Crocs surges 14% on strong 2026 outlook after Q4 earnings beat
Footwear maker delivers $100M in cost savings and maintains buyback firepower despite HEYDUDE brand impairments
Crocs shares jumped 13.9% to $94.25 on Thursday after the footwear maker exceeded fourth-quarter expectations and issued 2026 earnings guidance that significantly outpaced Wall Street forecasts, as investors focused on the company's improved profitability outlook and aggressive capital return strategy.
The Colorado-based company reported adjusted earnings per share of $2.29 for the final quarter of 2025, comfortably ahead of analyst estimates of $1.91. Revenue reached $958 million, surpassing the consensus forecast of $916.1 million, according to analyst data compiled by MarketBeat. The strong quarterly performance, which Chief Executive Andrew Rees described as a "better-than-expected Holiday quarter," helped the company achieve full-year revenue of $4.04 billion.
The centerpiece of Thursday's rally was Crocs' 2026 guidance, which projects adjusted diluted earnings per share between $12.88 and $13.35. That outlook represents growth from 2025's adjusted EPS of $12.51 and substantially exceeds the prior analyst consensus of $11.92. The optimistic forecast reflects approximately $100 million in cost savings the company has identified for implementation this year.
"We enter 2026 with increased confidence in our growth engines, which are diversified across channels, geographies, brands, and product categories," Rees said in the company's earnings announcement. "We have identified and actioned $100 million in cost savings for 2026, aiming for greater efficiency while maintaining investment in our brands and consumer connection."
The company's strong cash flow generation enabled substantial capital returns to shareholders in 2025. Crocs repurchased approximately 6.5 million shares for $577 million during the year, representing roughly 10% of outstanding shares, and reduced debt by $128 million. At year-end, the company maintained $747 million of share repurchase authorization remaining available, providing continued flexibility for future buybacks.
Despite the headline earnings beat, the company faces ongoing challenges with its HEYDUDE brand, which it acquired in 2022 for $2.5 billion. HEYDUDE revenues declined 16.9% in the fourth quarter to $189 million, while the Crocs brand grew 0.8% to $768 million. The struggles prompted significant non-cash impairment charges totaling $737 million in the second quarter of 2025, including a $430 million impairment for the HEYDUDE trademark and $307 million for HEYDUDE brand goodwill.
For 2026, Crocs expects consolidated revenues to be down approximately 1% to up slightly compared to 2025. The Crocs brand is projected to be flat to up 2%, while HEYDUDE is expected to decline 9% to 7%. The company forecasts first-quarter revenue declines of 5.5% to 3.5%, with adjusted diluted EPS of $2.67 to $2.77.
Analysts had maintained cautious sentiment heading into the report, with a consensus "Hold" rating across fourteen analysts and an average price target around $92, according to data from multiple research firms. Needham had projected fiscal 2026 EPS of $11.32, below the consensus, suggesting conservative initial guidance expectations that the company's outlook now handily exceeds.
The stock's surge on Thursday adds approximately $525 million to Crocs' market capitalization, which stood at roughly $4.6 billion prior to the earnings release. The shares remain well below their 52-week high of $122.84, set earlier in 2025, but have recovered significantly from the 52-week low of $73.20.
Looking ahead, investors will be watching whether Crocs can execute on its cost savings initiatives and stabilize the HEYDUDE brand while maintaining the momentum in its core Crocs business. The company's ability to generate strong free cash flow—approximately $700 million in operating cash flow for 2025—provides flexibility for continued share repurchases and debt reduction, both key drivers of the improved earnings outlook.