Crocs’ second quarter met Wall Street’s revenue expectations but was met with a significant negative market reaction as management highlighted caution around U.S. consumer spending and a challenging retail environment. CEO Andrew Rees detailed that while international growth and strong gross profit supported free cash flow, North American sales faced headwinds due to reduced discounting and softer consumer demand. Management took a notably cautious tone, emphasizing the need for “bold decisions” to protect long-term brand health and profitability. The shift away from promotional activity in direct channels and the clean-up of aged inventory for HEYDUDE were among the key actions impacting results.
Is now the time to buy CROX? Find out in our full research report (it’s free).
Crocs (CROX) Q2 CY2025 Highlights:
- Revenue: $1.15 billion vs analyst estimates of $1.15 billion (3.4% year-on-year growth, in line)
- Adjusted EPS: $4.23 vs analyst estimates of $4.02 (5.3% beat)
- Adjusted EBITDA: $329 million vs analyst estimates of $315.8 million (28.6% margin, 4.2% beat)
- Revenue Guidance for Q3 CY2025 is $956 million at the midpoint, below analyst estimates of $1.07 billion
- Operating Margin: -37.2%, down from 29.3% in the same quarter last year
- Constant Currency Revenue rose 2.7% year on year (4.8% in the same quarter last year)
- Market Capitalization: $4.56 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 Q2 Earnings Call
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Jonathan Komp (Baird) pressed on North America’s Q3 outlook and share losses to athletic brands. CEO Andrew Rees acknowledged shelf space pressure and said, “the athletic trend...is providing some pressure on open-to-buy, combined with consumer uncertainty.”
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Christopher Nardone (BofA Securities) asked if Q3 guidance bakes in further deterioration. Rees responded that guidance assumes “the back half is worse than the first half,” but does not assume a sequential monthly decline.
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Adrienne Yih (Barclays) inquired about wholesale pullback and shelf space risks. Rees confirmed that guidance embeds current order books and noted some shelf space losses to athletic brands, offset by gains in sandals.
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Anna Andreeva (Piper Sandler) probed on the magnitude of promotional pullback and its impact. Rees explained that reducing discounting led to a meaningful top-line impact but was necessary to protect brand health.
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Brooke Roach (Goldman Sachs) sought detail on cost savings and SG&A cuts. CFO Susan Healy said, “We’re particularly focused on SG&A and steps that we can take to further simplify the business.”
Catalysts in Upcoming Quarters
Looking ahead, our analysts will be focused on (1) the pace of international expansion, especially in China and India, (2) the effectiveness of Crocs’ pullback on promotions and the resulting impact on margins and U.S. market share, and (3) progress in HEYDUDE’s channel reset, including inventory clean-up and any improvement in wholesale sell-through. Additional signposts include management’s ability to offset tariff headwinds and drive cost efficiencies.
Crocs currently trades at $83.40, down from $105.23 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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