• Total Revenue: $4.1 billion for the full year 2024, a 4% increase from the prior year.
• Adjusted Gross Margin: 58.8%, a 230-basis point increase over the prior year.
• Adjusted Operating Margin: 25.6% for the full year.
• Adjusted Diluted EPS: $13.17, a 9% increase from the prior year.
• Free Cash Flow: $923 million generated in 2024.
• Debt Repayment: $323 million paid down in 2024.
• Share Repurchase: Approximately 4.3 million shares bought back for $551 million.
• Crocs Brand Revenue: $3.3 billion, a 10% increase from the prior year.
• HEYDUDE Brand Revenue: $824 million, a 13% decrease from the prior year.
• International Revenue Growth: 19% increase, with China growing 64%.
• Store Count: Approximately 2,200 Crocs mono-brand doors, including 390 owned and operated stores.
• Inventory Balance: $356 million as of December 31, a 7% decline from the prior year.
• Adjusted SG&A Rate: 33.2%, up 450 basis points compared to the prior year.

• Warning! GuruFocus has detected 2 Warning Sign with CROX.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Crocs Inc (NASDAQ:CROX) achieved a record revenue growth of 4% in 2024, reaching $4.1 billion in total revenues.
• The company reported adjusted gross margins of 58.8%, a 230-basis point improvement over the previous year.
• Crocs Brand revenues grew by 10%, with significant international growth of 19% and North America growth of 3%.
• Strong cash flow generation of $923 million allowed Crocs Inc (NASDAQ:CROX) to pay down $323 million in debt and repurchase approximately 4.3 million shares for $551 million.
• The company is expanding its international footprint, with plans to open new stores in growth markets such as China, India, Southeast Asia, and the Middle East.

Negative Points

• HEYDUDE brand revenues were down 13% from the prior year, with wholesale revenues declining by 20%.
• The company faces an approximate $11 million headwind to gross profit from additional tariffs on goods imported from China and Mexico.
• Adjusted SG&A expenses increased by 23% in the fourth quarter, driven by investments in DTC, talent, and marketing.
• Crocs Inc (NASDAQ:CROX) anticipates a decline in HEYDUDE revenue by approximately 7% to 9% for 2025.
• The company expects enterprise revenue growth to be impacted by a $60 million currency headwind in 2025.

Q & A Highlights

Q: Can you discuss the Crocs Brand's performance in North America and the drivers for growth after the first quarter? A: Andrew Rees, CEO, explained that Crocs Brand has grown for seven consecutive years in North America, tripling its business size. The company is confident in its product offerings, including clog innovations and sandals, and anticipates growth based on retailer feedback. However, they are cautious due to consumer environment uncertainties.

Q: How is Crocs managing SG&A expenses, and what should we expect in terms of growth rates? A: Susan Healy, CFO, noted that SG&A investments are focused on DTC, talent, and marketing. The growth rate will slow in the second half of 2025 as they lap previous investments. Andrew Rees added that despite SG&A deleverage, the company maintains a 24% operating margin, which is high compared to industry peers.

Q: What is the outlook for Crocs' wholesale business in North America? A: Andrew Rees stated that Crocs ended 2024 with a successful wholesale season and clean inventories. The company is satisfied with its order books for 2025, which extend into the third quarter, indicating confidence in wholesale performance.

Q: What is Crocs' strategy for share repurchases and debt repayment? A: Susan Healy confirmed that Crocs is committed to maintaining a leverage target of 1 to 1.5 times, balancing share repurchases and debt repayment. The company has a $1.3 billion repurchase authorization and sees its stock as a valuable investment.

Q: How does Crocs plan to drive growth in North America and internationally for the Crocs Brand? A: Andrew Rees highlighted that international markets offer the most straightforward growth opportunities due to lower market penetration. In North America, growth will come from expanding wearing occasions and product innovation, although this is still in early stages.

Q: Can you elaborate on HEYDUDE's product development and expansion strategy? A: Andrew Rees explained that the focus remains on the core Wendy and Wally products, with growth driven by color, materialization, and collaborations. The company is in the early stages of expanding beyond these core products, with promising results from new styles like the Austin Lift.

Q: What is Crocs' pricing strategy, and how does it impact operating margins? A: Andrew Rees stated that pricing is market-specific and considers competition and brand strength. While pricing has improved gross margins, Crocs is not planning significant price increases in the short term but remains flexible for future adjustments.

Q: How is Crocs managing promotional activities and gross margins? A: Susan Healy noted that gross margins are expected to be slightly down for the year due to tariffs and FX impacts. Andrew Rees added that while the promotional environment was dynamic, Crocs achieved strong gross margins in Q4, and they plan prudently for 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.