Crocs' third quarter results received a negative market reaction, as sales declined due to intentional pullbacks in promotional activity and wholesale shipments, particularly in North America. Management acknowledged these actions were taken to protect long-term brand health, with CEO Andrew Rees stating, “While our results came in ahead of our expectations, I acknowledge that this performance is not up to the standards that we expect for ourselves.” The company emphasized disciplined cost structure management and inventory controls to support profitability despite lower revenues.
Is now the time to buy CROX? Find out in our full research report (it’s free for active Edge members).
Crocs (CROX) Q3 CY2025 Highlights:
- Revenue: $996.3 million vs analyst estimates of $964.4 million (6.2% year-on-year decline, 3.3% beat)
- Adjusted EPS: $2.92 vs analyst estimates of $2.36 (23.7% beat)
- Adjusted EBITDA: $228 million vs analyst estimates of $200.4 million (22.9% margin, 13.8% beat)
- Revenue Guidance for Q4 CY2025 is $1.07 billion at the midpoint, above analyst estimates of $923 million
- Adjusted EPS guidance for Q4 CY2025 is $1.87 at the midpoint, above analyst estimates of $1.75
- Operating Margin: 20.8%, down from 25.4% in the same quarter last year
- Constant Currency Revenue fell 6.8% year on year (2% in the same quarter last year)
- Market Capitalization: $4.17 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Crocs’s Q3 Earnings Call
- Jonathan Komp (Baird) asked about structural changes due to cost savings and whether operating leverage could be achieved even if revenue remains subdued in early 2026. CEO Andrew Rees and CFO Patraic Reagan emphasized supply chain efficiencies, organizational simplification, and preserving investment in product innovation and brand marketing.
- Christopher Nardone (Bank of America) inquired about steps to improve North America performance and whether the promotional pullback risks losing core customers. Rees detailed efforts to drive innovation in clogs and sandals, expand product lines, and deepen digital engagement, while acknowledging bifurcated consumer behavior.
- Tom Nikic (Needham) sought clarity on marketplace cleanup for HEYDUDE and the timeline for normalizing channel inventory. Rees indicated most actions would conclude in 2025 and already show improved sell-through, with ongoing but less significant activity expected in 2026.
- Adrienne Yih-Tennant (Barclays) questioned consumer demand patterns, especially among value-oriented shoppers, and inventory management amid tariff impacts. Rees and Reagan described lower traffic and cautious spending among lower-income consumers, while highlighting strong inventory discipline despite tariff-driven cost increases.
- Rakesh Patel (Raymond James) asked about the outlook for the North America wholesale channel and product innovation to reinvigorate growth. Rees pointed to cautious retailer planning, continued declines in wholesale sell-in, and a robust innovation pipeline, including the Crafted clog and refreshed Croc Brand.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace of product innovation and success of new launches like Echo 2.0 and expanded sandals; (2) sustained growth in key international markets, especially China and Europe; and (3) the effectiveness of cost savings initiatives in mitigating margin pressure from tariffs and cautious U.S. consumer spending. Progress in digital and social commerce channels will also be an important signpost for future growth.
Crocs currently trades at $80.11, down from $84.73 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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