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Crocs, Inc. (CROX)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 beat on revenue and EPS versus S&P Global consensus: revenue $996.3M vs $961.5M*, adjusted diluted EPS $2.92 vs $2.36*, and EBITDA $228.0M vs $200.4M*, driven by Crocs brand international strength and better-than-expected HEYDUDE DTC; however, total revenue declined 6.2% YoY and margins compressed on tariff headwinds (estimates marked with * from S&P Global).
  • Gross margin fell 110 bps to 58.5% (adjusted), with CFO citing ~230 bps tariff headwinds in Q3; adjusted operating margin of 20.8% exceeded prior 18–19% guide but was down 460 bps YoY .
  • Q4 2025 guidance implies continued pressure: consolidated revenue down ~8% YoY, Crocs brand down ~3%, HEYDUDE down mid‑20%, adjusted operating margin ~15.5%, adjusted EPS $1.82–$1.92; GAAP ETR ~20% and adjusted ETR ~16% .
  • Cash generation remained strong: Q3 free cash flow $226.2M; management repurchased 2.4M shares ($203M) and paid down $63M of debt; $927M buyback authorization remains, and an incremental $100M gross cost savings program identified for 2026 (in addition to $50M in 2025) could provide operating leverage next year .

What Went Well and What Went Wrong

What Went Well

  • International Crocs brand strength: Crocs brand international revenue rose 5.8% YoY in Q3 (DTC +25.9%), with China up mid‑20% and solid growth in Japan and Western Europe; management highlighted successful digital/social campaigns (e.g., Popmart x Skullpanda, Pan-Asian Monsoon) .
  • Profitability and cash returns: Adjusted operating margin of 20.8% exceeded prior guide (18–19%); free cash flow of $226.2M supported buybacks (2.4M shares, $203M) and $63M debt paydown; net leverage at lower end of 1–1.5x target .
  • Management commitment to cost takeout and operating leverage: “In addition to the $50 million of gross cost savings in 2025, we have identified an incremental $100 million of gross cost savings, and are committed to driving operating leverage in 2026.” — CEO Andrew Rees .

What Went Wrong

  • Topline contraction and mix headwinds: Consolidated revenue fell 6.2% YoY as Crocs North America declined 8.8% and HEYDUDE revenue fell 21.6% (wholesale -38.6%), reflecting promotions pullback at Crocs NA and HEYDUDE wholesale cleanup .
  • Margin pressure from tariffs and deleverage: Adjusted gross margin declined 110 bps to 58.5% with ~230 bps tariff headwind; adjusted SG&A rate increased 350 bps to 37.7% (investments and deleverage), and Q4’s gross margin headwind (~300 bps) is expected to be “almost entirely due to tariffs” .
  • Cautious near-term outlook: Q4 2025 revenue guided down ~8% YoY, Crocs NA expected down low double digits amid a “choiceful” consumer and competitive holiday, and HEYDUDE wholesale cleanup/markdown support to continue in Q4 .

Financial Results

Headline vs S&P Global Consensus (Q3 2025)

MetricQ3 2025 ActualQ3 2025 ConsensusSurprise
Revenue ($M)$996.3 $961.5*+$34.8M
Adjusted Diluted EPS$2.92 $2.36*+$0.56
EBITDA ($M)$228.0 [GetEstimates actual]$200.4*+$27.6

Values with * are retrieved from S&P Global. All S&P Global values lack document citations and are marked with an asterisk.

Trend vs Prior Year and Prior Quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($M)$1,062.2 $1,149.4 $996.3
GAAP Diluted EPS$3.36 $(8.82) $2.70
Adjusted Diluted EPS$3.60 $4.23 $2.92
Gross Margin % (Adj)59.6% 61.7% 58.5%
Operating Margin % (Adj)25.4% 26.9% 20.8%

Brand, Channel and Geography (Q3 2025 vs Q3 2024)

CategoryQ3 2024 ($M)Q3 2025 ($M)YoY Change
Crocs Brand Revenue$858.1 $836.2 -2.5%
HEYDUDE Brand Revenue$204.1 $160.1 -21.6%
Crocs DTC$462.5 $471.9 +2.0%
Crocs Wholesale$395.6 $364.4 -7.9%
HEYDUDE DTC$91.1 $90.7 -0.5%
HEYDUDE Wholesale$113.0 $69.4 -38.6%
Crocs North America$490.8 $447.7 -8.8%
Crocs International$367.3 $388.5 +5.8%

KPIs and Balance Sheet

KPIQ3 2025YoY / Notes
Free Cash Flow ($M)$226.2 vs $278.8 in Q3’24
Share Repurchases2.4M sh, $203M at $83.03 avg $927M authorization remaining
Debt Repayment$63M in Q3 Total borrowings $1,318.5M
Cash & Equivalents ($M)$154.0 vs $186.0 a year ago
Inventory ($M)$397.1 vs $367.1 a year ago
Net leverageLower end of 1–1.5x target Management commentary
Capex ($M)$13.2 in Q3 FY25: $70–$75

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated RevenueQ4 2025N/ADown ~8% YoY New
Crocs Brand RevenueQ4 2025N/ADown ~3% YoY New
HEYDUDE RevenueQ4 2025N/ADown mid‑20% YoY New
Adjusted Operating MarginQ4 2025N/A~15.5% New
Adjusted EPSQ4 2025N/A$1.82–$1.92 New
GAAP Effective Tax RateQ4 2025N/A~20% New
Adjusted Effective Tax RateQ4 2025N/A~16% New
Non‑GAAP AdjustmentsQ4 2025N/A~$10M (cost reduction) New
CapexFY 2025N/A$70–$75M Reiterated context

Note: Prior quarter (Q2) only provided Q3 guidance; there was no prior Q4 guidance to compare .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Tariffs/MacroWithdrew FY25 guide; tariff scenarios of ~$45M (10% all) to ~$130M (incl. China 145%) annualized; mitigation: sourcing mix, costs, selective pricing . In Q2, flagged ~$90M annualized impact and embedded ~170 bps GM headwind in Q3 guide .~230 bps tariff headwind to Q3 GM; Q4 GM down ~300 bps almost entirely due to tariffs .Worsening headwinds in H2; mitigation ongoing.
Crocs NA promotions pullbackStrategic pullback beginning in May to protect brand and margin .Pullback executed “across the entire quarter”; more non‑promo days and shallower discounts .Continued discipline.
HEYDUDE wholesale cleanupResetting programs (e.g., Wally Stretch Sock), improved DTC; planning returns to clean channel . Q2: accelerated returns/markdowns in H2 to reset floors .Q3: significant returns; Q4: more markdown support; early signs of better sell‑through and inventory alignment .Cleanup peaking in Q3/Q4; improving sell‑through.
International growthCrocs international +12% in Q1; China >30% .Q2 international +16% led by China/India/W. Europe .Q3 Crocs international +4% (DTC +23%); China up mid‑20% .
Social commerce/TikTokCrocs #1 on TikTok Shop; HEYDUDE Super Brand Day wins .Crocs #1; HEYDUDE #2–#3; growing channel .24/7 Croctober live‑streaming; strong TikTok results; DTC acceleration into Q4 .
Cost savingsIdentified $50M in 2025; evaluating more .Actioned $50M; further simplification planned .Added $100M gross savings identified for 2026; target operating leverage .
Stores/DistributionSoHo NYC opening; EU momentum .—EU outlets performing “incredibly”; continued openings incl. HEYDUDE outlets .

Management Commentary

  • “While our results came in ahead of expectations, we believe both of our brands have greater potential, and are working to re‑gain momentum in the marketplace.” — Andrew Rees, CEO .
  • “Adjusted operating margin of 20.8% came in ahead of our guidance of 18% to 19%… Adjusted diluted earnings per share of $2.92 was down 19% to last year.” — Patrick (Patraic) Reagan, CFO .
  • “In addition to the $50 million of gross cost savings in 2025, we have identified an incremental $100 million of gross cost savings, and are committed to driving operating leverage in 2026.” — Andrew Rees .
  • “The third quarter represents the ninth consecutive quarter of ASP increases for HEYDUDE.” — CFO .
  • “China delivered revenue growth across all channels and was up mid 20% to prior year… we saw strong growth in Japan and across key markets in Western Europe.” — CEO .

Q&A Highlights

  • Cost savings/operating leverage: Management outlined buckets (supply chain efficiencies, organizational simplification, vendor/consolidation, selective AI/tech), reaffirming intent to drive operating leverage in 2026 while protecting product innovation and brand marketing .
  • Tariffs/pricing: Q3 gross margin saw ~230 bps tariff headwind; Q4 GM headwind ~300 bps mostly tariffs; pricing decisions remain market‑based with selective increases (no increase planned for Classic Clog in NA) .
  • Crocs North America path: Pullback on discounting and wholesale sell‑in to protect brand health; innovation pipeline (Crafted, Echo 2.0, Crocband re‑launch) and sandals expansion to reinvigorate growth .
  • HEYDUDE cleanup cadence: Significant returns in Q3 and further markdown support in Q4 are already embedded in guidance; early improvements in sell‑through and alignment of sell‑in with inventory levels .
  • DTC trajectory and stores: Management expects North America DTC to be stronger in Q4 vs Q3; Crocs EU outlets and SoHo flagship cited as strong, cash‑generative assets .

Estimates Context

  • Q3 2025 beats vs S&P Global consensus: revenue $996.3M vs $961.5M*, adjusted EPS $2.92 vs $2.36*, EBITDA $228.0M vs $200.4M*. All three were meaningful beats, aided by Crocs brand international DTC strength and disciplined promotions, partially offset by tariff headwinds and HEYDUDE wholesale cleanup (estimates marked with * from S&P Global).
  • Prior quarters also exceeded consensus: Q1 revenue $937.3M vs $907.9M*, adjusted EPS $3.00 vs $2.49*; Q2 revenue $1,149.4M vs $1,142.7M*, adjusted EPS $4.23 vs $4.02* (S&P Global; actuals in company releases) .

Values with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Core beat on revenue/EPS despite YoY declines; however, tariff headwinds and HEYDUDE wholesale cleanup continue to weigh on near‑term margins and growth .
  • International DTC momentum for the Crocs brand remains the growth engine; NA recovery hinges on innovation (Crafted, Echo 2.0, Crocband re‑launch) and controlled promotions .
  • Q4 guide is conservative (rev down ~8%, adj OPM ~15.5%), embedding competitive holiday dynamics and continued HEYDUDE cleanup; sets a lower bar amid macro uncertainty .
  • Structural levers exist: $50M 2025 savings underway and $100M incremental identified for 2026; management targets operating leverage next year .
  • Capital returns continue: robust FCF, sizable remaining authorization ($927M), and net leverage at the low end support ongoing buybacks while reducing debt .
  • Watch tariff policy path and price/mix actions; management indicates selective pricing and supply chain optimization, but Q4 margin headwind remains mostly tariff‑driven .
  • Legal/overhang: multiple shareholder/investigation PRs persist industry‑wide; monitor for developments but no new company‑level disclosures beyond standard risk framing .

Sources

  • Q3 2025 press release and financials: revenue/margins/segments/guidance/FCF/repurchases/debt .
  • Q3 2025 Form 8‑K (Item 2.02, Exhibit 99.1) and reconciliations .
  • Q3 2025 earnings call transcript: prepared remarks and Q&A on tariffs, cost savings, DTC, HEYDUDE cleanup, innovation .
  • Prior quarters: Q2 2025 press release and call ; Q1 2025 press release and call .
  • Other relevant Q3 press releases: conference call notice, Croctober activation .
  • Legal/investigation PRs: post‑quarter reference .

Values with * are retrieved from S&P Global.