$CROX earnings
$CROX put up a mixed quarter. Revenue came in at $1,149M, up 3.4% from last year, which isn’t bad given the tough environment. What stood out the most is that they hit their highest ever gross profit, which says a lot about how efficient the business still is. Gross margin ticked up to 61%, which is solid.
They also returned a good amount of cash to shareholders, $133M in buybacks and $105M in debt paydown. That kind of capital allocation is always good to see, especially when growth slows.
But there are some real headwinds. The CEO came out and said the environment is uncertain and hard to predict, which is becoming a theme across consumer names. To handle that, they’ve already implemented $50M in cost cuts, cut back inventory, and are trying to limit promos to keep the brand healthy. Short term that hurts revenue, but long term it should protect margins and cash flow.
The HEYDUDE side is clearly struggling. Revenue was down 3.9% to $190M and wholesale dropped more than 12%. They also had to take huge impairment charges, $430M for the trademark and $307M for goodwill. That’s painful, and it wiped out operating income. They posted a $428M operating loss, versus a $326M profit last year. Adjusted for the impairments, they would’ve made $309M, so the core business is still profitable, but it’s a big gap.
The Crocs brand itself is holding up a lot better. It grew 5% to $960M. International was strong, up 18% to $502M, while North America fell 6.5%. DTC grew, and wholesale also looked good, which is encouraging.
On the balance sheet, they’re in decent shape. Inventory is manageable at $405M and cash was $201M. Debt is coming down, now at $1,379M versus $1,530M last year. Not perfect, but improving.
For next quarter, they’re guiding revenue down 9% to 11%, which isn’t great. But even with that, they still expect adjusted operating margins around 18% to 19%. That tells you they’re focused on protecting profitability, not chasing growth blindly.
Overall, $CROX is in a tough spot, but not falling apart. The Crocs brand is resilient. HEYDUDE has real issues. They’ve got levers to pull, but the road ahead won’t be smooth. Still, if you believe in the brand and management’s discipline, there’s something to work with here.
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