As Crocs further expands its presence on marketplace partners, the company is set to implement a business model change in the third quarter.
On its second quarter 2026 earnings call with analysts on Thursday, chief executive officer Andrew Rees said the change will be coming to one of the company’s largest marketplace partners and will affect how it recognizes Crocs brand North American revenue between its direct-to-consumer and wholesale segments.
The CEO said the shift will shift revenue in the company’s DTC channel lower, with higher revenues will be realized in the wholesale channel. The net of these revenue shifts will be lower overall revenue, but Crocs should see an improvement to operating profit, Rees noted.
“We have fully contemplated the impact this will have to revenue in our latest top line expectations for the Crocs brand,” Rees said. “And in line with our prior guidance, North America DTC is anticipated to be positive for the year, excluding this change to revenue recognition.”
Rees added that the move comes as the company leans further into marketplaces. Crocs saw outperformance from TikTok Shop in the second quarter, in part, driven by the shoe label’s “Super Brand Day,” as well as the benefit from a record Amazon Prime Day.
“[Marketplaces are] where the consumer goes first, both in this country and in many countries around the world, when they’re searching for brands that they know and love,” Rees noted on the call. “And we’ve seen us grow our business very meaningfully. I would say that it’s critical as we kind of think about each region and each country to make sure that we’re doing business with those marketplaces in a way that is most in sync with their business model. So, I think this brings us a little bit more in sync with a key marketplace here in North America.”
Crocs Inc. chief financial officer Patraic Reagan reiterated on the call that the change will shift the recognition of some Crocs brand revenue from DTC to wholesale, reducing total reported revenue but leaving units sold and market share unchanged.
“From a number of partners standpoint, we’ve got dozens of marketplace partners across the globe, obviously, highlighting this means it’s one of our more strategically significant partners,” Reagan said. “And so, I think about it through that lens. But, again, overarchingly, the shift that we’re communicating in that today, fundamentally, it does not impact or affect anything as it relates to units into the marketplace, market share, health of our business, etcetera. It is simply a revenue recognition between channels.”
The news comes as Wall Street sent shares for Crocs into the red on Thursday following lower-than-expected guidance for the third quarter of fiscal 2026.
In the upcoming period, the company is expecting revenues to be approximately flat compared to the same time last year. Adjusted diluted earnings per share are expected to be in the range of $3.20 to $3.30. This third quarter guidance is below analysts’ expectations, which were looking for earnings per share between $3.41 and $3.84, according to Yahoo Finance.
Crocs Inc. closed on Thursday down 7.38 percent to $123.66 per share.
