Has Crocs demand peaked? Sales just dropped - and are expected to keep falling.

By Steve Gelsi

The clogs seller is facing stiff competition in the sub-$100 price range for shoes, as companies look to entice 'choiceful' shoppers

Crocs shares lost ground Thursday after the company's latest quarterly results showed sales of its namesake footwear dropped for the first time in five years.

Shares of Crocs Inc. fell Thursday after sales of the footwear maker's namesake brand declined for the first time in five years - and are expected to continue falling as customers continue to be more selective in spending their money.

What's hurting sales is that the sub-$100 shoe category, where Crocs (CROX) gets the vast majority of its sales, is getting highly competitive ahead of the holiday shopping season. The company has also been providing fewer discounts, which may boost profits but hurt sales, and is selling less to wholesalers to reduce outstanding inventory.

"We pulled back on the breadth and depth of promotional activity across our digital channels in North America," said Chief Executive Andrew Rees, according to an AlphaSense transcript of the company's postearnings call with analysts. "This promotional pullback has had the greatest impact on our Classic Clog business as we work harder to protect our icon."

And since Crocs is in the lower-priced shoe business, the lack of discounting may have an outsize impact on sales to more price-sensitive customers.

"There is a large portion of consumers who are nervous, they are in less good financial shape, and they're being super cautious about their spending and certainly spending closer to need," Rees said.

"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 added.

The stock closed down 2.5% to finish at $82.59 a share on Thursday. It has now lost 1.2% in October, putting it on track for a five-month losing streak. That would be its longest such streak since a seven-month stretch through June 2022.

For the third quarter, revenue for the Crocs brand fell 2.5% to $836 million - the first year-over-year decline since overall revenue was down 7.6% for the second quarter of 2020. Overall revenue didn't start including Heydude sales until February 2022.

For the current fourth quarter, the company expects Crocs-brand sales to be down about 3%.

Overall revenue for the third quarter fell 6.2% from a year ago to $996.3 million, as sales of the company's Heydude brand sank 21.6% to $160 million. Meanwhile, total revenue was above the average analyst estimate compiled by FactSet of $962.7 million.

Net income dropped 27% to $145.82 million, while adjusted earnings per share, which excludes nonrecurring items, of $2.92 topped the FactSet analyst EPS consensus of $2.36.

For the fourth quarter, Crocs said it expects adjusted EPS of $1.82 to $1.92, which is better than the FactSet consensus estimate of $1.74 a share.

Shares of Crocs have fallen 24.6% in 2025, while the S&P 500 index SPX has advanced 16%.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

10-30-25 1625ET