Crocs sales decline for first time since 2020 and are expected to keep falling

Footwear manufacturer Crocs reported the first decline in sales of its namesake brand in five years. Third-quarter revenue for the Crocs brand fell 2.5% year over year to $836 million, the company said in the earnings release yesterday, October 30. It is the first drop since the second quarter of 2020, MarketWatch notes. In the current quarter, the company also expects Crocs-brand sales to decline about 3%.

The group’s total revenue for the third quarter fell 6.2% to $996 million, as sales of its casual footwear line Heydude plunged 21.6% to $160 million. Still, total revenue came in above the average analyst estimate compiled by FactSet.

Crocs shares fell 2.5% yesterday to close at $82.54. The stock has been declining for four consecutive months. If the trend extends through October’s final session, it will mark the longest losing streak since 2022, when the shares fell for seven straight months, MarketWatch noted.

The decline was due primarily to lower promotional activity in North America, CEO Andrew Rees said on the earnings call, as MarketWatch reported. North American sales dropped 8.8%, while international revenue rose 4.2%.

The company also scaled back discounting and reduced wholesale shipments to clean up inventory. Because Crocs operates largely in the sub-$100 footwear segment, fewer promotions likely hit demand among more price-sensitive consumers, MarketWatch added.

Rees noted that a large share of Crocs customers are feeling financial strain and are becoming more selective in their purchases. “They don’t have the same level of disposable income or flexible income, so they’re being more choiceful about what they’re buying,” he said.

Although the results beat Wall Street forecasts, they fell short of internal expectations, Rees said. To reignite growth in North America, the company plans to expand its assortment through new product launches, including Crafted Clogs priced from $60, and to scale its core franchises. Crocs is also diversifying into sandals and other casual categories.

The company sees "significant opportunity to capture greater share across our international markets," Rees added. Sales in China rose nearly 20% across all channels during the quarter.

Crocs remains the top footwear brand on the youth-driven TikTok Shop in the U.S. “We're continuing to expand this partnership and have launched TikTok Shop in the UK, Germany, and Brazil,” Rees said.

Crocs shares have fallen nearly 25% year to date. Of the 17 analysts covering the stock, eight rate it as “hold,” seven as “buy” or “overweight,” and two as “sell” or “underweight.” On October 21, BofA Securities lowered its target price from $99 to $98 while maintaining a “buy” recommendation, according to Yahoo Finance. The average Wall Street target price stands just under $89 per share, implying about 8% upside from the last close.

The AI translation of this story was reviewed by a human editor.