Crocs (NASDAQ:CROX) said it closed 2025 on a “strong note” following a better-than-expected holiday season, as management highlighted product newness, international momentum and continued cash generation as key drivers. On the company’s fourth-quarter and full-year 2025 earnings call, executives also outlined a 2026 outlook that assumes modest revenue pressure in the first half as the company anniversaries strategic actions taken in late 2025, with improved trends expected later in the year.
Full-year 2025 results: Crocs brand growth offset by HEYDUDE declines
For the full year, Crocs reported enterprise revenue of just over $4 billion, down about 2% versus the prior year. The Crocs brand generated roughly $3.3 billion in revenue, up 1%, while HEYDUDE delivered $715 million, down 14%.
Chief Financial Officer Patraic Reagan said Crocs brand revenue growth was driven by unit volume, up 2% to 129 million pairs, while average selling prices were roughly flat year over year. He added that North America revenue for the Crocs brand fell 7% to $1.7 billion, which he attributed to pulling back promotional activity in DTC earlier in the year and “carefully managing” sell-in to the North American market. International Crocs brand revenue rose 11% to $1.6 billion, led by DTC growth of 23% and wholesale growth of 5%.
For HEYDUDE, Reagan said the company took “aggressive actions” to stabilize the brand in North America. DTC revenue rose 3% for the year, supported by digital marketplaces and 23 new retail stores, while wholesale revenue declined 27% as the company accelerated channel cleanup and managed sell-in more aggressively. HEYDUDE average selling prices increased 4% to just under $32, and unit volume fell 17% to 22 million pairs.
Holiday quarter: Revenue down, but management cites improved momentum
In the fourth quarter, Crocs posted enterprise revenue of approximately $958 million, down 4% year over year, which management said represented a three-percentage-point improvement from the third quarter. Crocs brand revenue was $768 million, up slightly on a reported basis, supported by 11% international growth. HEYDUDE revenue was $189 million, down 18%.
Rees said holiday results benefited from new products and “authentic consumer connections,” and noted particularly strong performance in the Crocs brand Lined business during the quarter in both North America and internationally, citing newness including the Unforgettable Clog.
Margins, tariffs, and cost actions
Reagan said enterprise adjusted gross margin for 2025 was 58.3%, down 50 basis points, primarily driven by a 130-basis-point tariff headwind, partially offset by lower negotiated sourcing costs. Crocs brand adjusted gross margin was 61.3%, down 30 basis points, while HEYDUDE brand adjusted gross margin was 44.8%, down 290 basis points.
Fourth-quarter enterprise adjusted gross margin was 54.7%, down 320 basis points, driven by a 300-basis-point tariff headwind. Reagan said adjusted SG&A dollars increased 7% for the year due largely to 2024 investments that “anniversaried” into the first half of 2025, while fourth-quarter SG&A dollars declined year over year, reflecting benefits of a $50 million cost savings program.
Adjusted operating margin for 2025 was 22.3%, down 330 basis points, and fourth-quarter adjusted operating margin was 16.8%, down 340 basis points, excluding about $14 million of discrete costs tied primarily to a recent reduction in force. Adjusted diluted EPS for the year was $12.51, down 5%, and the non-GAAP effective tax rate was 17%.
Looking to 2026, management reiterated plans for $100 million of cost savings that are expected to be “relatively balanced” between cost of goods sold and SG&A. Executives said the program is intended to provide flexibility for investments, including experimentation with AI applications, though they emphasized they are not embedding any AI-related upside into 2026 guidance.
Cash flow and capital allocation
Crocs reported free cash flow of $659 million in 2025. Rees and Reagan said the company used that cash to repay $128 million of debt and repurchase approximately 6.5 million shares for $577 million, representing about 10% of shares outstanding. The company ended 2025 with $747 million remaining on its share repurchase authorization.
Reagan said the company finished the year with $130 million of cash and cash equivalents and more than $900 million of revolver borrowing capacity. Inventory was $369 million at year-end, up 4% on a dollar basis, though units were down high single digits, which management attributed to actions to manage inventory flow into the marketplace.
2026 outlook: Modest revenue expectations, second-half improvement anticipated
For full-year 2026, Crocs expects enterprise revenue growth to be “up slightly to down 1%” on a reported basis, assuming currency rates as of Feb. 9. Management said the second half is expected to outpace the first half due to the timing of strategic actions taken in 2025.
- Crocs brand: Revenue expected to be flat to up 2%, with about 10% international growth offset by declines in North America as the company anniversaries prior actions. Management said it expects DTC to outperform wholesale.
- HEYDUDE: Revenue expected to be down about 7% to 9%, with a return to growth expected in the second half of 2026 as cleanup actions roll off.
The company expects adjusted gross margin to be up slightly year over year despite an anticipated incremental tariff pressure of about 80 basis points for 2026, which it expects to be weighted to the first half. Reagan said the company’s unmitigated tariff headwind is now estimated at about $80 million on an annualized basis, down from a prior estimate of $90 million.
Adjusted SG&A dollars are expected to be roughly flat, with cost savings offset by investments in DTC. The company guided to modest expansion in adjusted operating margin versus 2025’s 22.3%, excluding approximately $25 million of discrete costs related to implementing cost savings initiatives. Crocs expects adjusted diluted EPS of $12.88 to $13.35, reflecting future debt repayment but not assuming future share repurchases. Planned capital expenditures are $70 million to $80 million.
For the first quarter, Crocs expects revenue to decline 3.5% to 5.5%, with Crocs brand revenue down low single digits and HEYDUDE down 15% to 18%. Adjusted operating margin is expected to be about 21.5%, and adjusted diluted EPS is guided to $2.67 to $2.77.
In the Q&A, Rees reiterated that returning the Crocs brand to growth in North America is a “very clear priority,” citing innovation in clog iterations, growth in sandals and other categories, and continued strength in social and digital selling as key levers. He said the company does not anticipate significant price changes as a driver of 2026 performance and emphasized that product “newness” remains central to consumer demand across channels.
About Crocs (NASDAQ:CROX)
Crocs, Inc is a global footwear designer, developer and distributor best known for its lightweight, proprietary Croslite™ foam-clog construction. The company’s product portfolio encompasses a range of styles, including clogs, sandals, slides, boots and sneakers, all featuring the slip-resistant, odor-resistant and cushion-providing qualities of the Croslite material. Crocs distributes its products through an omnichannel network that includes e-commerce platforms, company-owned retail stores, authorized dealers and wholesale partners.
Founded in 2002 by Scott Seamans, Lyndon “Duke” Hanson and George Boedecker Jr., Crocs launched its first clog on the island of Vail, Colorado.
