Crocs, Inc. Q4 FY2025 earnings call

• 2025 ended strongly with a better-than-expected holiday season fueled by new products and consumer connections. Strong free cash flow was generated, with repurchases and debt paydown. - Crocs brand had an 8th consecutive year of growth, with international revenues growing double digits and DTC over half of enterprise revenue. Key initiatives included driving brand relevance, scaling product pillars outside clogs, fueling consumer engagement via marketing, creating compelling consumer experiences, and gaining market share internationally. - HeyDude prioritized stabilizing in North America, focusing on community building, clear product direction, and wholesale cleanup. Actions included accelerating returns/markdown allowances, pulling back on unproductive marketing, and seeing improvements in brand awareness and purchase intent.

For the full year 2025, enterprise revenue was over $4,000,000,000. The Crocs brand contributed $3,300,000,000 (approximately 82.5% of total revenue), with international revenues growing double digits. HeyDude contributed $715,000,000 (approximately 17.875% of total revenue), with revenue down 14% from the prior year. In the fourth quarter, enterprise revenue was approximately $958,000,000, down 4% from the prior year. Crocs brand revenue was $768,000,000, up slightly, with international revenue up 11%. HeyDude brand revenue was $189,000,000, down 18% from the prior year.

Full year 2026: Enterprise revenue expected to be in the range of up slightly to down 1% reported. Crocs brand revenue expected flat to up 2% led by ~10% international growth. HeyDude revenue expected down ~7% to 9%. Adjusted gross margin expected up slightly despite ~80 basis points of incremental tariff pressure. Adjusted diluted EPS range $12.88 to $13.35. Q1 2026: Revenues expected down 3.5% to 5.5% at currency rates as of February 9. Crocs brand revenues expected low single digits down. HeyDude revenue expected down 15% to 18%. Adjusted operating margin expected ~21.5%.

Tariffs pose a risk as an incremental headwind. Consumer spending trends, intense competition, inventory management challenges, and execution of strategic initiatives also represent potential risks.

Q: As we think about the double digit international Crocs brand outlook, can you help us think about the regional brand development? You shared some nice commentary on China growing from an 8% base. I am curious to know about the other regions as well and countries as we think of the 2026 embedded outlook?

A: Andrew Rees said international grew 11% in 2025, with China growing 30% in 2025, Japan returning to growth, Western Europe performing well, and India having strategic investments with future growth prospects.

Q: Good morning and thank you for taking our question. Andrew, I wanted to dive a bit deeper on the North America wholesale channel. How are conversations trending regarding shelf space preservation and order books for the year? And how do you view the health of the consumer in that channel amidst a competitive environment?

A: Andrew Rees said consumer health is bifurcated, with higher end shopping and lower end tentative. For shelf space, they are working to position brands with right inventory and new products, with Crocs focusing on Classic franchise and newness, and HeyDude having right-sized inventories and new product resonance driving success.

Q: Great. Thank you so much for taking our questions and congrats. Nice results. Just wanted to follow up on the actions at HeyDude between the wholesale cleanup and the performance marketing change. Andrew, I think you just said the cleanup actions are fully behind us. Can you talk about if you are adding more partners in wholesale to the brand at this stage, and just what are those conversations looking like? And just as a follow-up on Crocs, if you think about the adjacent categories, I think you said with sandals penetration was similar at 13%, which I think implies mid-single-digit growth category, and you called out strength in the U.S. Can you talk about how international performed, and how do you think about that penetration over time?

A: Patraic Reagan said HeyDude stores are outlet stores performing well, with opening rate in 2026 likely less. Andrew Rees said for Crocs, sandals grew in North America, with international growth slower but aspirations for growth in key markets like India and Southeast Asia.

Q: Good morning. Thanks for the question. Can you talk about the performance of HeyDude stores and what the store opening plan is for 2026?

A: Patraic Reagan said HeyDude stores are outlet stores, performing well, with 23 opened in 2025 and opening rate in 2026 likely less.

Q: Yes. Thanks for taking my questions. First question, I just wanted to drill down a little bit more on the path of HeyDude returning to growth in the back half. How much of that is just lapping the $45,000,000 cleanup that took place in the back half of 2025 versus other factors? And I am curious if you can speak to what you are seeing in terms of the fall order book from a wholesale perspective?

A: Patraic Reagan said HeyDude's return to growth is due to progress in cleaning up inventory, gaining consumer traction, and new product newness, with lapping of cleanup actions part of it. Andrew Rees said they do not comment on order book.

Q: And then a second question, just on the SG&A, thinking about the shape of the year, I know that you said dollars flat year over year. Do you expect that to be kind of consistent across the quarters, or would you expect the dollar spending to mirror the sales growth per quarter?

A: Patraic Reagan said SG&A has cyclicality, with Q1 up slightly, and traction from cost savings programs and $100,000,000 savings, reserving flexibility for investment.

Q: Hi, thanks for sneaking me in one more. Any more color as we think about first half and back half progression from an operating profit standpoint? It looks like Q1 and implied the first half down year over year for operating profit. Second half looks like it could be implied up double digits. Any more color as we think about the shape and anything that would be helpful for modeling?

A: Patraic Reagan said similar to 2025, there is a first half, second half story with headwinds in first half from strategic actions and improvement in second half.