Crocs, the other casual footwear darling, just cautioned investors on a difficult second half of the year. They say their challenges come from increased cost of living and possible effects of trade policies of U.S. President Donald Trump. This announcement precipitated a 40% drop in the company’s stock price. It crashed by close to 30%, bringing its share price to its lowest point in almost three years.
The colorful footwear company, which bought HEYDUDE for $2.5 billion late last year, made the announcement about their lowered revenue projections. It predicts about a 10% drop for the three months ending in August from a year ago. This larger than expected decline is a sign of the times, as college consumers are feeling the effects of inflation and cutting back on discretionary spending.
This was Crocs’ worst single day decline in almost 15 years which came as a devastating hit to out of home investors and stakeholders. Chief Executive Andrew Rees highlighted the shift in consumer preferences, noting that shoppers are “migrating back towards athletic products.” He added that in the face of rapidly rising prices, consumers are becoming more risk-averse.
“They’re not purchasing, they’re not even going to the stores, and we see traffic down,” – Andrew Rees.
Retaliation hits hard Chief Financial Officer Susan Healy announced Crocs will take a $40 million tariff hit. Secondly, this negative impact will extend over the balance of 2025. This financial loss is likely to make things even worse given how tough the declining sales have been. In light of these challenges, Crocs has indicated that it will be taking a product-related sales hit by going lighter on discounts, likely further impacting sales numbers.
Rees expressed optimism regarding the company’s ability to navigate these challenges, stating, “I think we can over the medium-term mitigate the impact of tariffs. That will come from cost savings in our supply chain.” While there’s clearly needed focus on addressing issues impacting unaffordable consumer spending, the company must find efficiencies within its operations.
The combination of increased living expenses and a stop-spending mindset among many consumers have combined to make for a stressful economy. As shoppers rein in their spending, companies like Crocs must adapt to shifting market dynamics or risk further financial setbacks.