, compared to 12.6% in Q3 2024[41] - The GAAP effective income tax rate for Q3 2025 was 23.0%, up from 18.4% in Q3 2024[41]

Core Insights - Crocs, Inc. reported its third-quarter 2025 financial results, highlighting a disciplined execution of brand strategies and product innovation, which led to strong profitability and cash flow [2][10] - The company repurchased 2.4 million shares and paid down $63 million of debt during the quarter, emphasizing its value creation model [2][10] - Crocs anticipates $50 million in gross cost savings for 2025 and has identified an additional $100 million in cost savings for 2026 [3] Financial Performance - Consolidated revenues for Q3 2025 were $996 million, a decrease of 6.2% year-over-year, with a 6.8% decline on a constant currency basis [11] - Direct-to-consumer (DTC) revenues grew by 1.6%, while wholesale revenues decreased by 14.7% [11] - Gross margin declined by 110 basis points to 58.5%, and selling, general, and administrative expenses increased by 3.3% to $375 million, representing 37.7% of revenues [11] Brand Performance - Crocs Brand revenues decreased by 2.5% to $836 million, with DTC revenues increasing by 2.0% and wholesale revenues decreasing by 7.9% [11] - International revenues for the Crocs Brand increased by 5.8%, while North America revenues decreased by 8.8% [11] - HEYDUDE Brand revenues decreased by 21.6%, with DTC revenues down by 0.5% and wholesale revenues down by 38.6% [11] Balance Sheet and Cash Flow - Cash and cash equivalents were $154 million, down from $186 million, while inventories increased to $397 million from $367 million [11] - Total borrowings decreased to $1,318 million from $1,422 million [11] - Capital expenditures for the full year 2025 are expected to be between $70 million and $75 million [6] Future Outlook - For Q4 2025, revenues are expected to decline approximately 8% compared to Q4 2024, with the Crocs Brand projected to decrease by about 3% and HEYDUDE Brand expected to decline by mid-20% [11] - Adjusted diluted earnings per share are anticipated to be in the range of $1.82 to $1.92 [11]