Veriton Investment

Crocs Shares Sink After Discount Pullback and Tariffs Zap Sales

(Bloomberg) -- Crocs Inc. shares dropped after the shoe company said its efforts to save money amid consumer pressure and tariffs would drive down revenue.

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The company forecast a third-quarter revenue decline of approximately 9% to 11%. Analysts on average expected sales to gain less than 1%.

The stock fell as much as 19% in Thursday premarket trading in New York. Shares are down 4% this year, trailing a 7.9% gain for S&P 500.

Crocs imports from countries highly impacted by tariffs. China made up around 22% of Crocs sourcing to the US in the three months ending on March 31, which the company plans to reduce. A “predominant portion” of products also comes from Vietnam, Indonesia, India and Cambodia, the company said in May.

The company will focus on managing its expenses, including cost savings, inventory reduction and a pullback in promotions, Chief Executive Officer Andrew Rees said in a statement.

“Crocs might have a tougher time navigating tariff pressures, given its decision to pull back on promotions to preserve brand image,” said Bloomberg Intelligence analyst Abigail Gilmartin in a note.

“Although these actions will impact the topline of our business in the short term, they will position our business to win,” he said.

--With assistance from Katerina Petroff.

(Updates with additional detail starting in the fourth paragraph.)