Crocs raises adjusted EPS outlook to $14.45–$14.65 after revenue grows 4.6%
Key Facts
Crocs raised its fiscal 2026 adjusted diluted earnings per share outlook to $14.45–$14.65 after reporting consolidated revenue of $1.043 billion in the third quarter, up 4.6% year over year. The company said in its statement that direct-to-consumer sales rose 6.9%, while wholesale revenue grew 1.8%. Adjusted diluted EPS increased 26.4% to $3.69, and GAAP diluted EPS climbed 67.4% to $4.52. The company raised its full-year consolidated revenue growth outlook to about 3%, from a previous range of 1% to 2%. The higher outlook came as HEYDUDE returned to growth and the flagship Crocs brand posted double-digit international growth, while Reuters reported that the shares rose about 27% in Thursday's session.
Adjusted operating profitability improved faster than revenue, with adjusted operating income reaching $232 million, up 11.7% from the year-earlier period, and the adjusted operating margin rising to 22.3% from 20.8%. CEO Andrew Rees said the Crocs brand delivered a record quarter, with revenue growth of 4% led by a double-digit increase internationally. He added that HEYDUDE revenue rose 6%, describing the brand's return to growth as a "milestone." By region, North American revenue fell 2.1% to $438 million, while international revenue rose 11.8% to $434 million. The figures highlight a contrast between weakness in the company's largest region and growth in sales elsewhere, alongside an improvement in overall brand sales.
Revenue for the Crocs brand rose 4.4% to $873 million, driven by an 8.2% increase in direct-to-consumer sales to $510 million. By contrast, wholesale sales for the brand fell 0.5% to $362 million. HEYDUDE revenue rose 6.1% to $170 million, after wholesale sales increased 14% to $79 million, while direct-to-consumer sales edged up 0.1% to $91 million. Reuters said HEYDUDE's turnaround benefited from retailer orders accelerating more than expected and inventory selling through quickly. The differing performance of the two channels shows that the brand's return to growth came mainly from wholesale, while direct sales were nearly flat.
The company raised its fiscal 2026 revenue growth outlook for the Crocs brand to about 4%, from 2% to 3% previously, and expects HEYDUDE revenue to remain roughly flat, compared with previous guidance ranging from a 4% decline to 2% growth. It also raised its adjusted diluted EPS outlook to $14.45–$14.65, from $13.70–$14.00, and expects slight adjusted operating margin expansion from 22.5%. CFO Patrick Riegger told Reuters that pricing, supply chain measures and cost cuts helped the company protect profitability amid inflation. Crocs expects a $40 million non-GAAP net benefit in 2026, primarily related to cost-cutting initiatives and potential tariff refunds. The estimate does not include receipt of those refunds, whose quarterly timing the company said it cannot predict; it will recognize them when they are realized or deemed realizable.
For the fourth quarter of 2026, Crocs expects consolidated revenue growth of 7% to 9%, with the flagship brand's revenue increasing 6% to 8% and HEYDUDE's rising 10% to 12%. It targets an adjusted operating margin of about 20.5% and adjusted diluted EPS of $3.25 to $3.45. On the balance sheet, inventory was $413 million on September 30, compared with $397 million a year earlier, while total borrowings declined to $1.29 billion from $1.32 billion. The company repurchased about 2.0 million shares for $250 million, at an average of $123.32 per share, and repaid $21 million of debt. About $1.7 billion remained available under the share repurchase authorization at quarter-end; the company's statement scheduled the earnings call for October 29, 2026, at 8:30 a.m. Eastern time, with a replay available through October 29, 2027.