Crocs, Inc. (NASDAQ:CROX) reported Thursday that its second quarter adjusted earnings per share were $4.23, beating the consensus estimate of $4.01. Additionally, it reported sales of $1.14 billion, which aligns with the consensus estimate.
The company said its Crocs and HEYDUDE brands contributed to the second-quarter performance, with the company delivering its highest-ever quarterly gross profit.
Consolidated revenue rose 3.4%, which was led by 5% growth in the Crocs brand and a 7.6% increase in direct-to-consumer sales for HEYDUDE.
However, the company described the current operating environment as uncertain and stated that it is reducing inventory receipts and promotional activity to protect brand health. It has also implemented $50 million in cost savings to support long-term margin growth and cash flow.
Outlook: Crocs reported third-quarter sales from $945.18 million to $966.42 million, versus the consensus estimate of $1.06 billion.
Revenues are expected to be down approximately 11% to 9% compared to the third quarter of 2024.
The footwear maker expects a 2025 adjusted operating margin of approximately 18% to 19%, including an anticipated negative impact of roughly 170 basis points from announced and pending tariffs.
Analyst Reaction-Needham
Needham said Thursday that despite a solid first-half performance, CROX appears poised for a dramatic deterioration of trends, some of which are macro-driven and some of which are strategic.
Analyst Tom Nikic maintains a Buy on Crocs and lowers the price forecast from $129 to $89.
Needham lowered its fiscal 2025/2026 earnings per share to $ 11.40/$11.16 from $12.74/$12.92.
Crocs North America is feeling pressure from multiple sources. Analyst Nikic writes that low-end consumers have become much more cautious, and athletic brands’ renewed focus on this consumer is causing competitive headwinds.
Needham also highlighted that management is working to streamline distribution by adjusting the wholesale channel and reducing promotions in the direct-to-consumer (DTC) segment.
These changes are expected to result in a mid-single-digit percentage decline in the brand's global sales in the third quarter. As international sales are projected to grow, North America will likely see a double-digit decline.
Other Analysts
Barclays downgrades Crocs from an Overweight rating to Equal Weight and lowers the price forecast from $119 to $81.
Stifel downgrades Crocs from a Buy to a Hold rating and lowers the price forecast from $127 to $85.
BofA Securities maintains a Buy rating on Crocs, lowering the price forecast from $135 to $99.
KeyBanc maintains Crocs with an Overweight rating, lowering the price forecast from $120 to $95.
Price Action: CROX stock is up 0.09% at $74.46 at the last check on Friday.
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