Crocs (CROX) 29 Oct 242024 Q3 Earnings call transcript

Good day, and welcome to the Crocs Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Erinn Murphy, Senior Vice President of Investor Relations and Corporate Strategy. Please go ahead.

Good morning, and thank you for joining us to discuss Crocs, Inc.'s third quarter results. Andrew Officer. Executive are Healy, and today Financial Chief me Rees, Officer; Chief Susan With

prepared we limit their which caller. Following remarks, we your call ask questions, for that you to per will one open the

other regarding statements I statements financial outlook. our limited for SEC known provisions our of information strategy, achievements uncertainties Form and of securities some refer our accordingly, the including Before you on subject reports to, to risks, information is performance quarterly These more this the and and results, factors, I federal These to to risks filed cause provided involve would expectations remind may include, begin, with our objectives, and and Please the not that and call is uncertainties. on statements but materially. on to which the forward-looking are unknown these like safe differ or other reports plans, laws. actual harbor XX-Q intentions,

Certain a A conciliation unless refer financial morning. growth be measures. counterparts amounts earlier their to press we are these stated. is on basis, issued rates to or GAAP non-GAAP revenue release metrics cited this as in of constant non-GAAP the adjusted currency All that contained otherwise will we

At Inc.'s this to Chief over time, Crocs, I'll turn Andrew Executive Rees, the call Officer.

Thank you, Erinn, for today. and Thank us everyone. good morning, joining you

EPS enterprise $X.XX contracted enterprise exceeded growth that expectations. America XX%. grew and Consolidated XX%, prior results and per up revenues share X%, in an X% HEYDUDE led By to with terms on of brand increased diluted international guidance North grew by in quarter our third our reported DTC. We slightly of Adjusted basis. below year, $X.X XX% brand, X% sales X%. profitability Crocs revenues up billion of

results, elaborate prospects, on wins HEYDUDE's the perspective. covering a and the strategic will will then what the gives we're with our insights deeper some into around be first on the third today. we're I Today, from touching broader growth of I topics. consumer longer-term in share me along business confidence following quarter seeing what will I seeing priorities brand's early

will our XXXX preliminary updated financial XXXX. thoughts our review Susan on Finally, outlook our performance, and

time. the quarter making August, we our Clog, we investments online, third in personalization, enable all one that business, expression. Embracing insights, pillars, Jibbitz back-to-school Live product marketing to The Footwear personalization the around clog All our their were Classic starting season. Fully our the win both Classic us in led fuel of our with shoes with clogs, News by as turning love X our and for campaign Crocs for stores Classic well campaign product and and our engagement brand. quarter, as greatest Clog third Clog. Now high provides, consumers sandals are able the the world. Life platform created the Loaded to of This our as In grew consumer during of launched during consumers ICON, our named to self

Echo The introducing largely on explorer clog sandals, breadth building consumer male clogs, our products franchises. of developed silhouettes sneakers, across drive to and continuing by to to which franchise, and We're durable our new, in continues has brand. bring new a boots

to As priced innovations bring the Molded $XXX. new we this we're under part, in excited EchoSearch and both look market, the Mule EchoWave,

the on Another example franchise. our of how clogs we is in-motion have iterated

ride proprietary franchise results with a of our successful our this innovation features our of free foam XXXX. technology. on channels, our test in light We ahead rollout field along footbed, This new have in seen scaled DTC

gate, has fall scale an been value across chasing year, partners $XX.XX. offering the and last of replenishment. this at and from cosy incredible By the quick-to-market applying we're the of wholesale with DTC we're to learnings colorways Sell-out a launch expanded our strong slipper out able

In Charms. addition during our Jibbitz Clog & we X mystery quarter. Works These exciting a prehibited, Bath and scent bought with Classic collection, many life Body mainline our to to the included featuring a product, partnerships cosy sandal

Batman Crocs and Custines, Times of introduced Meal. our Squishmallow, Happy and also McDonald's course, We

natural we our of first Happy As of and launched collaboration pack saw a extension Clog with Happy Times designed a Cross personalization. results. McDonald's introduce the and curated a to McDonald's, fantastic China sticker in Meals with for assortment limited-edition Classic XX Meal, We chains the key

XX Meals were first the brand XXX,XXX Within hours, over over billion impressions. sold, XX Happy Crocs generating

Croctober. Since have XX Crocs owned we countries, XX, the in annual week, Meal and very Day driving Last month seventh celebrated Clog, Crocs, a on brand their debut, parents Classic we October launched in dog lockstep. over available of then, allowing and dogs alongside release celebrated heat. holiday within our pet matching our significant Happy coordinate much-awaited the we momentum fan-inspired the to With of looks

fully was partnership [indiscernible], we designed dot-com stores. Our there. release in our the clogs, And were available available Jibbitz and stop pair costume a a costume, with not of did Fan-inspired success. This in this a which your Pet huge retail Crocs, Classic festivities The just with is iconic friends. globally Crocs with in in select year, left released perfect both on own is like opportunity making life-sized right favorite loaded form versions, pairing Clog and Charms. a Crocs of

Clog. new post-consumer launch another of program. with all the achieved Crocs live keep-it-going limited towards take-back from clog through forward our new content step collected recycled shoes September, Classic circularity the edition featured In goals, consumer The we a our XX%

shoe remaining the XX% up Crocs-light of With construction containing material. to the bio-based

North holiday and revenue a to pre-pandemic to period. Monday Labor need performed Friday/Cyber The North Day, the led Now training constant environment in the consumer for market review by well key consumer DTC. closer the muted U.S. until being has reverted of back. holidays. pull we back-to-school consumer We a America, shopping spend patterns, shopping events but prior around season, since by have solid saw the Crocs relatively Black seen X% We business the anticipate In year, dropping Brand with and versus growth of geography. American

revenues Our XX% prior overall China, Germany. notable by versus growth year, Australia, supported in grew France and international

growth than year by third of on partnered XX% Our with grew of monobrand stores. driven top the X/X last China business growth the approximately over in more XX%, quarter,

As call, quarter behavior, our that It is more like consumer Shanghai being we second have during festival. the even and in Beijing. shared pronounced mid-season clear X was far industry Chinese during and purchase Tier is promotional the more key we conservative their cities seen pullback within more

is environment for accessible gain the more year. share and macro our continues direct authentic of result competitive In brand to China, light we're backdrop, a rest brand believe China, which serving this personalizable as broader of cautious of the our in the taking in a view positioning, advantage. Despite meaningful a we

Turning to HEYDUDE.

XX%. results quarter our third guidance, revenues with below slightly Our declining came in

detail the to the by provide progress on start I and sharing quarter, profitable we've made towards consistent growth Before want a I building brand. into further HEYDUDE

expression opened inventory prioritize showcase a to year, ASPs, a more pivot to elevated fleet channel of health, the of and turns our outlet outlet accounts, while we've began premium of a Since we last premium account our of then, up year stores. September improved made inventory, Xx brand. XX best shuted to XX% than stores In our brand rightsizing and clean building base

to strongly In rents foundation at right we investment driving to addition, this build towards accelerating our decision a invested as growth across for work brand, believe heat. market higher is relevance generate we profitable the the HEYDUDE. in We solid and while talent brand

While a confidence. HEYDUDE actions, what reflected has we share recognize year performance has about and me yet these bit let not this investments more me little given

build X focus we about As then and our quarter, last creating on are in and and culture stabilize female to brand WallendWendy America. sharpened we community, adding strategic accelerate HEYDUDE strategy North our driving used spoke imperatives: more, a

we've shoots. imperatives, following Against seen the green

This content had partnership Director global influence, connectivity plans seen generated and community. the and In to to content brand thrilled key a Sweeney. driver further has and is ambassador Sweeney with we as of best the to our female announce our First, Sydney have brand performing August, build HEYDUDE catalyst we culture of we believe date, Sydney were a youth ignite to Dudes.

bringing new, TikTok did consumer. During the and excellent we younger response, a Shop, we quarter, an launched

on in younger underscoring our our audience. quarter, the as account #X In Shop. key of [indiscernible] brand Number the select launch the on TikTok opportunity to TikTok further Instagram surpassed fact, days, emerged global followers

named shoe Collegia also time Sports for our Bartel official were collection. refreshed in of We the comfort

focused we are the on Second, our icons, Wally. Wendy and

[indiscernible]. Our canvas, X stretch include stretch core stocks, offerings

quarter, a four During Beetlejuice infusing offerings collaboration we the In few. a [indiscernible]. our long-term successfully name announced engine, through Country to singer, iterated Sponge Music we Bob partnership with October, and

featured as up to out same platforms sold Since this the which with the collab product our show seen we've $X,XXX. Wally, up were the secondary initial launch, in in Our minutes.

and cushioning an began across extension on our height. product QX quarter, innovation, accounts. new third DNA call, discussed the Wendy global the with we compass scaling and our added Wally of is As In this select we the that

women's As and left we're poll them beyond healthy seeing Austin a core, scale XXXX. our very plans men's we in silhouette, to look our with signs demand in

hyper-focused we're on a account that retailers, streamlined strategic and base are to relationships to American from across foundation sustainable on the similar market focused our stabilizing Third, of our drive North grow. We've which to Crocs. building

digital year, weeks and We In across quarter, across have to the strategic improving worked third up ASPs last our the to key improve accounts. build. we channel ASPs supply in our inventory and position our were of improve XX% saw

are premium with our stores Our expectations. outlet performing line in

will and operating the by than for longer corner. the HEYDUDE environment, encouraged we planned turn business the take performance signaling are we While indicators, these our it positive early recent current initially to

and confidence have opportunity. give of us we long-term are around about positive brand, to the potential reinforcement the the our seeing shoots continue We green

of I'm now to I incredibly team for call against urgency our turn the quarter. the proud through executed the Susan strategy. to over financials the our which of they've walk AG and sharpened will

morning, Andrew, everyone. you, Thank good and

high the count. bottom by Our line, performance, end results supported share and lower third rate combination operating enterprise and our quarter underlying top on of a lower-than-expected of tax the a exceeded guidance

each were For were to channel of growth volume-driven, brand a the tied XX% product DTC was mix $XX.XX. largely growing slight prior to since sold, units erosion. million total growing decreased Crocs and Brand, with balanced, wholesale year X% The to XX.X last year, with increasing price $XXX was and shoes year growth million X%. of last ASPs and to X% while pairs ASPs below revenues

growth of saw down prior growth markets revenues revenues year was digits. year, year's brick-and-mortar to was growth XX% in in North of versus million. we XX%. by by European In quarter, while X%, of XX% last growth led Germany France. direct of Underlying growth was to of prior led North continued excess rate, show up up International X% grew grew healthy versus which on top the DTC $XXX was led by mid-single the our and Growth China, wholesale XX% $XXX DTC, American growth while and wholesale X%. XX%-plus million America

last from XX% Wholesale XX% Turning down revenues were revenues were DTC year. down down to were X%. HEYDUDE. Revenues $XXX million, and

plan did wholesale declines DTC. for stabilization of the quarter, in we While anticipated third our guidance

marketing, the making support changed strategies strategy for believe performance brand our Andrew impacted To we investment which we outlined shifting marketing, towards investments digital our are performance earlier, decisions negatively. We right our brand, of in the below were XX% the last million to quarter. strengthening year. by long-term shoes X ASPs, of continued health of up lower, X% sold, highlighted volumes the the Concurrently, $XX.XX pairs around the

for year. expansion international up quarter than of increases, from The points by margin the XX.X% and year. costs margin prior or XXX margin basis gross offset mix. last price adjusted Consolidated in gross channel favorable adjusted points drivers XX part select Crocs XX.X%, was basis product was primary Brand were third higher

digital basis gross the gross favorable as points pricing. year, quarter. mix adjusted XXX expectations than margin and margin benefit or as was adjusted primarily brand not below driven Overall, favorable trends the was expected, mix was as channel HEYDUDE channel higher freight, XX.X% softer-than-anticipated in by given prior

Our third XX% prior dollars quarter adjusted SG&A year. to increased

to gains. driven share rate long-term Our marketing, digital was support adjusted and points investment compared XXX SG&A retail prior in basis by continued XX.X%, to up talent, year, market

investments third adjusted XX.X% XXX XX.X%, operating basis margin points SG&A. quarter year, down in driven was by the prior from and Our planned

Third quarter adjusted diluted earnings $X.XX. XX% per to share increased

was non-GAAP XX.X%. tax Our rate effective

tax tax the debt occurred rate savings refinancing in of the to our cash was quarter. largely that Our lower-than-expected tied from intercompany

$XXX was achieved brands turns our X% XX time Xx Both June an a of since decline basis. of of last on annualized year. as our goal million, balance inventory Our this of above inventory

of million of liquidity equivalents $XXX $XXX and revolver. capacity our and on million Our position comprised cash remains strong, of borrowing cash

end $XXX reducing approximately at $XXX and we of we million have quarter, $X.X lower ended borrowings of the to leverage During repaid range million. debt, the long-term to net X we approximately debt, target Year-to-date, million of quarter X.Xx. our the repaid

approximately million $XXX Enabled share shares, $XXX the buybacks, generation, we $XXX by free million our price per $XXX reproducing X.X have We flow we share shares. on completed million at of best-in-class remaining X.X million average currently cash share. have also of completed repurchasing an buybacks quarter, authorization. repurchase of million share during Year-to-date, our

and the XXXX Based our visibility year our turning adjusting Now the fourth outlook. have guidance. full to we quarter quarter, results we on third are heading into

enterprise Our full revenue assuming to September currency is X% now prior, XX. growth X% rates approximately year X% as versus of

the narrowing revenue growth For X% our Brand, Crocs X%. we X% to approximately from range are to

are approximately lower to to than down our lowering down and based both wholesale X% XX% For HEYDUDE, we sellouts on range revenue previously XX.X% assumed in digital. from

We to maintaining for gross plan to our year margins continue the operating by the adjusted powered more guidance XX% our we are strong for consolidated year, margins, up adjusted across than enterprise. of prior which

our from XXXX raising lower-than-expected to tax share diluted and our rate repurchase at annual assume repurchases. $XX.XX. to reflects repayment, per but $XX.XX $XX.XX from of to the debt guidance with our part policy, range share impact range from are high does the share not incremental $XX.XX Consistent end this earnings in previous in we future prior future quarter, adjusted our Resulting any

are XX%. be XX% approximately non-GAAP and underlying rate, the to tax expecting approximately We effective which tax approximates effective paid an rate taxes be cash to GAAP now

our to timing cash tied lowering expenditures million, capital annual the select profit. guidance $XXX million operational $XXX million million to $XXX from are We to to of $XX

guidance for our to Turning QX.

We consolidated slightly revenues the be range at XX. of rates currency as in September flat to expect up to of

to We expect growth. Brand Crocs X%, international approximately the like grow double-digit

a growth more meet impacting in is consumer in rate on, our demand. rate and Our ongoing China; to which two, cautious growth regulatory fourth based pressure below international one, year-to-date our quarter India, ability is

America. North to Turning

We a the expect our quarters. a as slightly expectations more includes timing wholesale shipments negative fourth quarter, well which of between consumer choiceful of as

For year, America expectations. flat prior in the previous expected line second half, be with North our to is to

remain to DTC QX expect We positive.

our down implied the For The driver expect between sellouts the largest below revenue up to is tied be lower to quarter, in and X% digital HEYDUDE, outlook of both X% of we mid-teens. lower-than-expected and range on revenue former to low wholesale.

drivers, [indiscernible] our our including international stores our assumptions in around noncomp are forecast. with sell-ins, and Our line former distributor

are to slightly versus Brand margins down Crocs year. for and gross enterprise, HEYDUDE up expected be up slightly with the Adjusted prior

$X.XX the expected We expect share margin QX to Adjusted adjusted to be in SG&A range in spend to $X.XX. operating and XX.X%. diluted be be to is high-teen approximately adjusted per earnings between

we shaping to to for want are we on based While thus far. guiding I not have XXXX yet, your models provide some visibility the preliminary

expect international. Crocs, led growth XXXX For we in revenue be to by

an moving As a reminder, into we will will be negatively impacted quarter, by the leap our QX. in timing of have lapping back addition to region North year. Easter in in first impact outsized America This the

year For is stabilization. HEYDUDE, brand about next

momentum will group shoots currently broadening brand marketing As around are that seeing we Andrew the lag of the from but consumers, green shared, a financial results receptivity we note seeing. are

down XXXX, be we the first sequentially wholesale. With the from to into quarter visibility we have expect fourth size of quarter the

and retail XXXX. EBIT talent, continue growth, put will plan rate digital our incremental marketing, which XXXX, pressure in margin create behind sustainable long-term In order versus on to invest we to to

are we we significant flow. closing, decisions the and believe In we our does delivering our will generate on what with that to interest shareholders, near-term margins focus in are of long-term the company best continue making best, cash free and growth industry-leading that company

his call back I turn the over to thoughts. for final will Andrew now

Thank you, Susan.

investment X drive and behind methodically and brands to new our markets attract on usage consumers talent, focus awareness new retail; occasions. and consistent, our X across for through our remain fuel existing through to digital one, our brands primary initiatives Tier product durable market and and share range we'll company's diversifying across items marketing, strategic consumers; to long-term growth: global three, Our drive gains two, ignite and relevance levers both

we'll the time, this call At for open questions.

The first [Operator Instructions] comes question with Komp Baird. today from Jonathan

expectations forecast? Crocs one remain QX some us wholesale, just Susan, I'll of stick to Could driving for you but you know about And topic I little here. with shift just on the America. of more mentioned ask remind detail? in the for what's DTC parts give DTC? want to a North you moving I Could positive. a

bigger maybe picture And question. a then

into see, for some total As XXXX, what look role in And of XXXX? drivers we forward that Andrew? are will America the outlook you cross North play the what

Great.

So I'll the give kind the around in will Susan year, do Jonathan. of take you a let's it and remainder this order, mechanics that of picture.

underline and our half, for but Thanks, Great. about in North in unchanged. Crocs the are North brand we we pleased in are with Jon. When America, unchanged our be North think second the third America, really expectation the half, of quarter full that we will back expectations for the flat performance America were the

by expected patterns is taking by in took we're positive, than wholesale, approach. So product fourth channel, shopping retailers down macro mindful current offset a And be planned. as of we overall, which consumer QX headwinds as DTC quarter, well planned in as is quarter we're fourth to prudent earlier the and

Yes.

we step for fourth provided the so to X.X% So grow picture, quarter, all guidance on year, the back the based the America will this North for we big if year. about

And so size the cash profitable. So American of a obviously, highly absolute And business, as what It's the overall a it large at look it. this play it, business, generative. stable we really well-managed, does is, business? within It's business. role our North is

international the to growth the we flow generates HEYDUDE. fund, one, cash making that can in Crocs, investments we're income, of for also some it is So use but the the

across balanced It's channels.

have wholesale we business. a So

have a retail business. We

on and We digital, some been will the that going strategic within be in shifts productive, We to that's a past more over attractive highly have the XP think platform. our We've we think digital business. year made future. Amazon

as continue modestly, business able we'll confident positioned that to in short overall really business of it's playing being and the to So longer grow the plays -- over role that role and kind We're be it the to an important term, the portfolio. our very about today. we think well

Jim question with next The from Stifel. comes Duffy

Multipart question on HEYDUDE.

account HEYDUDE. those and invest strive on elaborate continue to to willingness base for First, you speak distribution you to your brand to HEYDUDE actions? Can streamlining you profitability inflection. can And profitability mentioned the operating against for I'm hoping then brand

Okay. Great.

a we to or differentiation accounts, So strategic a we of adequate from we national call, really large grow base we where back off about can the want the account on with that almost where customers partners we smaller an talked and of now, segmentation cut really focus perspective, base sure alliance year accounts. have to some as ago this and make we broad

of do base strategic, well-positioned smaller, We points can of keep terms are think important of regional a kind lot also more consumer in and attractive some we what giving broader a we distribution. customers of consumers reaching and select or

happened at So year that ago has point. probably this just a

feel good account-based really So an from we we perspective. are with where

In key drivers there's of margin. as think we future. couple the a gross One of terms there profitability, is about

a from long-term there a some get You've start in some based We that's not on elevate We're margins to we in a the think impacted seen that place made investments substantial XX%. be. to to the strong that's brand going of past, we've 'XX to the in of improvements in gross us have around low gross but in decisions for midterm. on gross infrastructure margin is Based 'XX. think next made, margin quarters, some the pricing very couple we've

in then investing And obviously, SG&A. we're substantially

terms investing elevated at we're of in rate an So marketing.

talked the activities. prepared We our remarks. a lot on about of saw them You

to the brand. media a think female-orientated in marketing press, especially and younger this quarter. engage create for more broader to in in consumer, investing and the consumer in you've the to on We're social awareness I pivot also -- to seen them

international SG&A preparing stores North growth, We're outlet in our this our America also opened fuel in that growth. investments we've for and also making to both year

the growth I they we're is We're in long potential term. make will So off profile this will prudent we long-term for pay us financial what off. We're you tells pay of the supremely that of the investments HEYDUDE. that are Inc. confident do investments. and they this, frankly, prepared to business shareholders broader medium allows to in And to think the Crocs, think confident these

Okay.

valuing Crocs, contribution at looking the the Just Inc., isolate Crocs to many In and for Andrew. brand are up on to purposes. follow trying people context valuation that, the profitability of of that

brand profit And get people the additional would, perspective think, different size help the profitability that pools? I on HEYDUDE so of assessment of the to

people right? highly look reduce sustainable future at encourage look Yes. mean the I investors think shareholders would totality kind of generative. and our deleverage of to highly I to optionality us risk flow total in to about at our And basis. potential to profitable, within company also So investing the as encourage and continue guess the streams that to I I totality, is return those cash company, look you the but provides cash a and company, at the the in cash would

investment good profile. pretty a that's think I

the for with investment HEYDUDE, SG&A tempered then all at plans? have And outlook the you

I would no. say

that first We brand. making, back return. extremely I -- a feel investments potential of long-term strong what I'll confident We're around answer. they analyze haven't. we're go the And sort provide as the of said We of we to we to very my will mid- in HEYDUDE the each

The with Barclays. from Adrienne comes next Yih question

Great. long that order it you're futures? take my that? how some the spring you up you to sales Can give book -- itself? And question wondering well, the season if work background. of have you pulling of, are we're of on retail Do you operate highs us through I'm how about that the kind that? I being does high about last lows of And is environment? Andrew, a you channel sort some kind having How sell-through you for some through you think if can kind sort then toppy had managing think to in guess, back you are talked of talk and the are the partners for color the holiday? that back-to-school think

the about more to you're partners I a traditional as or shopping others this, pattern. so a month a I report retail about week probably, return our lot or But Yes. more Yes, this. a in think talk suspect so, do you'll consumers you've and look, heard hear

say incentive shop at they of when They're a shop going to to kind they extra be to And kind transact. holidays they it's need some cases, little They're pre-pandemic. it. whether key in promotional. of or going will events, need We

think that's of components we before of got into were of familiar the I sort pandemic. supply-oversupply So lack we what with the

or -- I they've been getting they're back think over so. year back there there last the

the partners, think that pretty And in understand They're country, our fourth into quarter. sophisticated. They retail adept. certainly I they're anticipating do We're we highly data this to this. probably this are have mean seeing happen. really more than I

So I pretty I intact they'll think there a job. think they're and they're and do transitioning pretty quickly, good

of a pretty excess up try try terms we're And sellout lined We was but in prudent. much the in order the inventories sellout. books little aggregate the sell-out. for we We are order We want top bit our of that books, on calculate expected don't to shifted, timing to make think that And sure market. very I with think Crocs.

progress, aggressively about work frankly, talked excess been we this trying down market, inventories made those to but and the we've in not have year, quite we've from the to had and we good progress want make. As a perspective, HEYDUDE we've all

Bank America. The next Chris from Nardone question with comes of

like just that crocs.com your around how Can just your elaborate you in more elaborate a fully fourth Crocs Can bit to on now. your seeing you your America just on And a maybe you Amazon doing based direct-to-consumer relative Amazon what business quarter-to-date? the quarter, think business? I North that? business your rationale switching XP to you Then business little on in the confidence you're lapped growing model, view

hard say that's a to Chris. would question I answer, Yes.

et feel and about comping plans great about North Crocs And is So place put going We that business cetera, line. that no on think right? planning. on about up back-end look, feel growing we great We the line I the our about so in product feel things marketing. for all logistics, holiday great We business, America based DTC we well. our those our all feel great it, but -- product

feel good really we about So it.

and our would our obviously a marketplace combination premium our I of business a dot-com are outlet also of that's business. say stores, stores, combination predominantly which

feel it's so play it. really there's, uncertainty And to but everything obviously, And think out we fingers we how good play will some crossed, about going there. out,

brand. try Amazon. also We've would Big on And important when on customer. picture They for say, go start our shopping also XXX% We're don't democratic kind Amazon, broad as backup they to of I Amazon, where prudently They're other got Amazon. we consumers say expectations. to searches plans to of look, it they're a a their I well. Amazon would their if on things. of plan a a initial many for reach our are. looking Crocs, super We lot on want but clearly pair things

both to et to cetera. more very important an North from is And the participating the this on bring that other little a marketplace, brand, market, here world, our in emphasis opportunity America bit us we and better think we around parts on for have of control that products

is I is too. think And consumer think liking transition and we're the we enjoying productive, the so it,

the follow-up one outlook. margin on just And quick operating

you a next it think year. be should mentioned I bit lower little

close term, the margin brands to of hear your but operating wanted longer-term grow maintain to these your balancing Just rationale to range, target? spend XX%-plus an mid-XX% for both long to investment about around also the trying

see we're on take invest. We that quarter And retail. on can as versus one. planning invest see revenue is an more generating We we we early fourth said, put see to call. we're XXXX. marketing, been we'll you I investment. So We're for behind these guidance opportunities -- really when continue we're and the on we incremental said, This year, look, that's to give about investment has our And planning next investing, both about digital And continuing very pressure to opportunities talent, margin what going the on year. XXXX as disciplined process very to brands. but return for rate XXXX Andrew going in our EBIT

I say Chris, Yes. And look, mid-XXs. say, I picture, big would would

guidance to I our think years. of above that XX% levels this for year. significantly been we'll above be profitability. recent We've extraordinary according are in These

base, close. is come look at players our above. there are you very that Nobody If few competitive

which we'll generation, backwards those. growth to levels got forwards maintaining attractive underpin cash between actually in we've opportunities, long-term to high flow obviously and valuation. of We're mid- and So balance toggle and our investing overall profitability

The with next question comes Guggenheim from Bob Drbul Securities.

actually. questions Two

one you the North strategy the XXXX? change HEYDUDE North seeing? in marketing is, The in growth And you for what second America KPIs first market question can the Crocs just do you America, investment for in expect for you're talk is, for quarter? about And clarify can the

Okay. Two different questions.

first Glad super you one the Bob. a asked important actually So is question, it.

on the key is the brand. decisions back quarter of made third we one pulled performance that So we marketing in the HEYDUDE for

at had trajectory, looked were not multiyear been but be. level of still performance creeping the wanted sort they our up. ROI was where we the say marginal I of to positive, we've them would As marketing

wanted to a the push future more marketing the long-term we brand of and brand. investment the And of into into

So in we pretty pullback performance a marketing. made distinct

ad that's money basis. of Google of those kind Search, a spend can things So that all you or dollars, on short-term

a brand really be measure TikTok fund Roll, up Barstool long perspective we've from the that that returns, used to Sweeny, your pulled And some money Sydney, And You over that and starting comfortable the think with, that Sports shop. return return dips more Jelly we TikTok the much if activations but of marginal then doing, attractive to investment will the on been don't a feel that. you we we can level term. so back

and New right it's dollar we -- creator revenue in for biggest That change, probably Crocs term. And think we reduction has your the a the thing expenditure value our and grow it's miss our biggest That and That's real impact, the had say in in the long plan. driver a for it QX American from But for Crocs, slightly explanator guide perspective, was do the for I HEYDUDE. think clarification for is XXXX. biggest a also to short-term on Crocs value America HEYDUDE yes, would and think question international current modestly in the I North then on will is growth. we the North the for

last into that come continue we X You've XXXX. for seen years, that and are through will very confident the

with next The Rick Raymond James. question Patel comes from

I terms potential Sorry in with can Crocs' expand what XXXX. you growth ended about you that. just of was upon in international hoping

how continue, next that most you're market should in China the about we lifting? you think confidence seeing heavy that to you given blocks In to So which the the the in building expect of year? slowdown do have growth

Yes.

you, Rick. thank So

I QX in definitely we still So we've what growing China, we saw point to So China. are we in 'XX. just by China is the store underpinned that in a XX%, the not year, in China XX% -- but do in to done would growth are really in in grew seen that next continue right? that I openings intend sorry, We XX-plus slowdown China, intend out, lot but would monobrands to percent it's we grow grow of we've still and a reported, growth say we QX

we So mono-brand work we've our stores. opened opened grown digital a with select who range We We've retail and successfully. operate also brand ourselves, stores. business of partners

-- year, by we've to stores think of we'll of the and opened XXX I the stores, in end year-to-date. excess XXX mono-brand we've have close opened

think year our a well as those as have accessible growth as that et for the comfort, we are the marketplace cetera, next points, Obviously, to grown price in personalization, positioning is positioning. competitive through going be will provide open year,

China. will grow in So we

I India. to we're around China, confident addition In think

We think, to in is. restrictions has knows with the Everybody That's been been imposing your I has with some what need the India a recently in Indian India. have, that government attractive model associated BIS. make very we business that products impeded

for HEYDUDE and to but Crocs it's have fund year. production India up year. it reach supply will year, next running and both started -- market this reach in It will We next

India. about confident we're So

direct how France, a successful. that key anticipate be continuing. continued bit we in Germany Europe our quite talked and markets We've to about Western

So in key that that's, little as see of bit stable South Australia probably next years, more of some for had Korea. great We've the the couple but business success obviously, We for years. is the drivers. active couple a last those of are as an

traction. I But focused obviously in resetting is is kind a that We're a of work that that focusing would big frank, Clog get and in remains say, evidence very the market potential. starting the on to Classic long-term with personalization on be to big and with Japan progress. business market,

growth are perspective. engines to So there our aspirations a think international of I from plenty support Crocs

question next Williams Sam Trading. The from comes with Poser

and you reiterate this how And my did evolve? was what thought can it. about confidence I And is, was going talk guess -- question you And other start your mean, So happen what to what are I driving than -- are all long that specifically to switching we you how under sort what to up beating fix? what your different have you -- happened than in of Andrew, HEYDUDE? marketing control that doing and sales again?

consumer control? as And as macro to have let's far on, out you It say, your some going and take of partners picture, not me but like on responding. let's the that's so what's stuff is looks under not the good

Okay.

start to and clarify. with first So your of then back go last part can question, you of we can me just kind let the the part,

we at is we last if situation, I doing? think, kind will the like? that do the you're Why are So getting think of what help you part,

we're is that things highlighted. marketing, doing the right? So are which So you one multipronged,

awareness, in the we culture culture relevance this consumer, engage country, drives I So And in marketing That's and or -- culture of And think pivot a broader that. very, countries resonance other very you a that drive agenda, significant the world. about younger set female talked pretty drives certainly. this country brand female important. to which you drive think in I brand around culture pivot consumers, a mentioned think in towards

say, would is, Second management. I wholesale

differentiation. I to So the time with proactively There reducing have there. at done. And good right be alliance they product strides working that to is we're right adequate inventories, all some of in-market still our work they making is sure partners have think make the

I and the off they more in we So things, the think term. work longer pay there's will done, bring be to but right

investment complementary the the I see opened Wally would between the balance channels centers the very our in Number Wendy, that fourth a much September. stores We'll premium stores. environments perspective. and XX three distribution, breadth consumers another And better in are of the XX We've think say, in from well. I of those about to They premium it end brand. female. We open building, a allows chain performing those year-to-date of is to see attractive between is of male are outlet and quarter. That

We those kids have environments. a in also business

exposure valuable So we that's consumer mechanism. a think very

laying growth. the quarter. in markets, direct thing We groundwork international Third for X X up the is opened

markets. you India Germany, as digital that at I say U.K., And we're have the Australia market, in just present direct presence. retail this markets present we might They have So in a means any We are remember, in distribution, presence those too now direct when don't as we all in stage. small small. and have wholesale

and to seeing, what to to small, we them are set Germany and we're numbers diverse of say the India to Australia. the is consumers, a relatively expect that's while pretty would I consumers from be small reception But positive those a U.K. from

and QX. perform addition, orders, the we incremental international Spain have distributor, opening to distributors Essentially, that through they'll in range a continues business will and be well Italy so starting in business. In of they're QX ship we the a up and

beginning to say we're building So enable And the all getting will that of question. the growth at in I come growth platforms it's the marketing, back but would in future. now -- future what it's the well, future the let's your

a the about and this of product 'XX, 'XX you beginning a -- marketplace. of ton Well, long At 'XX, I end mean, I of the time into end ago. of shifted fiscal calendar wrote

the And point think is I to the were last year? So sales about? the question starting how overstated guess right this, what's

this? shelf of sort where ahead now? made you happened measured you And that And taken should what things space maybe made what just how were your today? much growth of of decisions the be decisions And approach were and you did are doing caused caused more filling you back of that a sort -- then what would have

but to happened and know as little I more to a And on next next that was bone meat what but then numbers confident, we'll in just year, want what happens you're control get don't I know what versus... lowered -- the see your I just

they some I gate shipped it. our too We and didn't product, more either, how up. noting think grew they the constantly high was of were out the customers So was said fast, you brand, out So bought of you right? product. high stocking, we right? wanted We know up kind definitely of we when of some didn't how

time 'XX 'XX we And of retrospect, ship I sort think you this into in about much if frame, too think absolutely products.

they of what were we wanted. the we not And decisions that you're the marketing that creating kind I made if ineffective. were the did We think the They thing not wrong, kind spent weren't and initial that They was was do were ineffective. So focused sufficiently impact that effective. money, activities is that wrong, other we well then wrong, of right? but and weren't they asking consumer, resonance at right were

time. hoped, around brand of is us us and investments and but that be little whether The we'd I little offensive making and now that, integrating the the the, capabilities international. knew delayed third that probably whether of that a be the it all took stores that longer place of thing took in It of bit and came DCs, some than systems because that say, process we're would very putting that. with infrastructure, We

we thought. than that's taken longer So

being it in high almost and that sorry, $XXX sorry, -- revenue, million million was $XXX-ish is revenue. Now $XXX we $XXX said, bought now a business million million, in that approximately

has because accretive it along. been is It on bigger. for but generated an associated profitable a is It's growth debt substantially or what associated it's been down the debt the along longer-term of we is with investment invested perspective So and we investment. all less with we've the think EBIT potential, percentage down cash, the lot and paid paid the profitable

have and has that those that's doesn't team around The what willingness get future. the we that confidence -- have we change have we to and activities and deployed it of our those would trying place at that not strategies expected, hoped you're So our that gone and if support in to as team, strategies kind activities. but

very is sure we're that that. going confident positive I investors. So super to we're outcome a just be what about we'll That we're clear want do, and to make for

UBS. Jay The comes from Sole with next question

Are there Crocs if awareness? bit growth? Great. big to the in year. doors the talking brand about mean growth that, wholesale picture. just new But beyond of a you new growth mean little big maybe about opportunity Andrew, trend what's could categories tell talk share plan of you And brand America North North market Obviously, get can you see into? I an us to raise more you next sort drive do XXXX? I we your open picture. gains or get to America stores in accelerate rate beyond categories? your Just in we'll you in beyond of maybe and own can why how should it get existing whatever expect of into growth sort channel, see direct-to-consumer

a the that's great issue will X-, a I sort -- in sure in the those And strategic right? that's question, underlying right? a the your very international frame, I our make is That's be here time large say, So X-year the Yes. want and the growth there big just is that Crocs look, would business, I of driver term, business, Jay. penetration short to in primary for what markets not that. attractive U.S. and reiterate it is question. fraction international the

in question America. growth drives Your North what is

growth. distribution I don't think there a huge amount of is

want are a go. the but continue maintain I for positioning democratic, our mass for as brand There our are to that to are other not think that's place we I could to places right brand. we we the elevated resellers think There don't want be. in. just places represented we were

I going go we're there. to don't think So

there long-range that America broader opportunity We North is occasions. had in there's do has and for a say, into think growth do continued think there think We is 'XX more growth and do development consumer silhouette We us digital And growth think I in as in 'XX. funnel think would of, in and a nice play We continues We potential. here to we in growth sandals. the there's goes personalization. more set digital. [indiscernible] an

have us there. You experiment seen

experiment can to in we today, are, we think a We we time. there over that arena, say slam-dunk winner I there, get but have wouldn't but will continue

international cow while sort incremental we to cash and opportunities and the our about XX-month frame, that select to really continue XX- of growth, product in that we're growth for thinking the engage is consumers North perspective. funding So experiment from America time

question Sandler. The Piper Andreeva Anna with from comes next

next what just follow guardrails the given investments to Are the of do mentioned for either at on think up talk about level you you is place at the the Can of these the opportunities HEYDUDE. we XX% Great. investments? as OpEx with about business pricing or level the business. guys of year? maybe management there We things, profitability side Crocs some wanted at consolidated Andrew, overall to additional you offset think I have in right

important for sure our next scrutiny year. about here But I we increasing continue it's the SG&A, making question, there's do a and This the to KPIs, into lot around Thanks lot we're emphasize Anna. is of mentioned think to how which is We've to guardrails disciplined right thing investments. really making plan One a Susan. you there's we -- are mentioned our investments.

better HEYDUDE, nimbly a investment And as about saw to we we the there. from pivoting we find HEYDUDE when opportunity did Andrew readily and when indicated, and brand performance need as marketing with do talking pretty pretty that on pivot, we that

So we're it. super about disciplined

But when pressure. that to be and EBIT an year, create will including -- incremental as XXXX XXXX an year, margin investment we continued investment be said we're

we the expect So be was guidance reiterated Andrew next that for year, XX% would to below And that. year. this

Andrew Chief for Officer, to remarks. closing This over like would turn the Executive concludes any Rees, to session. question-and-answer our conference back I

I conclude for to today. We by you. interest company. Thank everybody time with thanking continued just us want their in spending appreciate you our

now has concluded. you attending for conference Thank The today's presentation.

may You disconnect. now