Core Insights - Crocs, Inc. reported an earnings per share (EPS) of $2.64, exceeding estimates of $2.36, but down from $4.23 the previous year [2][5] - The company's revenue for the quarter was approximately $996.3 million, surpassing expectations but reflecting a 6.2% decline year-over-year, primarily due to a 14.7% drop in wholesale revenues [2][5] - Direct-to-consumer sales increased by 1.6%, indicating a successful strategic focus on this channel [2][5] Financial Performance - Crocs is targeting $100 million in cost savings for 2026, in addition to $50 million for 2025, demonstrating a commitment to operational efficiency [3][5] - The company maintains a price-to-earnings (P/E) ratio of approximately 24.95 and a price-to-sales ratio of about 1.11, reflecting market confidence in its earnings and sales potential [4][5] - Crocs has a debt-to-equity ratio of 0.28, indicating a relatively low level of debt and suggesting financial stability [4][5]

Core Viewpoint - Crocs Inc. experienced a decline in sales of its namesake brand for the first time in five years, leading to a drop in share prices and expectations of continued sales decline as customer preferences shift [1] Company Summary - The footwear maker's sales decline marks a significant change in its performance trajectory, indicating potential challenges ahead for the brand [1] - The decline in sales is attributed to changing customer behaviors, suggesting a need for the company to adapt its strategies to maintain market relevance [1] Industry Summary - The footwear industry may be facing shifts in consumer preferences, which could impact sales for brands similar to Crocs Inc. [1] - The decline in sales for a leading brand like Crocs could signal broader trends within the industry that warrant close monitoring [1]

Core Insights - Crocs, Inc. (CROX) reported better-than-expected third-quarter 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate, although both metrics decreased year over year [1][2] Financial Performance - Adjusted earnings per share were $2.92, surpassing the Zacks Consensus Estimate of $2.39, but down 18.9% from the previous year [2] - Consolidated revenues fell 6.2% to $996 million compared to the prior year, exceeding the Zacks Consensus Estimate of $968 million; on a constant-currency basis, revenues decreased by 6.8% [4] - Direct-to-consumer (DTC) revenues increased by 1.6%, while wholesale revenues declined by 14.7%; on a constant-currency basis, DTC revenues rose by 0.9% and wholesale revenues dropped by 15.1% [4] Brand Performance - Revenues for the Crocs brand decreased by 2.5% year over year to $836 million, with wholesale revenues down 7.9% but offset by a 2% rise in DTC revenues; on a constant-currency basis, revenues fell 3.2% [5] - The HEYDUDE brand experienced a 21.6% decline in revenues to $160.1 million, driven by a 38.6% drop in wholesale revenues and a 0.5% decrease in DTC revenues; on a constant-currency basis, revenues declined by 11.9% [6] Profitability Metrics - Adjusted gross profit decreased by 7.9% year over year to $583 million, with the adjusted gross margin contracting by 110 basis points to 58.5% [7] - Adjusted operating income fell 23% year over year to $207.7 million, with the adjusted operating margin contracting by 460 basis points to 20.8% [7] Financial Position - As of the end of the third quarter 2025, the company had cash and cash equivalents of $154 million, long-term borrowings of $1.32 billion, and stockholders' equity of $1.36 billion [8] - The company repaid $63 million of debt and repurchased 2.4 million shares for $203 million, with $927 million of share repurchase authorization remaining [8] Future Outlook - For Q4 2025, management anticipates revenues to decline approximately 8% year over year, with Crocs brand revenues expected to drop around 3% and HEYDUDE brand revenues projected to decrease in the mid-20% range [9][10] - Adjusted earnings per share are forecasted to be in the range of $1.82 to $1.92, excluding potential impacts from future share repurchases [11]

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]