Crocs Shares Plunge Over 25% on Q3 Sales Decline, Tariff Impact

Crocs Inc. experienced a significant stock decline, dropping nearly 30% due to a gloomy third-quarter sales forecast amid ongoing tariff pressures and shifting consumer behavior. Despite a 3.4% revenue increase in Q2 and the highest gross profit quarter in company history, Crocs reported a substantial net loss of $492.3 million, primarily driven by noncash impairment charges and higher expenses. CEO Andrew Rees highlighted the company's strategy to manage expenses, reduce inventory receipts, and pull back promotional activities to protect brand health and profitability, even though these moves might hurt short-term sales. The company anticipates a $40 million tariff impact in the second half of 2025 and about $90 million annually, which, combined with consumers' reduced discretionary spending and preference for discounts, has pressured revenue projections. Crocs is also pivoting away from discount pricing to maintain brand status, acknowledging that the lack of promotions contributed to weaker sales but was necessary to protect margins. Uncertainty in the operating environment has led Crocs to withhold full-year guidance, reflecting broader challenges faced by retailers adapting to consumer caution and tariff costs.