A maker of the iconic Classic Clog, sandals, and Jibbitz charms, Crocs, Inc. sells comfy footwear made from its buoyant Croslite foam, along with HEYDUDE loafers like the Wally and Wendy, in over 85 countries. The company began in 2002 when three friends debuted a boat-friendly foam clog at a Florida boat show and named it after crocodiles for their amphibious nature. It added the Italian-founded HEYDUDE brand in 2022.
Crocs swings to a $204.9M profit as the prior year's $738M HEYDUDE impairment does not repeat, while tariffs compress gross margin.
The HEYDUDE that drove last year's loss is gone, and Crocs returned to profitability. rose 2.6% to $1.18 billion and reached $285.7 million, but fell 2.3 points to 59.4% as new tariff duties and an unfavorable product mix took hold. The core Crocs brand is growing, but tariffs are now a persistent cost that the company is trying to price through.
Key takeaways
swung to $285.7 million from a loss of $427.5 million a year ago, entirely because the $738.1 million non-cash HEYDUDE trademark and recorded in Q2 2025 did not recur.
Consolidated rose 2.6% to $1,179.5 million, as a 4.3% increase in the Crocs brand on higher average selling prices more than offset a 5.7% decline in HEYDUDE brand revenue.
contracted 230 to 59.4%, driven by incremental tariff duties and an unfavorable product mix in the Crocs brand, partially offset by lower product costs.
Section summaries
Management's Discussion and Analysis
Q2 2026 revenue rose 2.6% to $1.18B driven by higher ASPs, while operating income swung to $285.7M from a prior-year loss due to absent HEYDUDE impairments.
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Consolidated revenues increased 2.6% to $1,179.5M, with Crocs Brand up 4.3% and HEYDUDE Brand down 5.7%, as higher average selling prices offset lower unit volumes.
contracted 230 to 59.4%, primarily from incremental tariff duties and unfavorable product mix in the Crocs Brand, partially offset by lower product costs.
SG&A expenses rose 4.2% to $415.0 million, pulled higher by direct-to-consumer channel investments for the Crocs brand, while HEYDUDE marketing costs declined as part of cost-savings initiatives.
The company repurchased $250.6 million of common stock during the quarter and later expanded its authorization by $1.5 billion, while ending the period with $170.3 million in cash and $880.4 million in available borrowing capacity.
The company expects to recognize a benefit from approximately $70 million in IEEPA tariff refunds, with $20 million already received after the quarter close, while new tariffs of 10% to 12.5% took effect in July 2026.
What changed
The HEYDUDE flagged in Q2 2025 did not recur, removing the single largest drag on reported earnings and allowing to return to positive territory.
HEYDUDE decline narrowed to 5.7% from 12.3% in Q1 2026, continuing the uneven trajectory that has swung from -3.9% in Q2 2025 to -21.6% in Q3 2025 and now back toward single digits.
contracted further, falling 2.3 points after a 1.0-point decline in Q1 2026, as the tariff that first appeared in Q3 2025 persists and now includes an unfavorable product mix shift in the Crocs brand.
The $70 million in estimated IEEPA tariff refunds first disclosed in Q1 2026 began to materialize, with $20 million received after the quarter close, though new tariffs of 10% to 12.5% took effect in July 2026, adding a fresh layer of cost pressure.
Share repurchases accelerated to $250.6 million in Q2 2026 from $73.6 million in April buybacks noted in Q1, and the board expanded the authorization by $1.5 billion, signaling a continued priority on capital returns even as tariffs pressure margins.
What to watch
Whether the new 10% to 12.5% tariffs that took effect in July 2026 further compress in Q3, and whether the remaining $50 million in IEEPA tariff refunds materializes to provide a partial offset.
The trajectory of Crocs brand unit volumes as higher average selling prices—used to offset tariffs—continue to take effect, particularly in North America where consumer demand has been described as weak.
Whether HEYDUDE stabilizes or declines further after the 5.7% Q2 drop, and whether the improved trajectory holds or reverses as it did after the 3.9% decline in Q2 2025.
The pace of share repurchases following the $1.5 billion expansion in authorization, against a backdrop of $1.31 billion in and ongoing tariff-driven margin pressure.
reached $285.7M versus a loss of $427.5M last year, largely because the prior-year period included $738.1M in non-cash HEYDUDE trademark and impairments that did not recur.
SG&A rose 4.2% to $415.0M, driven by higher direct-to-consumer channel investments for the Crocs Brand, while HEYDUDE marketing costs declined as part of cost-savings initiatives.
Liquidity remained strong with $170.3M in cash and $880.4M in available borrowing capacity; the company repurchased $250.6M of common stock during the quarter and later expanded its authorization by $1.5B.
The company expects to recognize a benefit from approximately $70M in IEEPA tariff refunds, with $20M already received after the quarter close, while new tariffs of 10% to 12.5% took effect in July 2026.
Quantitative and Qualitative Disclosures About Market Risk
The company faces interest rate risk on variable-rate debt and foreign exchange risk from international operations, partially hedged with derivatives.
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A hypothetical 1% rise in interest rates on variable-rate borrowings would increase annual by $6.3 million based on June 30, 2026 balances.
Total borrowings had a face value of $1.3 billion as of June 30, 2026, consisting of fixed-rate Notes and variable-rate Term Loan B and Revolving Facility borrowings.
A 1% strengthening of the U.S. Dollar against foreign currencies would have reduced Q2 2026 revenues by $5.9 million and income before taxes by $1.0 million.
The company uses to manage currency exposure, with a total U.S. Dollar of $104.5 million as of June 30, 2026.
A hypothetical 10% appreciation of the U.S. Dollar would increase the of the foreign currency derivative portfolio by $8.3 million.
Translation of international subsidiary results into U.S. Dollars causes reported period-over-period comparisons to be significantly impacted by exchange rate differences.
A discussion of legal matters is found in Note 15 — Legal Proceedings in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q.
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A discussion of legal matters is found in Note 15 — Legal Proceedings in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q.