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]