Crocs Inc. shares tumbled nearly 30% Thursday, marking their steepest one-day drop since 2011, after the company warned of a revenue decline in the third quarter and outlined a significant hit from U.S. tariffs. The Colorado-based footwear maker said it expects sales to fall between 9% and 11% from a year earlier, missing analysts' expectations for modest growth.
The company cited "continued uncertainty from evolving global trade policy and related pressures around the consumer," with CEO Andrew Rees warning that U.S. shoppers have turned "super cautious." Rees said there was "ample evidence" of weaker demand, adding, "They're not purchasing, they're not even going to the stores, and we see traffic down."
The latest tariffs, part of President Donald Trump's trade measures that took effect Thursday, are expected to cost Crocs about $40 million in the second half of 2025 and $90 million annually based on its current sourcing mix, CFO Susan Healy said. The impact is expected to be more severe for the company's casual footwear line HEYDUDE, acquired in late 2021.
For the quarter ended June 30, Crocs posted a pre-tax loss of $448.6 million compared with a $296.4 million profit a year earlier, driven largely by $737 million in noncash impairment charges related to Heydude trademarks and goodwill. Consolidated revenues rose 3.4% to $1.15 billion, with Crocs brand sales up 5% to $960 million and Heydude sales down 3.9%.
Despite the loss, gross profit reached a record $708.8 million, up from $681.9 million last year, as gross margin improved to 61.7%. Adjusted diluted earnings per share rose 5.5% to $4.23, though reported earnings swung to a loss of $8.82 per share from a $3.77 profit last year.
Rees described the second-half environment as "concerning" and said retail partners' orders reflected that caution. He noted a shift in consumer tastes "back towards athletic" footwear, benefiting sports brands ahead of major global events like the 2026 FIFA Men's World Cup and the 2028 Los Angeles Olympics.
The company has realized $50 million in cost reductions this year and plans further measures, including cutting inventory orders and limiting promotions to protect margins. "Although these actions will impact the topline of our business in the short term, they will position our business to win, drive margin dollars, and support continued cash flow generation longer term," Rees said.
Crocs returned $133 million to shareholders through buybacks in the quarter and repaid $105 million in debt. Shares closed Thursday down 29.2%, taking the stock to its lowest level in nearly three years.
