American footwear company Crocs is facing significant financial challenges, as their shares drop nearly 30% following a warning about decreasing sales amid changing consumer trends.
Crocs Shares Plunge 30% as US Consumer Spending Slows
Crocs Shares Plunge 30% as US Consumer Spending Slows
Crocs warns of plummeting sales amidst cautious spending behaviors by US shoppers, with shares hitting a three-year low.
Crocs, a well-known rubber clog manufacturer, is grappling with a nearly 30% decline in its share price after alerting investors about an anticipated drop in sales as US shoppers cut back on discretionary spending. The company's revenue projections for the three months leading up to the end of August indicate an expected decline of around 10% compared to last year, attributed to a decreased foot traffic in Crocs stores. CEO Andrew Rees expressed concerns over consumer habits, noting, "We see the US consumer behaving cautiously around discretionary spending."
This predicament has led to Crocs sharing its lowest stock price in almost three years and suffering its worst single-day decline in nearly 15 years. The firm foresees a "concerning" outlook for the remainder of the year, largely due to the ongoing high cost of living and potential repercussions from US trade policies under President Donald Trump. CFO Susan Healy disclosed that Crocs is bracing for a $40 million (£29.8 million) impact for the fiscal year due to tariffs.
Rees indicated a strategy to offset tariff impacts by pursuing cost savings within their supply chain: "I think we can over the medium-term mitigate the impact of tariffs." However, he also pointed out that consumer sentiment has shifted significantly, with many customers now exhibiting "super cautious" spending behaviors. "They're not purchasing; they're not even going to the stores, and we see traffic down," he remarked.
To further complicate matters, Crocs intends to reduce its discounting practices, which could negatively influence sales in the short term. Despite these challenges, Rees highlighted a tentative upland in consumer preferences as they begin to "migrate back toward athletic" products, coinciding with global sporting events on the horizon, including next year's football World Cup in the US, Mexico, and Canada, as well as the 2028 Los Angeles Olympics.
In its most recent earnings report, Crocs recorded second-quarter revenue of $1.1 billion, reflecting a 3% increase from the previous year. The company also holds the casual footwear brand HEYDUDE, which it acquired for $2.5 billion in late 2021. As consumer dynamics evolve, Crocs faces a critical period ahead.
This predicament has led to Crocs sharing its lowest stock price in almost three years and suffering its worst single-day decline in nearly 15 years. The firm foresees a "concerning" outlook for the remainder of the year, largely due to the ongoing high cost of living and potential repercussions from US trade policies under President Donald Trump. CFO Susan Healy disclosed that Crocs is bracing for a $40 million (£29.8 million) impact for the fiscal year due to tariffs.
Rees indicated a strategy to offset tariff impacts by pursuing cost savings within their supply chain: "I think we can over the medium-term mitigate the impact of tariffs." However, he also pointed out that consumer sentiment has shifted significantly, with many customers now exhibiting "super cautious" spending behaviors. "They're not purchasing; they're not even going to the stores, and we see traffic down," he remarked.
To further complicate matters, Crocs intends to reduce its discounting practices, which could negatively influence sales in the short term. Despite these challenges, Rees highlighted a tentative upland in consumer preferences as they begin to "migrate back toward athletic" products, coinciding with global sporting events on the horizon, including next year's football World Cup in the US, Mexico, and Canada, as well as the 2028 Los Angeles Olympics.
In its most recent earnings report, Crocs recorded second-quarter revenue of $1.1 billion, reflecting a 3% increase from the previous year. The company also holds the casual footwear brand HEYDUDE, which it acquired for $2.5 billion in late 2021. As consumer dynamics evolve, Crocs faces a critical period ahead.
