Crocs, Inc. (NASDAQ:CROX) shares traded higher on Thursday after CEO Andrew Rees said strong profitability and cash flow allowed the company to repurchase 2.4 million shares and pay down $63 million in debt last quarter.
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However, the stock gave up its early gains due to the third-quarter earnings report.
The company reported third-quarter adjusted earnings per share of $2.92, beating the analyst consensus estimate of $2.36.
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Quarterly sales of $996.301 million (down 6.2% year over year) outpaced the Street view of $962.546 million.
Crocs brand revenue slipped 2.5% to $836 million, or 3.2% in constant currency. Under the Crocs brand, North America revenue fell 8.8% to $448 million, while international revenue rose 5.8% to $389 million (4.2% on a constant-currency basis).
HEYDUDE revenue fell 21.6% to $160 million, or 21.7% on a constant-currency basis.
Margin & Cash Balance
Gross profit decreased to $583.008 million from $633.339 million. On a reported and adjusted basis, gross margin declined 110 basis points to 58.5% compared to 59.6%.
As of Sept. 30, cash and equivalents were $154 million, down from $186 million a year earlier, while inventories rose to $397 million from $367 million.
Total borrowings declined to $1.318 billion from $1.422 billion, and capital expenditures eased to $45 million from $51 million.
The operating margin for the third quarter was 20.8%, a decline from 25.4% in the previous period.
“The strength of our profitability and cash flow enabled us to repurchase 2.4 million of our outstanding shares and pay down $63 million of debt during the quarter, both fundamental levers of our value creation model,” said Rees.
Outlook
Crocs guided fourth-quarter adjusted EPS to a range of $1.82 to $1.92, above the $1.75 consensus estimate.
It expects sales of about $910.6 million, below the $922.7 million Street view.
“As we look forward, in addition to the $50 million of gross cost savings in 2025, we have identified an incremental $100 million of gross cost savings, and are committed to driving operating leverage in 2026,” Rees added.
CROX Price Action: Crocs shares were down 2.87% at $82.26 at the time of publication on Thursday, according to Benzinga Pro data.
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