Crocs Lifts Outlook as Heydude Leans Into Wholesale

Crocs reported third-quarter net income of $216.8 million, nearly 50% higher than a year earlier, as the company raised its annual revenue outlook on Thursday.

Total revenue topped $1 billion, up 4.6%, Crocs said. The namesake Crocs brand produced $873 million, up 4.4%, while Heydude revenue rose more than 6% to $170 million. Direct-to-consumer (DTC) sales, meaning sales made directly by the company, increased nearly 7%. Wholesale sales through third-party retailers rose 1.8%.

What changed in Crocs' outlook?

Under the raised outlook, Crocs expects revenue to grow about 3% compared with 2025, up from 1% to 2%. It expects the Crocs brand to grow about 4% and Heydude to remain about flat. The reported guidance did not identify the fiscal-year end for the 2025 comparison.

Gross margin, a measure of profitability before operating expenses, expanded 770 basis points to 66.2%, Needham analysts led by Tom Nikic said. The increase ended four consecutive quarterly declines. Nikic wrote: “The Heydude brand achieved its long-awaited return to growth in Q3.”

Takeaway: Crocs improved sales and profitability in Q3, but its raised annual outlook still assumes a flat Heydude brand.

Why did Heydude return to growth?

Although the Crocs brand remained far larger, the smaller, struggling Heydude supplied Thursday's main turnaround narrative. On the analyst call, CEO Andrew Rees said the “quarter marks an important inflection for the Heydude brand” and presented the result as an endorsement of the company's three-pillar strategy. He acknowledged that the topline boost reflected weak results a year earlier.

The pillars, Rees said, are staying “laser focused on our core consumer,” thoughtfully diversifying the assortment and pushing more deeply into North America. Heydude has added sandals, which Rees said are outperforming expectations.

Takeaway: Heydude has one encouraging quarter and a clearer product focus, but Rees's soft-comparison caveat limits what the rebound proves.

Will North American growth bring more stores?

Probably not many. Rees said wholesale is a “more cost-effective way to reach our intended consumer,” which argues against a large new-store program. Heydude's return to growth in North America was driven by wholesale, up 14%, according to Rees.

Crocs' annual report showed 75 Heydude stores as of the end of March, up from 54 a year earlier. The store base grew even as Rees said future expansion would lean toward wholesale.

“We like the portfolio that we have,” Rees said. “It performs all the roles that we are looking for it to perform, which is some help in terms of building brand awareness and showing the consumers a broader range of Heydude product than they would actually typically see in their local wholesale environment.”

Takeaway: Heydude can widen North American availability through wholesale without making a large store expansion its main growth engine.

What drove the broader portfolio?

The Crocs brand also posted a record third quarter, Rees said. International sales and diversification of the product mix, meaning the range of products offered, drove the performance. A limited-edition collaboration with Pendleton included “vibrant wool colors from Pendleton's woolen mills,” Rees said, and sold out at Crocs and Pendleton.

No new-store target appears in the reported remarks, and the annual outlook still assumes Heydude's revenue is about flat. Takeaway: The key test is whether wholesale can turn the 14% North American rebound into sustained growth beyond the weak comparison.