Crocs (CROX -27.01%), known for its casual footwear including the iconic Classic Clog, posted its Q2 2025 results on August 7, 2025. The highlight of the release was solid non-GAAP earnings and GAAP revenue, both outpacing analyst expectations. Non-GAAP diluted EPS came in at $4.23 versus the $4.00 estimate, while GAAP revenue reached $1,149 million compared to the $1,142.95 million consensus. The period was marked by continued international momentum but also a significant $737 million non-cash impairment charge relating to its HEYDUDE acquisition. Overall, while operational metrics such as gross profit (GAAP) hit a record, the period’s results were overshadowed by this large impairment and a cautious outlook for the next quarter.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Diluted, Non-GAAP) | $4.23 | $4.00 | $4.01 | 5.5 % |
| Revenue (GAAP) | $1,149 million | $1,142.95 million | $1,111 million | 3.4% |
| Operating Margin (Non-GAAP) | 26.9 % | 29.3 % | (2.4) pp | |
| Free Cash Flow (Non-GAAP) | $269.2 million | $384.2 million | (29.9 %) | |
| Revenue – Crocs Brand | $960 million | $914 million | 5.0 % |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Key Success Drivers
Crocs (CROX -27.01%) is a global leader in casual footwear, best known for its Classic Clog, a lightweight and comfortable foam shoe. Over the years, it has diversified its portfolio to include sandals, slides, and new silhouettes, appealing to a wide demographic. The 2022 acquisition of HEYDUDE, a brand focused on flexible and easy-to-wear shoes, expanded its product mix further.
The company’s recent focus has been on several pillars: innovation within its core product families (led by the Classic Clog and expanded sandal offerings), market share expansion abroad (notably China, India, and Western Europe), a robust direct-to-consumer and digital sales strategy, ongoing supply chain optimization for efficiency, and a commitment to sustainability through reduced waste and lower carbon footprints. Successful execution in these areas—especially digital engagement and international growth—remains central to maintaining brand relevance and driving profit growth.
Quarter in Review: Financial and Operational Highlights
The latest period showed resilience in several operating metrics, with GAAP revenue and non-GAAP EPS both exceeding analyst expectations. The revenue figure of $1,149 million (GAAP) grew 3.4% compared to the same period last year. Non-GAAP diluted EPS was $4.23, up from $4.01 the previous year. Record gross profit was reached, although the adjusted operating margin contracted to 26.9% from 29.3%. Free cash flow also dropped nearly 30%, settling at $269.2 million compared to Q2 2024.
The Crocs brand continued to outperform, especially outside North America. Revenue in the Crocs brand jumped 5.0% year-over-year on a GAAP basis, led by 18.1% growth in international markets (to $502 million). By contrast, North America saw a 6.5% sales decline for the Crocs Brand, echoing heightened consumer caution and more conservative wholesale orders. Direct-to-consumer channels, key for controlling brand image and driving margin, grew 3.4% for Crocs and 7.6% for HEYDUDE. Management attributes ongoing digital growth to investments in e-commerce, social media commerce (including TikTok Shop), and retail expansion.
HEYDUDE, which makes casual slip-on shoes, had sales of $190 million, down 3.9% from the prior-year period. This weakness, along with wholesale softness, led to a sharp non-cash impairment: Crocs recognized a combined $737 million GAAP write-down against the carrying value of HEYDUDE’s goodwill and trademarks. Direct-to-consumer business for HEYDUDE remains a bright spot, but overall growth is challenged as integration efforts continue and repositioning strategies unfold.
Operating expenses (GAAP) rose sharply, mainly because of the impairment charge. On an adjusted (non-GAAP) basis, selling, general, and administrative costs rose to $399 million, or 34.7% of revenue versus 32.0% last year. Excluding the impairment, the company reduced debt by $105 million, repurchased $133 million of shares, and maintains $1.1 billion in remaining buyback authorization as of Q2 2025. Cash and cash equivalents rose approximately 19.1% to $201 million as of June 30, 2025, compared to June 30, 2024, and Inventories (GAAP) climbed 7.4% to $405 million as of June 30, 2025, compared to June 30, 2024.
Product Family and Channel Performance
The Classic Clog remains the company's most recognizable product within its core offering, bolstered this quarter by strong interest in both traditional and new iterations. New franchise Clogs and a growing sandal business (such as the Getaway sandal) contributed fresh consumer appeal. In digital channels, social media partnerships and influencer campaigns, such as collaborations with streetwear brands and key figures, continued to drive brand relevance, particularly among younger consumers.
By sales channel, direct-to-consumer revenue grew 4.0% across all brands. Wholesale revenue grew more moderately. International sales, now making up a greater portion of brand revenue, are increasingly critical as North America softens. International sales accounted for 44.1% of Crocs Brand revenues in 2024. Notably, digital sales accounted for 37.2% of consolidated revenue in 2024, underlining its importance in the go-to-market strategy.
Looking Ahead: Guidance and Focus Areas
Looking to Q3 2025, management guided for a 9% to 11% drop in revenue compared to Q3 2024. The company expects adjusted operating margin of approximately 18% to 19% (non-GAAP), with a roughly 1.7 percentage point headwind from tariffs. This cautious stance is informed by both ongoing geopolitical risk—especially regarding tariffs and supply chain policy—and softer wholesale outlooks. No full-year forecast was provided, citing the unpredictability of consumer demand and the evolving trade environment.
Investors should watch for signs of HEYDUDE stabilization and renewed progress in margin protection. Management continues to emphasize direct channel development, ongoing brand innovation, and careful supply chain management to limit cost inflation. Cost savings and capital allocation (debt reduction and buybacks) remain priorities in the near term.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
