Crocs forecasts weaker-than-expected Q3 earnings and flat revenue, overshadowing a Q2 beat driven by its core brand.
Crocs Inc. (NASDAQ:CROX) shares fell nearly 10% after the company projected third-quarter adjusted earnings per share of $3.20 to $3.30, below Wall Street estimates of $3.53 to $3.55. Revenue is expected to remain flat, missing expectations of about $1 billion, due to tariff pressures and weakness in its HEYDUDE brand.
In the second quarter, Crocs reported adjusted EPS of $4.55, surpassing analyst estimates of $4.32 to $4.35, while revenue rose 2.6% year over year to $1.18 billion. The core Crocs brand achieved over $1 billion in quarterly revenue for the first time, with direct-to-consumer sales up 12.9%. However, HEYDUDE revenue declined 5.7% to $179 million, and gross margin contracted 170 basis points to 60%.
Adjusted operating income fell 4.5% to $296 million, with operating margin narrowing to 25.1% from 26.9% a year earlier. The company cited tariff-related costs and product mix pressures for the outlook downgrade.