Crocs, Inc.CROX appears to be building momentum as strong consumer response to product innovation, expanding direct-to-consumer operations and international strength support an improved outlook for 2026. The company delivered a better-than-expected second quarter, with both the Crocs and HEYDUDE brands making progress against their strategic priorities. Product diversification, disciplined inventory management and increased engagement across digital channels are also helping Crocs broaden its growth drivers beyond its traditional clog business.
In the second quarter, Crocs generated record enterprise revenues of $1.2 billion, up 2% year over year, while Crocs brand revenues increased 4% to more than $1 billion for the first time in a quarter. HEYDUDE revenues declined 6% to $179 million, but its DTC sales advanced 7%. Adjusted earnings of $4.55 per share rose 8% year over year and exceeded management's guidance. Encouraged by the performance, Crocs raised its 2026 enterprise revenue growth outlook to 1%-2%, lifted Crocs brand expectations to 2%-3% growth and improved HEYDUDE guidance to a decline of 2%-4%. The company also increased its adjusted EPS forecast to $13.70-$14.
Several strategic initiatives could help sustain this momentum. Crocs is expanding beyond its Classic clog through sandals, lifestyle footwear and newer franchises such as Echo and Crocband. Management expects the sandal business to generate roughly $500 million globally this year and sees considerable long-term room for expansion. International markets are another key catalyst, with China, India and Japan posting double-digit growth in the second quarter. Meanwhile, increased activity on TikTok Shop, social commerce and early testing of AI-enabled shopping experiences could strengthen consumer engagement and support digital conversion.
Nevertheless, challenges remain. Tariffs weighed on second-quarter adjusted gross margin, while Crocs continues to manage wholesale inventories cautiously amid an uncertain consumer environment. North America is still expected to decline for the full year, particularly because of wholesale weakness, and an upcoming marketplace business-model change will reduce reported revenues despite being slightly favorable to operating profit. Still, improving DTC trends, international expansion, product diversification and a stronger earnings outlook suggest that Crocs' growth story is gaining traction, provided the company can navigate tariff and channel-related pressures.
The Zacks Rundown for CROX
Crocs’ shares have gained 25% in the past three months compared with the industry’s rise of 7.8%.
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From a valuation standpoint, CROX trades at a forward price-to-earnings ratio of 8.82X, lower than the industry’s average 14.69X.
Image Source: Zacks Investment Research
CROX stock presently carries a Zacks Rank #2 (Buy).
Other Key Picks in the Consumer Discretionary Space
The Zacks Consensus Estimate for CRI’s current fiscal-year earnings implies a decline of 9.5% from the year-ago figures. CRI delivered a trailing four-quarter earnings surprise of 415.9%, on average.
Ralph LaurenRL, which is a designer and marketer of premium lifestyle products, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Ralph Lauren’s current financial-year EPS indicates growth of 12.8% from the year-ago number. RL delivered a trailing four-quarter earnings surprise of 8.7%, on average.
Kontoor Brands, Inc.KTB, a lifestyle apparel company, designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under the Wrangler, Lee and Helly Hansen brands. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for KTB’s current financial-year sales and EPS is expected to decline 14.3% and 6.1%, respectively, from the corresponding year-ago reported figures. KTB delivered a trailing four-quarter earnings surprise of 21.4%, on average.
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