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What changed in Crocs, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Crocs, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+400 added−375 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in Crocs, Inc.'s 2024 10-K

400 paragraphs added · 375 removed · 317 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

70 edited+11 added−10 removed19 unchanged
Biggest changeThe following table illustrates the net change during 2023 in the number of our company-operated retail stores (inclusive of full-price retail stores, outlet stores, kiosks, and store-in-store locations) by reportable operating segment and country: December 31, 2022 Opened Closed December 31, 2023 Crocs Brand United States 160 7 4 163 Korea 89 3 1 91 China 33 5 2 36 Singapore 16 1 — 17 Japan 13 2 1 14 Germany 11 1 1 11 Canada 8 — — 8 Austria 3 — — 3 Puerto Rico 3 — — 3 France 2 1 1 2 The Netherlands 2 — 1 1 Total Crocs Brand 340 20 11 349 HEYDUDE Brand United States 5 9 — 14 Total HEYDUDE Brand 5 9 — 14 Total 345 29 11 363 Business Segments and Geographic Information We have two reportable operating segments: the Crocs Brand and the HEYDUDE Brand.
Biggest changeAs of December 31, 2024, we had 71 Crocs Brand kiosks and store-in-store locations. 5 Table of Contents The following table illustrates the net change during 2024 in the number of our company-operated retail stores (inclusive of full-price retail stores, outlet stores, kiosks, store-in-store locations, and temporary stores) by reportable operating segment and country: December 31, 2023 Opened Closed December 31, 2024 Crocs Brand United States 163 13 4 172 South Korea 91 4 — 95 China 36 18 3 51 Japan 14 7 — 21 Singapore 17 — — 17 Germany 11 1 2 10 Canada 8 2 1 9 Great Britain — 4 — 4 Austria 3 — — 3 Puerto Rico 3 — — 3 France 2 — — 2 The Netherlands 1 1 — 2 Australia — 1 — 1 Total Crocs Brand 349 51 10 390 HEYDUDE Brand United States 14 39 1 52 Total HEYDUDE Brand 14 39 1 52 Total 363 90 11 442 Business Segments and Geographic Information We have two reportable operating segments: the Crocs Brand and the HEYDUDE Brand.
The information provided on our website (or any other website referred to in this report) is not part of this report and is not incorporated by reference as part of this Annual Report on Form 10-K.
The information provided on our website (or any other website referred to in this Annual Report on Form 10-K) is not part of this report and is not incorporated by reference as part of this Annual Report on Form 10-K.
Our company-operated retail locations and e-commerce sites also compete with some of our wholesale partners. The principal elements of competition in these markets include brand awareness, product functionality, design, comfort, quality, price, customer service, and marketing and distribution. We believe that our unique footwear designs, material formulations, prices, product line, and distribution networks position us well in the marketplace.
Corporation. Our company-operated retail locations and e-commerce sites also compete with some of our wholesale partners. The principal elements of competition in these markets include brand awareness, product functionality, design, comfort, quality, price, customer service, and marketing and distribution. We believe that our unique footwear designs, material formulations, prices, product line, and distribution networks position us well in the marketplace.
Brick-and-mortar customers typically include family footwear retailers, national and regional retail chains, sporting goods stores, and independent footwear retailers. Outside the U.S., we use distributors when we believe such arrangements are economically preferable to direct sales.
Brick-and-mortar customers typically include family footwear retailers, international, national, and regional retail chains, sporting goods stores, and independent footwear retailers. Outside the U.S., we use distributors when we believe such arrangements are economically preferable to direct sales.
Innovation is not only core to our brands’ values; it is at the forefront of how we drive consumer acquisition and engagement. We strive to listen and respond quickly to our customers to give them new and innovative reasons to continue to choose the Crocs Brand and HEYDUDE Brand.
Innovation is not only core to our brands’ values; it is at the forefront of how we drive consumer acquisition and engagement. We strive to listen and respond quickly to our customers to give them new and innovative reasons to continue to choose the Crocs and HEYDUDE brands.
Specifically, the ESG Committee assisted the Board in (i) carrying out the responsibilities delegated by the Board regarding the review and oversight of our goals, policies, procedures and disclosures related to sustainability and ESG matters and (ii) its oversight of the sustainability and ESG matters material to us, our employees, our communities, and the planet.
Specifically, the CRS Committee assisted the Board in (i) carrying out the responsibilities delegated by the Board regarding the review and oversight of our goals, policies, procedures and disclosures related to sustainability and CRS matters and (ii) its oversight of the sustainability and CRS matters material to us, our employees, our communities, and the planet.
Our mission of “everyone comfortable in their own shoes” continued in 2023 as we repeatedly brought our consumers new silhouettes, compelling collaborations, trend-right colors and graphics, and increased personalization through our Jibbitz™ charms accessories.
Our mission of “everyone comfortable in their own shoes” continued in 2024 as we repeatedly brought our consumers new silhouettes, compelling collaborations, trend-right colors and graphics, and increased personalization through our Jibbitz™ charms accessories.
We believe we have one of the most talented workforce in the footwear industry and continue to improve and implement new initiatives to remain an employer of choice across all of our businesses and geographies.
We believe we have one of the most talented workforces in the footwear industry and continue to improve and implement new initiatives to remain an employer of choice across all of our businesses and geographies.
However, a number of companies in the casual footwear industry have greater financial resources, more comprehensive product lines, broader market presence, longer standing relationships with wholesalers, longer operating histories, greater distribution capabilities, stronger brand recognition, and greater marketing resources than we have.
However, a number of companies in the casual footwear industry have greater financial resources, more comprehensive product lines, broader market presence, longer standing relationships with wholesalers, longer operating histories, greater distribution capabilities, stronger brand recognition, 8 Table of Contents and greater marketing resources than we have.
To that end, in 2023, we continued our message of “Come As You Are” for the Crocs Brand and the slogan “Good To Go-To” for the HEYDUDE Brand.
To that end, in 2024, we continued our message of “Come As You Are” for the Crocs Brand and the slogan “Good To Go-To” for the HEYDUDE Brand.
Direct-to-Consumer Channel Our DTC channel includes company-operated e-commerce sites, third-party marketplaces, company-operated full-price retail stores, outlet stores, and kiosks/store-in-store locations. During the years ended December 31, 2023, 2022, and 2021, 48.0%, 45.1%, and 49.2%, respectively, of our consolidated revenues were derived through our DTC channel.
Direct-to-Consumer Channel Our DTC channel includes company-operated e-commerce sites, third-party marketplaces, company-operated full-price retail stores, outlet stores, and kiosks/store-in-store locations. During the years ended December 31, 2024, 2023, and 2022, 49.7%, 48.0%, and 45.1%, respectively, of our consolidated revenues were derived through our DTC channel.
We have brands, with a broad democratic appeal and accessible price points, which are aligned with global megatrends such as casualization and personalization. The philosophy and vision for our brands has been an important driver of our results and, we believe, will continue to be important as we strive to realize the full potential of our brands.
We have brands with a broad democratic appeal and accessible price points, which are aligned with global megatrends such as casualization, comfort, and personalization. The philosophy and vision for our brands have been important drivers of our results and, we believe, will continue to be important as we strive to realize the full global potential of our brands.
Although we do not believe that we compete directly with any single company with respect to the entire spectrum of our products, we believe portions of our wholesale, retail, and e-commerce businesses compete with companies including, but not limited to: NIKE, Inc., adidas AG, Deckers Outdoor Corporation, Skechers USA, Inc., Steven Madden, Ltd., Wolverine World Wide, Inc., and VF Corporation.
Although we do not believe that we compete directly with any single company with respect to the entire spectrum of our products, we believe portions of our wholesale, retail, and e-commerce businesses compete with companies including, but not limited to: NIKE, Inc., adidas AG, Deckers Outdoor Corporation, Skechers USA, Inc., Birkenstock Holding plc., Steven Madden, Ltd., Wolverine World Wide, Inc., and V.F.
Our products containing LiteRide™ feature comfort-focused, proprietary foam insoles which are soft, lightweight, and resilient. HEYDUDE Brand The HEYDUDE Brand offers shoes with a versatile silhouette with many wearing occasions that focus on casualization, comfort-led functionality, and personalization. The HEYDUDE Brand utilizes leading technologies including a flex-and-fold outsole and ergonomic insole.
Our products containing LiteRide™ and Free Feel Technology™ feature comfort-focused, proprietary foam insoles which are soft, lightweight, and resilient. HEYDUDE Brand The HEYDUDE Brand offers shoes with an iconic and versatile loafer silhouette with many wearing occasions that focus on casualization, comfort-led functionality, and personalization. The HEYDUDE Brand utilizes leading technologies including a flex-and-fold outsole and ergonomic insole.
As of December 31, 2023, we had 84 full-price Crocs Brand retail stores. Our company-operated outlet stores allow us to sell discontinued and overstocked merchandise directly to consumers at discounted prices. We also sell full-priced products in our outlet stores as well as built-for-outlet products. As of December 31, 2023, we had 201 Crocs Brand outlet stores.
As of December 31, 2024, we had 87 full-price Crocs Brand retail stores. Our company-operated outlet stores allow us to sell discontinued and overstocked merchandise directly to consumers at discounted prices. We also sell full-priced products in our outlet stores as well as built-for-outlet products.
The vast majority of Crocs™ shoes feature Croslite™ material, a proprietary, revolutionary technology that gives each pair of shoes the soft, comfortable, lightweight, non-marking, and odor-resistant qualities that our fans know and love. We also use Croslite™ material formulations in connection with material technologies used in our visible comfort collections, such as our LiteRide™ products.
The vast majority of Crocs™ shoes feature Croslite™ material, a proprietary, revolutionary technology that gives each pair of shoes the soft, comfortable, and lightweight qualities that our fans know and love. We also use Croslite™ material formulations in connection with material technologies used in our visible comfort collections, such as our LiteRide™ and Free Feel Technology™ products.
E-commerce As of December 31, 2023, we offered our products through 16 company-operated e-commerce sites worldwide and also on third-party marketplaces. Our e-commerce presence facilitates a greater connection with our consumers and provides us with an opportunity to educate them about our products and brand.
E-commerce As of December 31, 2024, we offered our products through 23 company-operated e-commerce sites worldwide and also on third-party marketplaces. Our e-commerce presence facilitates a greater connection with our consumers and provides us with an opportunity to educate them about our products and brands.
As of December 31, 2023, our company-operated warehouse and distribution facilities provided us with 3.4 million square feet, and our third-party operated distribution facilities provided us with 0.9 million square feet, with additional area available based on inventory levels.
As of December 31, 2024, our company-operated warehouse and distribution facilities provided us with 2.9 million square feet, and our third-party operated distribution facilities provided us with 0.9 million square feet, with additional area available based on inventory levels.
Our largest third-party manufacturer for the Crocs Brand, with the vast majority of operations in Vietnam and China, produced approximately 47%, 42%, and 34% of our production during the years ended December 31, 2023, 2022, and 2021, respectively, and our second largest third-party manufacturer for the Crocs Brand, primarily operating in both Vietnam and China, produced approximately 26%, 27%, and 30% of our production during the years ended December 31, 2023, 2022, and 2021, respectively. • China for the HEYDUDE Brand.
Our largest third-party manufacturer for the Crocs Brand, with the majority of operations in Vietnam, produced approximately 50%, 47%, and 42% of our production during the years ended December 31, 2024, 2023, and 2022, respectively, and our second largest third-party manufacturer for the Crocs Brand, primarily operating in both Vietnam and China, produced approximately 25%, 26%, and 27% of our production during the years ended December 31, 2024, 2023, and 2022, respectively. • China for the HEYDUDE Brand.
Risk Factors of this Annual Report on Form 10-K for more information. 8 Table of Contents Available Information We file with, or furnish to, the SEC reports including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports pursuant to Section 13(a) or 15(d) of the Exchange Act.
Available Information We file with, or furnish to, the SEC reports including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports pursuant to Section 13(a) or 15(d) of the Exchange Act.
We also ship directly to certain of our wholesale customers from our third-party manufacturers, and certain distributors pick up orders directly from our third-party manufacturers.
We also ship directly to certain wholesale customers from our third-party manufacturers and certain distributors pick up orders directly from our third-party manufacturers or from the port of entry.
Except where specified otherwise, all information in the forthcoming Comfort Report and below environmental, social, and governance (“ESG”) discussion pertains to Crocs, Inc. as of December 31, 2023. The content provided in our Comfort Report or accessible through our website is not incorporated by reference as part of this Annual Report on Form 10-K.
Except where specified otherwise, all information in the forthcoming Comfort Report and below corporate responsibility and sustainability (“CRS”) discussion pertains to Crocs, Inc. as of December 31, 2024. The content provided in our Comfort Report or accessible through our website is not incorporated by reference as part of this Annual Report on Form 10-K.
As of December 31, 2023, we had 349 and 14 company-operated stores for the Crocs Brand and HEYDUDE Brand, respectively. 5 Table of Contents Our company-operated full-price retail stores allow us to effectively showcase the full extent of our product range to consumers and provide us with the opportunity to interact with those consumers directly.
As of December 31, 2024, we had 390 and 52 company-operated stores for the Crocs Brand and HEYDUDE Brand, respectively. Our company-operated full-price retail stores allow us to effectively showcase the full extent of our product range to consumers and provide us with the opportunity to interact with those consumers directly.
With efficient use of retail space and limited fixed cost and capital investment, we believe kiosks and store-in-store locations can be effective vehicles for selling our products in certain geographic areas. As of December 31, 2023, we had 64 Crocs Brand kiosks and store-in-store locations.
With efficient use of retail space and limited fixed cost and capital investment, we believe kiosks and store-in-store locations can be effective vehicles for selling our products in certain geographic areas.
Our efforts around inclusion, collaboration, and human rights extend through our supply chain. We work to ensure our products are sourced, produced, and delivered to our customers in a manner that upholds international labor and human rights standards, inclusive of occupational safety and chemical safety.
We work to ensure our products are sourced, produced, and delivered to our customers in a manner that upholds international labor and human rights standards, inclusive of occupational safety and chemical safety.
The laws of certain countries do not protect intellectual property rights to the same extent or in the same manner as do the laws of the U.S., and, therefore, we may have difficulty obtaining legal protection for our intellectual property in certain foreign jurisdictions. Competition The global casual, athletic, and fashion footwear markets are highly competitive.
The laws of certain countries do not protect intellectual property rights to the same extent or in the same manner as do the laws of the U.S., and, therefore, we may have difficulty obtaining legal protection for our intellectual property in certain foreign jurisdictions.
Wholesale Channel During the years ended December 31, 2023, 2022, and 2021, 52.0%, 54.9%, and 50.8% of our consolidated revenues, respectively, were derived through our wholesale channel. Our wholesale channel includes domestic and international, multi-brand, brick-and-mortar retailers, e-tailers, partner store operators, and international distributors.
Wholesale Channel During the years ended December 31, 2024, 2023, and 2022, 50.3%, 52.0%, and 54.9% of our consolidated revenues, respectively, were derived through our wholesale channel. Our wholesale channel includes domestic and international multi-brand retailers, mono-branded partner stores, e-tailers, and distributors.
We use our employees, sales representatives, distributors, and retailers, as well as outside investigators, attorneys, and customs agents, to police against infringing products by encouraging them to notify us of any suspect products and to assist law enforcement agencies.
We also actively combat counterfeiting and other infringements of our brand by monitoring the global marketplace. We use our employees, sales representatives, distributors, and retailers, as well as outside investigators, attorneys, and customs agents, to police against infringing products by encouraging them to notify us of any suspect products and to assist law enforcement agencies.
In addition, we maintain numerous measures to ensure our supply chain complies with our Social Compliance Code of Conduct, Restricted Substances Policy, and Human Rights Policy, as well as with all local laws and customs regarding hiring practices, wages, and working conditions.
In addition, we maintain numerous measures to ensure our supply chain complies with our Social Compliance Code of Conduct, Restricted Substances Policy, and Human Rights Policy, as well as with local laws and customs regarding hiring practices, wages, and working conditions. We also seek to extend the reach of our impact through our global community giving program.
Additionally, we regularly review our Enterprise Risk Management and Ethics & Compliance program frameworks to account for our social and environmental risks and opportunities, specifically including those related to climate change. All material findings and updates are elevated to and discussed with our Board.
Additionally, we regularly review our Enterprise Risk Management and Ethics & Compliance program frameworks to account for our social and environmental risks and opportunities, specifically including those related to climate change.
Environmental, Social, and Governance Initiatives As one of the world’s largest footwear companies, we strive to make a positive impact on the global footwear industry, for people, and for our planet.
Corporate Responsibility and Sustainability Initiatives As one of the world’s largest footwear companies, we aim to make a positive impact on the global footwear industry, for people, and for our planet.
HEYDUDE Brand The primary raw materials for the HEYDUDE Brand are fabrics, including polyester and cotton, Ethylene-vinyl acetate (“EVA”) insoles and outsoles, and other materials such as leather. We purchase this material from a select group of third-party sources, and we believe these materials are broadly available.
These materials are obtained from a number of third-party sources, and we believe these materials are also broadly available. 6 Table of Contents HEYDUDE Brand The primary raw materials for the HEYDUDE Brand are fabrics, including polyester and cotton, Ethylene-vinyl acetate (“EVA”) insoles and outsoles, and other materials such as leather and polyurethane.
We also had 5 HEYDUDE Brand outlet stores and 9 HEYDUDE Brand temporary clearance stores. Our company-operated kiosks and store-in-store locations allow us to market specific product lines, with flexibility to tailor products to consumer preferences in shopping malls and other high foot-traffic areas.
As of December 31, 2024, we had 232 Crocs Brand outlet stores and 52 HEYDUDE Brand outlet stores, of which 9 were clearance locations. Our company-operated kiosks and store-in-store locations allow us to market specific product lines, with flexibility to tailor products to consumer preferences in shopping malls and other high foot-traffic areas.
We believe the comfort and utility of our Crocs Brand products depend on the properties achieved from the compounding of the Croslite™ and LiteRide™ materials, which constitutes a key competitive advantage for us, and we intend to continue to vigorously protect these trade secrets. We also actively combat counterfeiting and other infringements of our brand by monitoring the global marketplace.
We believe the comfort and utility of our Crocs Brand products depend on the properties achieved from the compounding of the Croslite™, LiteRide™, and Free Feel Technology™ materials, which constitutes a key competitive advantage for us, and we intend to continue to vigorously protect these trade secrets.
Our 2023 Comfort Report, which is expected to be published in the first half of 2024, is our third annual publication that provides an explanation of our progress towards more transparent, socially conscious, and sustainable business practices. Our Comfort Report will be made available on the Investor Relations section of our website located at www.investors.crocs.com.
Our 2024 Comfort Report, which is expected to be published in the first half of 2025, is our fourth annual publication that provides an explanation of our progress towards our purpose of creating a more comfortable world for all. Our Comfort Report will be made available on the Investor Relations section of our website located at www.investors.crocs.com.
In 2023, we also introduced “Give Old Crocs New Life,” a pilot circularity program in the United States that allows our Crocs consumers to return their gently worn or well-loved Crocs shoes to retail stores in 10 states to be donated to communities in need or repurposed into something new.
In 2024, we also expanded “Old Crocs New Life,” a circularity program in the United States and Canada that allows our Crocs consumers to return their gently worn or well-loved Crocs shoes to over 160 retail stores or via a mail-back initiative to be donated to communities in need or repurposed into something new.
During the year ended December 31, 2023, approximately 83% of our HEYDUDE Brand production was in China. We believe any potential concentration risk is mitigated by the fact that the manufacturing capabilities required to produce our footwear are broadly available for both brands.
During the partial period beginning on the Acquisition Date through December 31, 2022 (the “Partial Period”), the vast majority of production was in China for the HEYDUDE Brand. We believe any potential concentration risk is mitigated by the fact that the manufacturing capabilities required to produce our footwear are broadly available for both brands.
Our growth framework is driven by five strategic areas of focus: • Growing digital sales — Digital sales include sales directly to consumers through our company-owned websites and third-party marketplaces as well as wholesale sales to our global e-tailers.
Digital sales include sales directly to consumers through our company-owned websites and third-party marketplaces as well as wholesale sales to our global e-tailers.
In the U.S., our patents are generally in effect for up to 20 years from the date of filing the patent application. Our trademarks registered within and outside of the U.S. are generally valid as long as they are in use and their registrations are properly maintained and have not been found to have become generic.
Our trademarks registered within and outside of the U.S. are generally valid as long as they are in use and their registrations are properly maintained and have not been found to have become generic. We believe our trademarks and patents are crucial to the successful marketing and sale of our products.
Sourcing Our sourcing strategy is to maintain a flexible, globally-diversified, cost-efficient third-party manufacturing base. We source our inventory production from multiple third-party manufacturers, primarily in: • Vietnam for the Crocs Brand. We have additional third-party manufacturers in China and Indonesia, among other countries.
We purchase this material from a select group of third-party sources, and we believe these materials are broadly available. Sourcing Our sourcing strategy is to maintain a flexible, globally-diversified, cost-efficient third-party manufacturing base. We source our inventory production from multiple third-party manufacturers, primarily in: • Vietnam for the Crocs Brand.
We employ social and digital marketing centered on showcasing our clog and sandal silhouettes and our Jibbitz™ charms for the Crocs Brand and our versatile loafer silhouette for the HEYDUDE Brand.
We employ social and digital marketing centered on showcasing our clog, sandal silhouettes, and Jibbitz™ charms for the Crocs Brand and our versatile loafer silhouette for the HEYDUDE Brand. We continue to invest in partnerships including McDonald’s, Toy Story, Simone Rocha, Sydney Sweeney, and Jelly Roll.
See the risk factor under “Risks Related to our Products — We face significant competition” included in Item 1A.
See the risk factor under “Risks Related to our Products — We face significant competition” included in Item 1A. Risk Factors of this Annual Report on Form 10-K for more information.
We believe the progress of our sustainability efforts is best understood by disclosing measurable and relevant goals and metrics, and, to this end, we continue to align our 3 Table of Contents reporting with the Sustainability Accounting Standards Board (“SASB”) and Taskforce on Climate-related Financial Disclosures (“TCFD”) frameworks.
We believe the progress of our sustainability efforts is best understood through transparent and comparable disclosures and, to this end, we continue to align our reporting with the Sustainability Accounting Standards Board (“SASB”) and the Taskforce on Climate-related Financial Disclosures (“TCFD”) frameworks. 3 Table of Contents Environmental We are committed to taking steps to reduce our impact on the environment and are particularly focused on carbon reduction, sustainable operations, and product circularity.
During the years ended December 31, 2023, 2022, and 2021, approximately 56%, 53%, and 56%, respectively, of our Crocs Brand production was in Vietnam.
We have additional third-party manufacturers in China, Indonesia, India, and Mexico, among other countries. During the years ended December 31, 2024, 2023, and 2022, approximately 51%, 56%, and 53%, respectively, of our Crocs Brand production was in Vietnam.
The material formulations are manufactured through a process that combines a number of components in various proportions to achieve the properties for which our Crocs Brand products are known.
We consider the formulations of the materials used to produce our Crocs Brand footwear covered by our trademarks Croslite™, LiteRide™, and Free Feel Technology™, among others, valuable trade secrets. The material formulations are manufactured through a process that combines a number of components in various proportions to achieve the properties for which our Crocs Brand products are known.
During 2023, we further expanded our U.S. distribution centers in Nevada for the HEYDUDE Brand to increase distribution capacity. We also utilized third-party operated distribution centers located in the United States, Japan, China, Australia, Korea, Singapore, India, Brazil, and the United Kingdom.
We also utilized third-party operated distribution centers located in the United States, Japan, China, Australia, South Korea, Singapore, India, Brazil, Canada, the Netherlands, and the United Kingdom.
Distribution and Logistics We strive to enhance our distribution and logistics network to further streamline our supply chain, increase our speed to market, and lower operating costs. As of December 31, 2023, we principally stored our finished goods inventory in company-operated warehouses and distribution and logistics facilities located in the U.S. and the Netherlands.
As of December 31, 2024, we principally stored our finished goods inventory in company-operated warehouses and distribution and logistics facilities located in the U.S. and the Netherlands. During 2024, we further expanded our U.S. distribution centers in Nevada for the HEYDUDE Brand to increase distribution capacity.
Multiple suppliers produce the elastomer resins used in the Croslite™ material. In the future, we may identify and utilize materials produced by other suppliers as an alternative to, or in addition to, those elastomer resins. All other raw materials that we use to produce the Croslite™ formulations are readily available for purchase from multiple suppliers.
Croslite™ is produced by compounding elastomer resins, purchased from major chemical manufacturers, with certain other production inputs such as color dyes. Multiple suppliers produce the elastomer resins used in the Croslite™ material. In the future, we may identify and utilize materials produced by other suppliers as an alternative to, or in addition to, those elastomer resins.
These initiatives include pay transparency in hiring, offering employee training and developing leadership capabilities, enabling meaningful professional experiences, offering a compelling employee value proposition and fair wages, and creating a collaborative culture that “celebrates one-of-a-kinds and stands together with all different kinds.” We strive to create a culture of inclusion through progressive people-practices that support and empower all employees regardless of gender, age, race, ethnicity, national origin, disability, religion, immigration status, or sexual orientation, gender identity, or expressions.
These initiatives include pay transparency in hiring, offering employee training and developing leadership capabilities, enabling meaningful professional experiences, offering a compelling employee value proposition, and creating a collaborative culture. We strive to create a culture of inclusion through people-practices that support and empower all employees. We are proud of the workplace culture we have created.
Governance Strong corporate governance mechanisms, along with robust internal controls over our financial reporting framework, are the foundation for our progress toward our environmental and social ambitions.
Governance Strong corporate governance mechanisms, along with robust internal controls over our financial reporting framework, are the foundation for our progress toward our environmental and social ambitions. The basis of this is our Board of Directors (the “Board”), which was comprised of 22% female and 22% historically underrepresented racial/ethnic members as of December 31, 2024.
We continue to invest in research and development to refine our materials to enhance these properties, develop new properties for specific applications, as well as reduce our environmental impact through various sustainability initiatives described in the previous section. 6 Table of Contents Croslite™ is produced by compounding elastomer resins purchased from major chemical manufacturers, together with certain other production inputs such as color dyes.
Our Croslite™ materials are formulated to create soft, comfortable, and lightweight footwear. We continue to invest in research and development to refine our materials to enhance these properties, develop new properties for specific applications, as well as reduce our environmental impact through various sustainability initiatives described in the previous section.
More detail on these initiatives, as well as our ambitions, will be provided in our upcoming Comfort Report. Social As of December 31, 2023, we employed nearly 7,030 employees globally, including approximately 3,650 employees in our retail stores, 2,040 employees at our corporate/regional offices, and 1,340 employees at our distribution centers.
Social As of December 31, 2024, we employed more than 7,910 employees globally, including approximately 4,560 employees in our retail stores, 2,300 employees at our corporate/regional offices, and 1,050 employees at our distribution centers.
Some of the products we offer are constructed using textile fabrics or other material formulations, such as those we brand LiteRide™. These materials are obtained from a number of third-party sources, and we believe these materials are also broadly available.
All other raw materials that we use to produce the Croslite™ formulations are readily available for purchase from multiple suppliers. Some of the products we offer are constructed using textile fabrics or other material formulations, such as those we brand LiteRide™ and Free Feel Technology™.
The HEYDUDE word mark is registered in the U.S., the European Union, China, and Singapore, among others. Protection for the HEYDUDE logo has been filed in the U.S. and we intend to extend to foreign jurisdictions within the required time period. We also have registrations or pending trademark applications for other marks and logos in various countries around the world.
The HEYDUDE word mark is registered in the U.S., the European Union, China, and Singapore, among others. Protection for the HEYDUDE logo has been filed in the U.S. and other countries and has moved to registration in some, including Singapore, the United Kingdom, and Australia among others.
We believe sandals are a natural extension of the Crocs Brand and allow us to access new consumers by leveraging our signature molding technology to provide casual, comfortable footwear for a variety of wearing occasions. • Increasing awareness and distribution for the HEYDUDE Brand — We have embarked, and plan to continue to embark, on various marketing activities to drive higher awareness including, but not limited to, developing a pipeline of collaborations and brand activations.
We believe sandals are a natural extension of the Crocs Brand and allow us to access new consumers by leveraging our signature molding technology to provide casual, comfortable footwear for a variety of wearing occasions. In addition to the development of our sandals product pillar, we see further opportunity to expand into broader footwear silhouettes and lifestyle occasions.
We continue to grow our clog silhouette with new designs, colors, graphics, licensed images, embellishments, and accessories, such as Jibbitz™ charms, for personalization. The addition of the HEYDUDE Brand to our portfolio provides an innovative loafer concept that is differentiated through easy on and off, quality, and comfort.
Our Classic Clog is our icon, and we continue to grow our broader clog silhouette with new designs, colors, graphics, licensed properties and collaborations. The addition of the HEYDUDE Brand to our portfolio provides opportunity to play in a broader casual footwear market. The brand is known for its versatility, easy on and off characteristics, and comfort.
In the fourth quarter of 2023, to reflect changes in the way management evaluates performance, makes operating decisions, and allocates resources, we updated our reportable operating segments to be (i) Crocs Brand and (ii) HEYDUDE Brand, which are discussed in more detail in “Business Segments and Geographic Information” below.
We have two reportable operating segments: the Crocs Brand and the HEYDUDE Brand, which are discussed in more detail in “Business Segments and Geographic Information” below. Our Vision At the heart of our brands are our consumers.
Environmental We are committed to reducing our impact on the environment and are particularly focused on carbon reduction, sustainable operations, and product circularity. In 2023, we completed a Greenhouse Gas inventory for the Crocs, Inc. enterprise, including both the Crocs and HEYDUDE brands, based on 2022 data.
In 2024, we completed a greenhouse gas inventory for the Crocs, Inc. enterprise, including both the Crocs and HEYDUDE brands, based on 2023 data. We also updated our 2022 and 2021 emissions based on updates in calculation methodology due to more accurate emission factors and advancements in data quality.
See the risk factor under “Risks Related to our Supply Chain — We depend solely on third-party manufacturers located outside of the U.S.” included in Item 1A. Risk Factors of this Annual Report on Form 10-K for more information on risks associated with sourcing.
Nonetheless, see the risk factors under “Risks Related to our Supply Chain — We depend solely on third-party manufacturers located outside of the U.S.” and “Risks Related to International Operations —Government actions and regulations, such as export restrictions, tariffs, and other trade protection measures could adversely affect our business” included in Item 1A.
We have rightsized HEYDUDE’s wholesale distribution footprint and are evolving our channel diversification strategy through a thoughtful development of outlet retail. In 2023, we opened 5 HEYDUDE Brand outlet stores. • Growth opportunities internationally — As a company with a well-established global footprint, we believe we have a long-term sales growth opportunity internationally.
We have rightsized HEYDUDE’s wholesale distribution footprint and are evolving our channel diversification strategy through the thoughtful development of premium outlet retail stores. At the end of 2024 and 2023, we had a fleet of 52 and 14 HEYDUDE Brand outlet stores, respectively. Across our portfolio, leading with digital remains a priority.
We aggressively police our patents, trademarks, and copyrights and pursue those who infringe upon them, both domestically and internationally, through litigation and otherwise as we deem necessary. We consider the formulations of the materials used to produce our Crocs Brand footwear covered by our trademark Croslite™ and LiteRide™, among others, valuable trade secrets.
We strategically register, both domestically and internationally, the trademarks and patents covering certain product designs and branding that we utilize today. We aggressively police our patents, trademarks, and copyrights and pursue those who infringe upon them, both domestically and internationally, through litigation and otherwise as we deem necessary.
On February 17, 2022 (the “Acquisition Date”), we acquired (the “Acquisition”) 100% of the equity of a privately-owned casual footwear brand business (“HEYDUDE”), pursuant to a securities purchase agreement entered into on December 22, 2021.
On February 17, 2022 (the “Acquisition Date”), we acquired (the “Acquisition”) 100% of the equity of a privately-owned casual footwear brand business (“HEYDUDE”). HEYDUDE is engaged in the business of distributing and selling casual footwear under the brand name “HEYDUDE.” The majority of HEYDUDE sales are currently in the United States.
In the past year, we continued the integration of our sustainable bio-based alternative materials as part of our Croslite™ compound, renewed our membership with the Sustainable Apparel Coalition, joined the Footwear Collective as a founding member, continued to enhance tracking of our energy use, water use, and waste generation, and had three key suppliers complete the Footwear Distributors and Retailers of America (“FDRA”) Footwear Factory Zero Waste Program.
We also maintained our membership with Cascale (formerly the Sustainable Apparel Coalition), continued to progress the work of the Footwear Collective as a founding member and enhanced the tracking of our energy use, water use, and waste generation.
From a marketing perspective, we continue 2 Table of Contents to invest in globally integrated digital advertising campaigns, as well as designer, celebrity and influencer, and brand partnerships. Products Since we first introduced a single-style clog in six colors in 2002, we have grown to be a world leader of innovative, casual footwear for women, men, and children.
For the HEYDUDE Brand, our primary focus is diversification within our core Wendy and Wally silhouettes, while pursuing natural extensions into sneakers, dress casual, boots and sandals. 2 Table of Contents Products Since we first introduced a single-style clog in six colors in 2002, we have grown to be a world leader of innovative, casual footwear for all.
Our international sales in 2023 were 32.5% of consolidated revenues, compared to 29.4% and 32.8% of consolidated revenues in 2022 and 2021, respectively. This includes sales in 2023 and 2022 for the HEYDUDE Brand, which operates primarily in the United States.
Our international sales in 2024 were 44.1% of Crocs Brand revenues compared to 41.0% and 38.2% in 2023 and 2022, respectively. For the HEYDUDE Brand, which predominantly operates in the United States, we have embarked, and plan to continue to embark, on various marketing activities to drive higher awareness. This includes developing a pipeline of collaborations and brand activations.
The basis of this is our Board of Directors, which was comprised of 29% female and 14% historically underrepresented racial/ethnic members as of December 31, 2023. 4 Table of Contents In 2023, our Environmental, Social, and Governance Steering Committee (the “ESG Committee”) of our board of directors (the “Board”), comprised of three independent directors and our Chief Executive Officer, continued its oversight of our ESG efforts and received quarterly updates on the development of our ESG program.
In 2024, our Corporate Responsibility and Sustainability Steering Committee (the “CRS Committee”) of our Board, comprised of three independent directors, continued its oversight of our CRS efforts and received quarterly updates on the development of our CRS program.
Our digital sales in 2023 were 37.9% of consolidated revenues, compared to 37.8% and 36.7% of consolidated revenues in 2022 and 2021, respectively. • Gaining sandals market share for the Crocs Brand — Sandals have long been a focus of the Crocs Brand as a large and accessible growth avenue for the brand.
Our digital sales in 2024 were 37.2% of consolidated revenues, compared to 37.9% and 37.8% of consolidated revenues in 2023 and 2022, respectively. • Attract new consumers by diversifying our product range and wearing occasions — For the Crocs Brand, we see opportunity to attract new consumers by driving diversification in wearing occasions.
Our six core markets for the Crocs Brand include five international markets, and more specifically, four markets in Asia: China, India, Japan, and South Korea. • Ongoing product and marketing innovation — At the heart of our Crocs Brand’s DNA are our clogs, sandals, and Jibbitz™ charms, which are key product pillars that we believe will drive long-term growth.
Our enterprise growth priorities are centered around three strategic areas of focus: • Ignite our icons to drive awareness and relevance for our brands — Central to our Crocs Brand’s DNA are our clogs, sandals, and Jibbitz™ charms, which are key product pillars that we believe will drive long-term growth.
We intend to continuously advance our business practices towards our goal of consistently delivering products that exceed customer and consumer expectations with neither undue degradation to the planet nor harm to the communities with which we interact globally as part of our effort to create a more comfortable world for all.
We are continuously evaluating our business practices towards our goal of consistently delivering products that exceed customer and consumer expectations while meeting all regulatory and compliance requirements.
Within the regions in which we operate, we prioritize six core markets for the Crocs Brand where we believe the greatest opportunities for growth exist: (i) China, (ii) India, (iii) Japan, (iv) South Korea, (v) the U.S., and (vi) Western Europe. Our Vision At the heart of our brands is our consumers.
The Wendy and Wally are distinct and innovative loafer silhouettes and represent our icons. • Drive market share gains across our Tier 1 markets through strategic investment in talent, marketing, digital, and retail — For the Crocs Brand, we are focused on six Tier 1 markets: (i) China, (ii) India, (iii) Japan, (iv) South Korea, (v), the U.S., and (vi) Western Europe.
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HEYDUDE is engaged in the business of distributing and selling casual footwear under the brand name “HEYDUDE.” The majority of HEYDUDE sales are currently in the United States. Our business has continued to evolve in the period following the consummation of the Acquisition, as we have grown the brand and staffed and developed our leadership team at HEYDUDE.
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In 2024, we increased the amount of bio-circular materials in our Croslite™ compound, reaching 25% bio-circular content on a mass balance basis as verified by the International Sustainability and Carbon Certification (“ISCC PLUS”), supporting our journey to Net Zero by 2040.
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We continue to invest in globally integrated marketing campaigns, as well as designer, celebrity and influencer, and brand partnerships, ranging from popular designers like Salehe Bembury to a wide range of well-known brands such as Mossy Oak, Levi’s, and Taco Bell.
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We also launched our first “Keep it Going” classic clog, made of 25% post-consumer recycled content created from Crocs shoes we’ve taken back. More detail on these initiatives, as well as our ambitions, will be provided in our upcoming Comfort Report.
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We also redefined our 2021 baseline to account for the HEYDUDE Brand as part of our continued journey to Net Zero by 2040.
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To that end, our regular employee engagement scores continue to reflect a highly engaged global workforce. Our efforts around inclusion, collaboration, and human rights extend through our supply chain.
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We are proud of the workplace culture we have created and will continue to engage our employees to hear where we still have room for improvement. To that end, our regular employee engagement scores continue to meet or surpass industry benchmarks and reflect a highly engaged global workforce.
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In 2024, we launched our “Step Up to Greatness” program focused on supporting non-profit partners that help young people build new skills, grow confidence, and open doors to new opportunities. We also partnered with Big Brothers Big Sisters, the largest youth mentoring organization in the United States, to support them in empowering young people.
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We also seek to extend the reach of our social and environmental standards through our global community giving program. We focus on providing shoes, funds, and employee time to support social inclusion and equality, and respond to our communities’ needs in times of crises. This program is informed by key stakeholder priorities.
Added
We continued to show up for our communities in times of need, donating shoes and funds in the wake of crises, such as the impacts following the hurricanes in the southeastern United States in 2024.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

110 edited+36 added−9 removed189 unchanged
Biggest changeSpecifically, our level of debt could have important consequences, including the following: • making it more difficult for us to meet our obligations with respect to our debt; • reducing the availability of cash flow to fund future working capital, capital expenditures, acquisitions or other general corporate purposes; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate purposes; • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions or other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest; • placing us at a disadvantage compared to other, less leveraged competitors; • increasing our cost of borrowing; and • limiting our flexibility in planning for changes in our business and reacting to changes in the industry in which we compete. 24 Table of Contents Furthermore, if we are unable to meet our debt service obligations or should we fail to comply with our financial and other negative covenants contained in the agreements governing our indebtedness, we may be required to refinance all or part of our debt, sell important strategic assets at unfavorable prices, incur additional indebtedness or issue common stock or other equity securities.
Biggest changeSpecifically, our level of debt could have important consequences, including the following: • making it more difficult for us to meet our obligations with respect to our debt; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate purposes; • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions or other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest; • placing us at a disadvantage compared to other, less leveraged competitors; • increasing our cost of borrowing; and • limiting our flexibility in planning for changes in our business and reacting to changes in the industry in which we compete.
Any substantial decrease in tourism, resulting from an economic slowdown, political, terrorism, social, or military events, natural disasters, public health issues like the COVID-19 pandemic, or otherwise, is likely to adversely affect sales in our existing stores. Our financial results may be adversely affected if substantial investments in businesses and operations fail to produce expected returns.
Any substantial decrease in tourism, resulting from an economic slowdown, political, terrorism, social, or military events, natural disasters, public health issues like the COVID-19 pandemic, or otherwise, is likely to adversely affect sales in our stores. Our financial results may be adversely affected if substantial investments in businesses and operations fail to produce expected returns.
Foreign manufacturing and sales activities are subject to numerous risks, including: • tariffs, anti-dumping fines, import and export controls, and other non-tariff barriers such as quotas and local content rules; • delays associated with the manufacture, transportation, and delivery of products, including related to global port backlog or congestion; • increased transportation costs due to distance, energy prices, inflation, or other factors; • delays in the transportation and delivery of goods due to increased security concerns; • restrictions on the transfer of funds; • restrictions and potential penalties due to privacy laws on the handling and transfer of consumer and other personal information; • changes in governmental policies and regulations; • political unrest, such as the ongoing war between Israel and Hamas, changes in law, terrorism, natural disasters, public health issues like the COVID-19 pandemic, or war, any of which can interrupt commerce; • potential violations of U.S. and foreign anti-corruption and anti-bribery laws by our employees, business partners or agents, despite our policies and procedures relating to compliance with these laws; • expropriation and nationalization; • difficulties in managing foreign operations effectively and efficiently from the U.S.; • difficulties in understanding and complying with local laws, regulations, and customs in foreign jurisdictions; • longer accounts receivable payment terms and difficulties in collecting foreign accounts receivables; • difficulties in enforcing contractual and intellectual property rights; • greater risk that our business partners do not comply with our policies and procedures relating to labor, health, and safety; • UFLPA detentions by U.S.
Foreign manufacturing and sales activities are subject to numerous risks, including: • tariffs, anti-dumping fines, import and export controls, and other non-tariff barriers such as quotas and local content rules; • delays associated with the manufacture, transportation, and delivery of products, including related to global port backlog or congestion; • increased transportation costs due to distance, energy prices, inflation, or other factors; • delays in the transportation and delivery of goods due to increased security concerns; • restrictions on the transfer of funds; • restrictions and potential penalties due to privacy laws on the handling and transfer of consumer and other personal information; • changes in governmental policies and regulations; • political unrest, such as the ongoing war between Israel and Hamas, changes in law, terrorism, natural disasters, or public health issues like the COVID-19 pandemic, any of which can interrupt commerce; • potential violations of U.S. and foreign anti-corruption and anti-bribery laws by our employees, business partners or agents, despite our policies and procedures relating to compliance with these laws; • expropriation and nationalization; 18 Table of Contents • difficulties in managing foreign operations effectively and efficiently from the U.S.; • difficulties in understanding and complying with local laws, regulations, and customs in foreign jurisdictions; • longer accounts receivable payment terms and difficulties in collecting foreign accounts receivables; • difficulties in enforcing contractual and intellectual property rights; • greater risk that our business partners do not comply with our policies and procedures relating to labor, health, and safety; • UFLPA detentions by U.S.
We, similar to many other companies with overseas operations, import and sell products in other countries that could be impacted by changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions).
We, similar to many other companies with overseas operations, import and sell products in other countries that could be impacted by changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs, international trade agreements, trade restrictions, or economic sanctions).
Pandemics, including the COVID-19 pandemic, and other public health emergencies have, among other things, caused global macroeconomic uncertainty, disrupted consumer spending and supply chains, contributed to various global shipping delays and port congestions, and created significant volatility and disruption of financial markets.
Pandemics, including the COVID-19 pandemic, epidemics, and other public health emergencies have, among other things, caused global macroeconomic uncertainty, disrupted consumer spending and supply chains, contributed to various global shipping delays and port congestions, and created significant volatility and disruption of financial markets.
If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive.
If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner, on favorable terms, or more dilutive.
Customs resulting in revenue loss and adverse media exposure; and • increased accounting and internal control costs. In addition, we are subject to customs laws and regulations with respect to our export and import activity, which are complex and vary within legal jurisdictions in which we operate.
CBP resulting in revenue loss and adverse media exposure; and • increased accounting and internal control costs. In addition, we are subject to customs laws and regulations with respect to our export and import activity, which are complex and vary within legal jurisdictions in which we operate.
In the past, several footwear companies, including ours, have experienced periods of rapid growth in revenues and earnings followed by periods of declining sales and losses, and our business may be similarly affected in the future.
In the past, several footwear companies, including ours, have experienced periods of rapid growth in revenues and earnings followed by periods of declining revenues and losses, and our business may be similarly affected in the future.
If our ESG practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, or if we are perceived or deemed to have not appropriately responded to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage from stakeholders and consumers and our business and financial condition could be materially and adversely affected.
If our CRS practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, or if we are perceived or deemed to have not appropriately responded to the growing concern for CRS issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage from stakeholders and consumers and our business and financial condition could be materially and adversely affected.
See the risk factor under “ Risks Related to International Operations — We conduct significant business activity outside the U.S., which exposes us to risks of international commerce. ” 15 Table of Contents We depend on a number of suppliers for key production materials, and any disruption in the supply of such materials could interrupt product manufacturing and increase product costs.
See the risk factor under “ Risks Related to International Operations — We conduct significant business activity outside the U.S., which exposes us to risks of international commerce. ” 16 Table of Contents We depend on a number of suppliers for key production materials, and any disruption in the supply of such materials could interrupt product manufacturing and increase product costs.
To successfully continue to evolve our footwear product line to appeal to our consumers, we must anticipate, understand, and react to the rapidly changing tastes of consumers and provide appealing merchandise in a timely manner. New footwear models that we introduce may not be successful with consumers or our brands may fall out of favor with consumers.
To successfully continue to evolve our footwear product line to appeal to our consumers, we must anticipate, understand, and react to the rapidly changing tastes of consumers and provide appealing merchandise in a timely manner. New footwear models, collaborations, and licenses that we introduce may not be successful with consumers or our brands may fall out of favor with consumers.
If we are not able to efficiently manufacture new products in quantities sufficient to support wholesale, retail, and e-commerce distribution, we may not be able to recover our investment in the development of new styles and product lines, and we would continue to be subject to the risks inherent to having a limited product line.
If we are not able to efficiently manufacture new products in quantities sufficient to support wholesale, retail, and e-commerce distribution, we may not be able to recover our investment in the development of new styles, product lines, collaborations, and licenses, and we would continue to be subject to the risks inherent to having a limited product line.
If we are unable to obtain suitable elastomer resins, or if we are unable to procure sufficient quantities of the materials that go into the Croslite™ and LiteRide™ formulations, we may not be able to meet our production requirements in a timely manner or may need to modify our product characteristics, which could result in less favorable market acceptance, lost potential sales, delays in shipments to customers, strained relationships with customers, and diminished brand loyalty.
If we are unable to obtain suitable elastomer resins, or if we are unable to procure sufficient quantities of the materials that go into the Croslite™, LiteRide™, and Free Feel Technology™ formulations, we may not be able to meet our production requirements in a timely manner or may need to modify our product characteristics, which could result in less favorable market acceptance, lost potential sales, delays in shipments to customers, strained relationships with customers, and diminished brand loyalty.
See the risk factor “Changes in foreign exchange rates, most significantly but not limited to the Euro, South Korean Won, and Chinese Yuan or other global currencies could have a material adverse effect on our business and financial results” for more information. • Slower consumer spending may result in our inability to maintain or increase our sales to new and existing customers and cause reduced product orders or product order delays or cancellations from wholesale accounts that are directly 11 Table of Contents impacted by fluctuations in the broader economy, difficulties managing inventories, higher discounts, and lower product margins. • If consumer demand for our products declines, we may not be able to profitably operate existing retail stores, due to higher fixed costs of the retail business. • A decrease in credit available to our wholesale or distributor customers, product suppliers, and other service providers, or financial institutions that are counterparties to our Revolving Facility (as defined herein) or derivative instruments may result in credit pressures, other financial difficulties, or insolvency for these parties, with a potential adverse impact on our business, our financial results, or our ability to obtain future financing. • If our wholesale customers experience diminished liquidity, we may experience a reduction in product orders, an increase in customer order cancellations, and/or the need to extend customer payment terms, which could lead to larger balances and delayed collection of our accounts receivable, reduced cash flows, greater expenses for collection efforts, and increased risk of nonpayment of our accounts receivable. • If our manufacturers or other parties in our supply chain experience diminished liquidity, and as a result are unable to fulfill their obligations to us, we may be unable to provide our customers with our products in a timely manner, resulting in lost sales opportunities or a deterioration in our customer relationships. • If we are unable to mitigate the impact of supply chain constraints and inflationary pressure through price increases or other measures, our results of operations and financial condition could be negatively impacted.
See the risk factor “Changes in foreign exchange rates, most significantly but not limited to the Euro, South Korean Won, and Chinese Yuan or other global currencies could have a material adverse effect on our business and financial results” for more information. • Slower consumer spending may result in our inability to maintain or increase our sales to new and existing customers and cause reduced product orders or product order delays or cancellations from wholesale accounts that are directly impacted by fluctuations in the broader economy, difficulties managing inventories, higher discounts, and lower product margins. • If consumer demand for our products declines, we may not be able to profitably operate existing retail stores, due to the higher fixed costs associated with our retail business compared to e-commerce distribution. • A decrease in credit available to our wholesale or distributor customers, product suppliers, and other service providers, or financial institutions that are counterparties to our Revolving Facility (as defined herein) or derivative instruments may result in credit pressures, other financial difficulties, or insolvency for these parties, with a potential adverse impact on our business, our financial results, or our ability to obtain future financing. • If our wholesale customers experience diminished liquidity, we may experience a reduction in product orders, an increase in customer order cancellations, and/or the need to extend customer payment terms, which could lead to larger balances and delayed collection of our accounts receivable, reduced cash flows, greater expenses for collection efforts, and increased risk of nonpayment of our accounts receivable. • If our manufacturers or other parties in our supply chain experience diminished liquidity, and, as a result, are unable to fulfill their obligations to us, we may be unable to provide our customers with our products in a timely manner, resulting in lost sales opportunities or a deterioration in our customer relationships, which could in turn negatively impact future sales. • If we are unable to mitigate the impact of supply chain constraints and inflationary pressure through price increases or other measures, our results of operations and financial condition could be negatively impacted.
For more information, please see the risk factors under “Risks Related to the Economy — Ongoing wars could cause further disruptions in the global economy as well as a negative impact on our business, financial condition, and results of operations,” “Risks Related to Our Supply Chain — We depend solely on third-party manufacturers located outside the U.S.,” “ Risks Related to our Supply Chain — Our third-party manufacturing operations must comply with labor, trade, and other 17 Table of Contents laws.
For more information, please see the risk factors under “Risks Related to the Economy — Ongoing wars could cause further disruptions in the global economy as well as a negative impact on our business, financial condition, and results of operations,” “Risks Related to Our Supply Chain — We depend solely on third-party manufacturers located outside the U.S.,” “ Risks Related to our Supply Chain — Our third-party manufacturing operations must comply with labor, trade, and other laws.
Issues in implementing or integrating new business operations, such as HEYDUDE, and new systems 21 Table of Contents with our current operations, failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, issues with transitioning to or operating our new distribution centers, cost overruns, or a breach in security of these systems could cause delays in product fulfillment and reduced efficiency of our operations, require significant additional capital investments to remediate, and may have an adverse effect on our business and financial results.
Issues in implementing or integrating new business operations, such as HEYDUDE, and new systems with our current operations, failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, issues with transitioning to or operating our new distribution centers, cost overruns, or a breach in security of these systems could cause delays in product fulfillment and reduced efficiency of our operations, require significant additional capital investments to remediate, and may have an adverse effect on our business and financial results.
During the year ended 2022, our third-party manufacturers, distribution centers, where we manage our inventory, and our third-party partners experienced disruptions that impacted our supply chain and increased global lead-time for our products, including port congestion, temporary closures, and worker shortages.
During the year ended December 31, 2022, our third-party manufacturers, distribution centers, where we manage our inventory, and our third-party partners experienced disruptions that impacted our supply chain and increased global lead-time for our products, including port congestion, temporary closures, and worker shortages.
See the risk factor under “ Supply chain disruptions could interrupt product manufacturing and global logistics and increase product costs” and “Our operations are dependent on the global supply chain and impacts of supply chain constraints and inflationary pressure could adversely impact our operating results.” 13 Table of Contents Foreign manufacturing is subject to additional risks, including transportation delays and interruptions, including those caused by the COVID-19 pandemic, work stoppages, political instability, including the ongoing war between Israel and Hamas, expropriation, nationalization, foreign currency fluctuations, changing economic conditions, cost inflation, changes in governmental policies or laws, and the imposition of tariffs, import and export controls, and other barriers.
See the risk factor under “ Supply chain disruptions could interrupt product manufacturing and global logistics and increase product costs” and “Our operations are dependent on the global supply chain and impacts of supply chain constraints and inflationary pressure could adversely impact our operating results.” Foreign manufacturing is subject to additional risks, including transportation delays and interruptions, including those caused by the COVID-19 pandemic, work stoppages, political instability, including the ongoing war between Israel and Hamas, the ongoing war between Russia and Ukraine, expropriation, nationalization, foreign currency fluctuations, changing economic conditions, cost inflation, changes in governmental policies or laws, and the imposition of tariffs, import and export controls, and other barriers.
Although we have undertaken significant efforts to improve and implement our ESG initiatives, it is possible that the aforementioned parties may not be satisfied with such disclosures, our ESG practices, or the speed with which we adopt and/or implement our plans.
Although we have undertaken significant efforts to improve and implement our CRS initiatives, it is possible that the aforementioned parties may not be satisfied with such disclosures, our CRS practices, or the speed with which we adopt and/or implement our plans.
If we are unable to mitigate the impact of supply chain constraints and inflationary pressure through price increases or other measures, our results of operations and financial condition could be negatively impacted.
If we are unable to mitigate the impact of supply chain constraints and inflationary pressure through price increases or other measures, our gross margins, results of operations and financial condition could be negatively impacted.
See the risk factor under “Supply chain disruptions could interrupt product manufacturing and global logistics and increase product costs.” 14 Table of Contents If we do not accurately forecast consumer demand, we may have excess inventory to liquidate or have greater difficulty filling our customers’ orders, either of which could adversely affect our business.
See the risk factor under “Supply chain disruptions could interrupt product manufacturing and global logistics and increase product costs.” If we do not accurately forecast consumer demand, we may have excess inventory to liquidate or have greater difficulty filling our customers’ orders, either of which could adversely affect our business.
Likewise, our U.S. companies are also exposed to the risk of losses resulting from changes in exchange rates on monetary assets and liabilities that are denominated in a currency other than the USD.
Likewise, our U.S. subsidiaries are also exposed to the risk of losses resulting from changes in exchange rates on monetary assets and liabilities that are denominated in a currency other than the USD.
A number of our competitors have significantly greater financial resources, more comprehensive product lines, a broader market presence, longer standing relationships with wholesalers, a longer operating history, greater distribution capabilities, stronger brand recognition, less reliance on a small number of brands 9 Table of Contents or product lines, and spend substantially more on product marketing than we do.
A number of our competitors have significantly greater financial resources, more comprehensive product lines, a broader market presence, longer standing relationships with wholesalers, a longer operating history, greater distribution capabilities, stronger brand recognition, less reliance on a small number of brands or product lines, and spend substantially more on product marketing than we do.
The use of indebtedness to finance the Acquisition reduced our liquidity and could cause us to place more reliance on cash generated from operations to pay principal and interest on our debt, thereby reducing the availability of our cash flow for working capital and capital expenditure needs or to pursue other potential strategic plans.
The use of indebtedness to finance the Acquisition reduced our liquidity and has caused, and could continue to cause, us to place more reliance on cash generated from operations to pay principal and interest on our debt, thereby reducing the availability of our cash flow for working capital and capital expenditure needs or to pursue other potential strategic plans.
Any such disruption could result in delayed or canceled orders by customers, unplanned inventory accumulation or shortages, and increased transportation and labor costs, negatively impacting our results of operations and financial position. We are subject to periodic litigation, which could result in unexpected expenditures of time and resources.
Any such disruption could result in delayed or canceled orders by customers, unplanned inventory accumulation or shortages, and increased transportation and labor costs, negatively impacting our results of operations and financial position. 23 Table of Contents We are subject to periodic litigation, which could result in unexpected expenditures of time and resources.
Our e-commerce business may be particularly vulnerable to cyber threats including unauthorized access and denial of service attacks. Sales in our e-commerce channel may also divert sales from our retail and wholesale channels. 20 Table of Contents Our financial success depends in part on the strength of our relationships with, and the success of, our wholesale and distributor customers.
Our e-commerce business may be particularly vulnerable to cyber threats including unauthorized access and denial of service attacks. Sales in our e-commerce channel may also divert sales from our retail and wholesale channels. Our financial success depends in part on the strength of our relationships with, and the success of, our wholesale and distributor customers.
The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.
The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers 25 Table of Contents from the lenders and/or amend the covenants.
We generally consider unremitted earnings of subsidiaries operating outside the U.S. to be indefinitely reinvested, and it is not our current intent to change this position. Cash held outside of the U.S. is primarily used for the ongoing operations of the business in the locations in which the cash is held.
We generally consider unremitted earnings of subsidiaries operating outside the U.S. to be indefinitely reinvested, and it is not our current intent to change this position. Cash held outside of the U.S. is primarily used for the ongoing operations of the business 27 Table of Contents in the locations in which the cash is held.
We depend on a number of sources for the primary materials used to make our footwear. We source the elastomer resins that constitute the primary raw materials used in compounding our Croslite™ and LiteRide™ formulations, which we use to produce our various footwear products, from multiple suppliers.
We depend on a number of sources for the primary materials used to make our footwear. We source the elastomer resins that constitute the primary raw materials used in compounding our Croslite™, LiteRide™, and Free Feel Technology™ formulations, which we use to produce our various footwear products, from multiple suppliers.
We have experienced, and will continue to experience, changes in exchange rates, impacting both our statements of operations and the value of our assets and liabilities denominated in foreign currencies.
We have experienced, and will continue to experience, changes in exchange rates, impacting both our statements of income and the value of our assets and liabilities denominated in foreign currencies.
For example, on December 23, 2021, the UFPLA, which effectively prohibits imports of any goods made either wholly or in part in a certain area of China, was signed into law, which generally prohibits importing goods made with forced labor into the U.S., subject to certain exceptions.
For example, in 2021, the UFPLA, which effectively prohibits imports of any goods made either wholly or in part in a certain area of China, was signed into law, which generally prohibits importing goods made with forced labor into the U.S., subject to certain exceptions.
Further, we could fail, or be perceived to fail, to achieve our ESG initiatives or goals, or we could fail to fully and accurately report our progress on such initiatives and goals, which could negatively impact our business.
Further, we could fail, or be perceived to fail, to achieve our CRS initiatives or goals, or we could fail to fully and accurately report our progress on such initiatives and goals, which could negatively impact our business.
Furthermore, our competitors or others may independently develop or discover such trade secrets and information, which would render them less valuable to us. Failure to continue to obtain or maintain high-quality endorsers of our products could harm our business .
Furthermore, our competitors or others may independently develop or discover such trade secrets and information, which would render them less valuable to us. Failure to continue to obtain or maintain high-quality endorsers of our products and social media influencers could harm our business .
If our brands are associated with inferior counterfeit reproductions, the integrity and reputation of our brands could be adversely affected. Furthermore, our efforts to enforce our intellectual property rights are typically met with defenses and counterclaims attacking the validity and enforceability of our intellectual property rights.
If our brands are associated with inferior counterfeit reproductions, the integrity and reputation of our brands could be adversely affected. Furthermore, our efforts to enforce our intellectual property rights are typically met with defenses and counterclaims 10 Table of Contents attacking the validity and enforceability of our intellectual property rights.
For a detailed discussion of our current material legal proceedings, see Note 16 — Commitments and Contingencies in the accompanying notes to the consolidated financial statements included in Part II - Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
For a detailed discussion of our current material legal proceedings, see Note 18 — Legal Proceedings in the accompanying notes to the consolidated financial statements included in Part II - Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
While we derived immaterial revenues from markets in and around these conflict zones in 2023, the instability resulting from these wars could cause an adverse effect on our business, financial condition, results of operations, supply chain, intellectual property, partners, customers, or employees should tensions escalate.
While we derived immaterial revenues from markets in and around these conflict zones in 2024, the instability resulting from these wars could cause an adverse effect on our business, financial 12 Table of Contents condition, results of operations, supply chain, intellectual property, partners, customers, or employees should tensions escalate.
Investor advocacy groups, certain institutional investors, investment funds, stockholders, customers, non-governmental organizations, consumers and regulators, such as the SEC, are increasingly focused on corporate responsibility, specifically on the ESG practices of companies. These parties have placed increased importance on the implications of the social cost of their investments.
Investor advocacy groups, certain institutional investors, investment funds, proxy advisory firms, stockholders, customers, non-governmental organizations, consumers and regulators, such as the SEC, are increasingly focused on corporate responsibility, specifically on the CRS practices of companies. These parties have placed increased importance on the implications of the social cost of their investments.
Even if we develop and manufacture new footwear products that consumers find appealing, the ultimate success of a new style may depend on our pricing.
Even if we develop and manufacture new footwear products that consumers find appealing, the ultimate success of a new style, collaboration, or license may depend on our pricing.
Any breach of our network may result in the loss of 19 Table of Contents valuable business data, misappropriation of our consumers’ or employees’ personal information, including credit card information, or a disruption of our business.
Any breach of our network may result in the loss of valuable business data, misappropriation of our consumers’ or employees’ personal information, including credit card information, or a disruption of our business.
Although the fair values of our HEYDUDE Brand reporting unit goodwill and indefinite-lived intangible assets are either equal to or in excess of their carrying values, the fair values are sensitive to the aforementioned potential unfavorable changes that could have an adverse impact on future analyses.
Although the fair values of our HEYDUDE Brand reporting unit goodwill and indefinite-lived intangible assets are either equal to or in excess of their carrying values, the fair values are sensitive to the aforementioned potential unfavorable changes that could have an adverse impact on future analyses. See Part II - Item 7.
In addition, we use information systems for certain human resource activities and to process our employee benefits, as well as to process financial information for internal and external reporting purposes and to comply with various reporting, legal, and tax requirements.
In addition, we use information systems for certain 20 Table of Contents human resource activities and to process our employee benefits, as well as to process financial information for internal and external reporting purposes and to comply with various reporting, legal, and tax requirements.
From time to time, we communicate certain ESG initiatives and goals to market participants and our customers and business partners.
From time to time, we communicate certain CRS initiatives and goals to market participants and our customers and business partners.
These tax laws and regulations could adversely impact our financial position and results of operations beyond 2024.
These tax laws and regulations could adversely impact our financial position and results of operations beyond 2025.
We compete with other companies for the production capacity of our third-party manufacturers, and we do not exert direct control over the manufacturers’ operations. As such, from time to time we have experienced delays or inabilities to fulfill customer demand and orders.
We compete with other companies for the production capacity of our third-party manufacturers, and we do not exert direct control over the manufacturers’ operations. As such, from time to time we have experienced delays or inabilities to fulfill customer demand and orders, as discussed in more detail below.
During the years ended December 31, 2023, 2022, and 2021, approximately 56%, 53%, and 56%, respectively, of our Crocs Brand production was in Vietnam.
During the years ended December 31, 2024, 2023, and 2022, approximately 51%, 56%, and 53%, respectively, of our Crocs Brand production was in Vietnam.
We had borrowings outstanding of $190.0 million under the Revolving Facility, with total borrowing capacity of approximately $558.7 million thereunder (including $1.3 million of letters of credit outstanding as of such date). Financial and Accounting Risks We may be required to record impairments of long-lived assets or incur other charges relating to our company-operated retail operations.
We had borrowings outstanding of $190.0 million under the Revolving Facility, with total borrowing capacity of approximately $809.4 million thereunder (including $0.6 million of letters of credit outstanding as of such date). Financial and Accounting Risks We may be required to record impairments of long-lived assets or incur other charges relating to our company-operated retail operations.
Our operations have been, and may continue to be, impacted by supply chain constraints and raw material shortages, resulting in increased material costs, longer lead times, port congestion, and increased freight costs caused, in part, by the COVID-19 pandemic, the uncertain economic environment, and macroeconomic trends.
Our operations have been, and may continue to be, impacted by supply chain constraints and raw material shortages, resulting in increased material costs, longer lead times, port congestion, and increased freight costs, the uncertain economic environment, and macroeconomic trends.
If additional steps are required, there can be no assurance that they will be properly implemented or will be successful. 18 Table of Contents Our ability to realize the benefits from the Acquisition is substantially dependent on our ability to grow HEYDUDE.
If additional steps are required, there can be no assurance that they will be properly implemented or will be successful. Our ability to realize the benefits from the Acquisition is substantially dependent on our ability to grow HEYDUDE. Our ability to realize the benefits from the Acquisition is substantially dependent on our ability to continue to grow HEYDUDE.
We depend solely on third-party manufacturers located outside of the U.S. All of our footwear products are manufactured by third-party manufacturers, the majority of which are located in Vietnam, China, and Indonesia. We depend on the ability of these manufacturers to finance the production of goods ordered, maintain adequate manufacturing capacity, and meet our quality standards.
All of our footwear products are manufactured by third-party manufacturers, the majority of which are located in Vietnam, China, Indonesia, India, and Mexico. We depend on the ability of these manufacturers to finance the production of goods ordered, maintain adequate manufacturing capacity, and meet our quality standards.
In producing new footwear models, we may encounter difficulties that we did not anticipate during the product development stage.
In producing new footwear models, collaborations, and licenses, we may encounter difficulties that we did not anticipate during the product development stage.
Furthermore, due to the relative concentration of our third-party manufacturers, disruption at the facilities of our third-party manufacturing partners as a result of COVID-19 or otherwise, including through the effects of facility closures, reductions in operating hours and labor shortages had an adverse effect on our supply chain in 2021 and 2022 and may have a material adverse effect in the future.
In addition, disruption at the facilities of our third-party manufacturing partners as a result of COVID-19 or otherwise, including through the effects of facility closures, reductions in operating hours and labor shortages had an adverse effect on our supply chain in 2021 and 2022 and may have a material adverse effect in the future.
A significant portion of our revenues is generated from foreign sales. Our ability to maintain the current level of operations in our existing international markets is subject to risks associated with international sales operations. We operate retail stores and sell our products to retailers outside of the U.S. and utilize foreign-based third-party manufacturers.
Our ability to maintain the current level of operations in our existing international markets is subject to risks associated with international sales operations. We operate retail stores and sell our products to retailers outside of the U.S. and utilize foreign-based third-party manufacturers.
Due to the relative concentration of HEYDUDE’s third-party manufacturers, disruption at the facilities of such third-party manufacturing partners as a result of COVID-19 or otherwise, including through the effects of facility closures, reductions in operating hours and labor shortages may have a material adverse effect in the future.
Due to the relative concentration of HEYDUDE’s third-party manufacturers, disruption at the facilities of such third-party manufacturing partners, including through the effects of facility closures, reductions in operating hours and labor shortages may have a material adverse effect in the future.
Raw material supply shortages and supply chain constraints, including cost inflation, have impacted and could continue to negatively impact our ability to meet increased demand, which in turn could impact our net sales revenues and market share.
Raw material supply shortages and supply chain constraints, including cost inflation, have impacted, and could continue to negatively impact our ability to meet consumer demand, which in turn has impacted, and could in the future impact our net sales revenues and market share.
Furthermore, because our third-party manufacturers are concentrated in Asia, we may be subject to an increased risk of supply chain disruption, particularly in the event of a natural disaster, pandemic, such as the COVID-19 pandemic, epidemic, geopolitical tension, or other event impacting the region outside of our control.
Furthermore, due to the relative concentration of our third-party manufacturers, we may be subject to an increased risk of supply chain disruption, particularly in the event of a natural disaster, pandemic, such as the COVID-19 pandemic, epidemic, geopolitical tension, or other event impacting the region outside of our control.
In connection with the Acquisition, we allocated approximately $710.0 million and $1,780.0 million to goodwill and indefinite-lived intangible assets, respectively. These assets are tested for impairment at least annually, using estimates and assumptions affected by factors such as economic and industry conditions and changes in operating performance. Additionally, in conjunction with the impairment tests, we also reassess the indefinite-life classification.
In connection with the Acquisition, we allocated approximately $710.0 million and $1,780.0 million to goodwill and definite- and indefinite-lived intangible assets, respectively. These assets are tested for impairment at least annually, using estimates and assumptions affected by factors such as economic and industry conditions and changes in operating performance.
Our largest third-party manufacturer for the Crocs Brand, with the vast majority of operations in Vietnam and China, produced approximately 47%, 42%, and 34% of our production during the years ended December 31, 2023, 2022, and 2021, respectively, and our second largest third-party manufacturer for the Crocs Brand, primarily operating in both Vietnam and China, produced approximately 26%, 27%, and 30% of our production during the years ended December 31, 2023, 2022, and 2021, respectively.
Our largest third-party manufacturer for the Crocs Brand, with the majority of operations in Vietnam, produced approximately 50%, 47%, and 42% of our production during the years ended December 31, 2024, 2023, and 2022, respectively, and our second largest third-party manufacturer for the Crocs Brand, primarily operating in both Vietnam and China, produced approximately 25%, 26%, and 27% of our production during the years ended December 31, 2024, 2023, and 2022, respectively.
If we are unsuccessful at, among other things, building HEYDUDE’s brand awareness, enhancing its digital capabilities, leveraging our wholesale relationships to enhance distribution, investing in HEYDUDE’s infrastructure as well as sales and business operations, integrating employees into our company culture, leveraging our distribution for global growth and/or investing to scale our supply chain and gain efficiencies, our sales could be adversely affected, and our business could suffer.
If we are unsuccessful at, among other things, building HEYDUDE’s brand awareness, enhancing its digital capabilities, leveraging our wholesale relationships to enhance distribution, investing in HEYDUDE’s infrastructure as well as sales and business operations, leveraging our distribution for global growth and/or investing to scale our supply chain 19 Table of Contents and gain efficiencies, our sales could be adversely affected, and our business could suffer.
We rely on technical innovation to compete in the market for our products. Our success relies on continued innovation in both materials and design of footwear, such as our branded Croslite™ and LiteRide™ materials. Research and development is a key part of our continued success and growth, and we rely on experts to develop and test our materials and products.
Our success relies on continued innovation in both materials and design of footwear, such as our branded Croslite™, LiteRide™, and Free Feel Technology™ materials. Research and development is a key part of our continued success and growth, and we rely on experts to develop and test our materials and products.
Furthermore, even if we are able to raise the prices of our products, consumers might react negatively to such price increases, which could have a material adverse effect on, among other things, our brands, reputation, and sales. The Federal Reserve recently raised interest rates multiple times in response to concerns about inflation and it may raise them again.
Furthermore, even if we are able to raise the prices of our products, consumers might react negatively to such price increases, which could have a material adverse effect on, among other things, our brands, reputation, and sales. In 2024, the Federal Reserve raised interest rates multiple times in response to concerns about inflation, though further interest rate changes remain uncertain.
Our financial success is sensitive to changes in general economic conditions, both globally and in specific markets, that may adversely affect the demand for our products including recessionary economic cycles, higher interest rates, higher fuel and other energy costs, increased labor costs, declines in asset values, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws, public health issues like the COVID-19 pandemic, or other economic factors, certain of which effects, including cost inflation, we experienced in 2022 and 2023 and currently expect to continue to experience in 2024.
Our financial success is sensitive to changes in general economic conditions, both globally and in specific markets, that may adversely affect the demand for our products including recessionary economic cycles, higher interest rates, higher fuel and other energy costs, increased labor costs, declines in asset values, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws, public health issues like the COVID-19 pandemic, or other economic factors, certain of which effects, including cost inflation, we experienced in 2023 and 2024 and currently expect to continue to experience in 2025. 11 Table of Contents Global inflation, elevated interest rates, global industry-wide logistics challenges, and foreign currency fluctuations resulting in a stronger U.S.
Our profitability may be impacted by lower prices, which may negatively impact gross margins. Even though we are working to alleviate supply chain constraints through various measures, we are unable to predict the impact of these constraints on the timing of revenue and operating costs of our business in the near future.
Our profitability may be impacted by lower prices, which may negatively impact gross margins. We are unable to predict the impact of these constraints on the timing of revenue and operating costs of our business in the near future.
In addition, the ongoing war between Israel and Hamas has adversely affected the global economy.
In addition, the ongoing war between Israel and Hamas as well as the ongoing war between Russia and Ukraine has adversely affected the global economy.
Any change to the conclusion of our reporting units or the aggregation of components within our reporting units could result in a different outcome to our annual impairment test.
The testing of our goodwill for impairment is predicated upon our determination of our reporting units. Any change to the conclusion of our reporting units or the aggregation of components within our reporting units could result in a different outcome to our annual impairment test.
Although certain of the agreements governing our existing indebtedness contain restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions are subject to a number of qualifications and exceptions, including compliance with various financial conditions. Additional indebtedness incurred in compliance with our existing debt instruments could be substantial.
We may be able to incur substantial additional indebtedness in the future. Although certain of the agreements governing our existing indebtedness contain restrictions on the incurrence of additional indebtedness and entering into certain types of other 26 Table of Contents transactions, these restrictions are subject to a number of qualifications and exceptions, including compliance with various financial conditions.
Global supply chain disruptions during fiscal years 2021 and 2022 negatively impacted our gross margins and net income and could continue to do so in the future, which could have a material adverse effect on the business, financial condition, and results of operations.
For example, global supply chain disruptions during fiscal years 2021 and 2022 negatively impacted our gross margins and net income and any pandemics, epidemics, and other public health emergencies could do so again in the future, which could have a material adverse effect on our business, financial condition, and results of operations.
As of December 31, 2023, we had approximately $1,664.3 million in total indebtedness outstanding (net of $49.0 million of unamortized issuance costs related to the issuance of the Notes), including $820.0 million outstanding on the Term Loan B Facility.
As of December 31, 2024, we had approximately $1,349.3 million in total indebtedness outstanding (net of $40.7 million of unamortized issuance costs related to the Term Loan B Facility and issuance of the Notes), including $500.0 million outstanding on the Term Loan B Facility.
Additionally, counterfeit reproductions of our products or other infringement of our intellectual property rights, including unauthorized uses of our trademarks by third parties, could harm our brands and adversely impact our business. We face significant competition. The footwear industry is highly competitive.
Additionally, counterfeit reproductions of our products or other infringement of our intellectual property rights, including unauthorized uses of our trademarks by third parties, could harm our brands and adversely impact our business.
Declines in revenue and operating performance of our company-operated retail stores could cause us to record impairment charges and have a material adverse effect on our business and financial results. During 2023, we opened 29 and closed 11 retail stores, and we operated 363 retail stores at December 31, 2023.
Declines in revenue and operating performance of our company-operated retail stores could cause us to record impairment charges and have a material adverse effect on our business and financial results.
The agreements 10 Table of Contents we use in an effort to protect our intellectual property, confidential information, and other unpatented proprietary information may be ineffective or insufficient to prevent unauthorized use or disclosure of such trade secrets and information.
Using third-party manufacturers and compounding facilities may increase the risk of misappropriation of our trade secrets, confidential information, and other unpatented proprietary information. The agreements we use in an effort to protect our intellectual property, confidential information, and other unpatented proprietary information may be ineffective or insufficient to prevent unauthorized use or disclosure of such trade secrets and information.
This could lead to results outside of analyst and investor expectations, which could increase volatility of our stock price. The risks of maintaining significant cash abroad could adversely affect our cash flows in the U.S., our business, and financial results. We have substantial cash requirements in the U.S., but a significant portion of our cash is generated and held abroad.
The risks of maintaining significant cash abroad could adversely affect our cash flows in the U.S., our business, and financial results. We have substantial cash requirements in the U.S., but a significant portion of our cash is generated and held abroad.
To the extent new debt is added to our current debt levels, the substantial leverage risks described in the immediately preceding risk factor would increase.
Additional indebtedness incurred in compliance with our existing debt instruments could be substantial. To the extent new debt is added to our current debt levels, the substantial leverage risks described in the immediately preceding risk factor would increase.
Additionally, the Uyghur Forced Labor Prevention Act (“UFLPA”), empowers the U.S. Customs and Border Protection Agency (the “U.S. CBP”) to withhold release of items produced in whole or in part in the XUAR, or produced by companies included on a government-created UFLPA entity list, creating a presumption that such goods were produced using forced labor.
CBP”) to withhold release of items produced in whole or in part in the XUAR, or produced by companies included on a government-created UFLPA entity list, creating a presumption that such goods were produced using forced labor.
Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal data. Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations.
Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations. As with many technological innovations, artificial intelligence presents risks and challenges that could impact our business.
We cannot predict whether additional U.S. or foreign customs quotas, duties, taxes other charges, or restrictions will be imposed upon the importation of foreign produced products in the future or what effect such actions could have on our business or results. See the risk factor under “We depend solely on third-party manufacturers located outside the U.S.” for more information.
We cannot predict whether additional U.S. or foreign customs quotas, duties, taxes other charges, or restrictions will be imposed upon the importation of foreign produced products in the future or what effect such actions could have on our business or results of operations.
Many of our company-operated retail stores are located in shopping malls and outlet malls, and our success depends in part on obtaining prominent locations and the overall ability of the malls to successfully generate and maintain customer traffic.
During 2024, we opened 90 and closed 11 retail stores, and we operated 442 retail stores at December 31, 2024. 22 Table of Contents Many of our company-operated retail stores are located in shopping malls and outlet malls, and our success depends in part on obtaining prominent locations and the overall ability of the malls to successfully generate and maintain customer traffic.
Although we intend to meet these commitments, we may be required to expend significant resources to do so, which could increase our operational costs.
We have a public, enterprise-wide commitment to be Net Zero by 2040. Although we intend to meet these commitments, we may be required to expend significant resources to do so, which could increase our operational costs.
The final resolution of such tax audits and any related litigation can differ from our historical provisions and accruals, resulting in an adverse effect on our financial performance.
The final resolution of such tax audits and any related litigation can differ from our historical provisions and accruals, resulting in an adverse effect on our financial performance. These and any other additional changes could adversely affect our effective tax rate or result in higher cash tax liabilities.
Despite their existing cybersecurity procedures and controls, if their information systems become compromised, it could, among other things, cause delays in our product fulfillment or reduce our sales, which could harm our business.
Despite their existing cybersecurity procedures and controls, if their information systems become compromised, it could, among other things, cause delays in our product fulfillment or reduce our sales, which could harm our business. See Item 1C. Cybersecurity of this Annual Report on Form 10-K for more information on risks associated with cybersecurity procedures and controls.
To finance the Acquisition in part, we entered into an agreement (as amended prior to the February 2024 Amendment (as defined below), the “Term Loan B Credit Agreement”) with respect to a new senior secured term loan B facility in an aggregate principal amount equal to $2.0 billion (as amended prior to the February 2024 Amendment, the “Term Loan B Facility”) and borrowed $50.0 million under the Revolving Facility.
To finance the Acquisition in part, we entered into an agreement (as amended to date, the “Term Loan B Credit Agreement”) with respect to a senior secured term loan B facility (as amended to date, the “Term Loan B Facility”) and borrowed under the Revolving Facility.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Executive Leadership Team is responsible for managing enterprise risk, which is inclusive of cybersecurity. The Chief Information Officer (“CIO”), a member of the Executive Leadership Team, and the Chief Information Security Officer (“CISO”), who reports to the CIO, are responsible for assessing and managing cybersecurity risk, including the prevention, detection, mitigation, and remediation of cybersecurity incidents.
Biggest changeThe Chief Information Officer (“CIO”), a member of the Executive Leadership Team, and the Chief Information Security Officer (“CISO”), who reports to the CIO, are responsible for assessing and managing cybersecurity risk, including the prevention, detection, mitigation, and remediation of cybersecurity incidents.
The engagement includes having independent third parties perform compliance, technical, and maturity assessments, such as (1) attack surface assessment, (2) penetration testing assessment, and (3) cybersecurity maturity assessments. We also annually engage third parties and our internal audit department to assess our information security programs, whose findings are reported to the Audit Committee of the Board.
The engagement includes having independent third parties perform compliance, technical, and maturity assessments, such as (1) attack surface assessment, (2) penetration testing assessment, and (3) cybersecurity maturity assessments. We also annually engage third parties and/or our internal audit department to assess our information security programs, whose findings are reported to the Audit Committee of the Board.
A significant disruption to our operational technology or those of our business partners, a privacy law violation, or a data security breach could harm our reputation and/or our ability to effectively operate our business, and our financial results.” 27 Table of Contents The Audit Committee of the Board is responsible for monitoring and overseeing risk management from cybersecurity threats.
A significant disruption to our operational technology or those of our business partners, a privacy law violation, or a data security breach could harm our reputation and/or our ability to effectively operate our business, and our financial results.” The Audit Committee of the Board is responsible for monitoring and overseeing risk management from cybersecurity threats.
On at least an annual basis, management presents to the Audit Committee on cybersecurity strategy and framework, roadmaps for continued program maturity, key risk areas and related actions, and any significant incidents that have occurred or are reasonably likely to occur. The entire Board is invited to attend this annual cybersecurity meeting of the Audit Committee.
On at least an annual basis, management presents to the Audit Committee on cybersecurity strategy and framework, roadmaps for continued program maturity, key risk areas and related actions, and any significant incidents that have occurred or are reasonably likely to occur.
Added
The entire Board is invited to attend this annual cybersecurity meeting of the Audit Committee. 29 Table of Contents Our Executive Leadership Team is responsible for managing enterprise risk, which is inclusive of cybersecurity.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Reportable Operating Segment(s) Use Approximate Square Feet Las Vegas, Nevada (1) HEYDUDE Brand Distribution center 1,500,000 Dayton, Ohio Crocs Brand Distribution center 1,322,000 Dordrecht, the Netherlands Crocs Brand, HEYDUDE Brand Distribution center 517,000 Broomfield, Colorado Crocs Brand, HEYDUDE Brand Regional office and Crocs Brand headquarters 190,000 Oudenbosch, the Netherlands Crocs Brand Warehouse 75,000 Hoofddorp, the Netherlands Crocs Brand, HEYDUDE Brand Regional office 47,000 Westwood, Massachusetts Crocs Brand, HEYDUDE Brand Regional office and HEYDUDE Brand headquarters 46,000 Singapore Crocs Brand Regional office 17,000 (1) In 2022, we entered into a lease to transfer our existing warehouses to a new single distribution center also in Las Vegas, Nevada, with an approximate size of 1,050,000 square feet.
Biggest changeLocation Reportable Operating Segment(s) Use Approximate Square Feet Dayton, Ohio Crocs Brand Distribution center 1,322,000 Las Vegas, Nevada HEYDUDE Brand Distribution center 1,044,000 Dordrecht, the Netherlands Crocs Brand, HEYDUDE Brand Distribution center 517,000 Broomfield, Colorado Crocs Brand, HEYDUDE Brand Regional office and Crocs Brand headquarters 190,000 Westwood, Massachusetts Crocs Brand, HEYDUDE Brand Regional office and HEYDUDE Brand headquarters 70,000 Hoofddorp, the Netherlands Crocs Brand, HEYDUDE Brand Regional office 47,000 Singapore Crocs Brand Regional office 24,000 We believe these properties, particularly our distribution centers and warehouses, along with various third-party distribution centers not included above, are adequate for our operations.
Aside from the principal properties listed above, we lease various other offices and distribution centers worldwide to meet our sales and operational needs. We also lease 363 retail locations 28 Table of Contents worldwide as of December 31, 2023. See Item 1. Business of this Annual Report on Form 10-K for further discussion regarding global company-operated stores.
Aside from the principal properties listed above, we lease various other offices and distribution centers worldwide to meet our sales and operational needs. We also lease 442 retail locations worldwide as of December 31, 2024. See Item 1. Business of this Annual Report on Form 10-K for further discussion regarding global company-operated stores.
Removed
During 2023, we gained access to the new location. We plan to complete the move of these warehouses in 2024. We believe these properties, particularly our distribution centers and warehouses, along with various third-party distribution centers not included above, are adequate for our operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. Legal Proceedings A discussion of legal matters is found in Note 16 — Commitments and Contingencies in the accompanying notes to the consolidated financial statements included in Part II - Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K. ITEM 4. Mine Safety Disclosures Not applicable. 29 Table of Contents PART II
Biggest changeITEM 3. Legal Proceedings A discussion of legal matters is found in Note 18 — Legal Proceedings in the accompanying notes to the consolidated financial statements included in Part II - Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K. ITEM 4. Mine Safety Disclosures Not applicable. 30 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1) October 1-31, 2023 275,419 $ 86.37 275,419 $ 876,232,951 November 1-30, 2023 14,184 85.87 14,184 875,015,198 December 1-31, 2023 — — — 875,015,198 Total 289,603 $ 86.34 289,603 $ 875,015,198 (1) On April 23, 2021, the Board approved and authorized a program to repurchase up to $1.0 billion of our common stock.
Biggest changePurchases of Equity Securities by the Issuer Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1) October 1-31, 2024 346,038 $ 132.29 346,038 $ 503,104,749 November 1-30, 2024 790,674 102.59 790,674 422,007,927 December 1-31, 2024 881,549 111.36 881,549 323,859,355 Total 2,018,261 $ 111.51 2,018,261 $ 323,859,355 (1) On April 23, 2021, the Board approved and authorized a program to repurchase up to $1.0 billion of our common stock.
The repurchase authorization does not have an expiration date and does not oblige us to acquire any particular amount of our common stock. The Board may suspend, modify, or terminate the repurchase program at any time without prior notice. ITEM 6. [Reserved] 31 Table of Contents
The repurchase authorization does not have an expiration date and does not oblige us to acquire any particular amount of our common stock. The Board may suspend, modify, or terminate the repurchase program at any time without prior notice. ITEM 6. [Reserved] 32 Table of Contents
Footwear Total Return Index. The graph assumes an investment of $100.00 on December 31, 2018 and assumes the reinvestment of all dividends and other distributions. The Dow Jones U.S. Footwear Total Return Index is a sector index and includes companies in the major line of business in which we compete.
Footwear Total Return Index. The graph assumes an investment of $100.00 on December 31, 2019 and assumes the reinvestment of all dividends and other distributions. The Dow Jones U.S. Footwear Total Return Index is a sector index and includes companies in the major line of business in which we compete.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Select Market under the stock symbol “CROX.” Performance Graph The following performance graph illustrates a five-year comparison from December 31, 2018 through December 31, 2023 of cumulative total return of our common stock, the Nasdaq Composite Total Return Index, and the Dow Jones U.S.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Select Market under the stock symbol “CROX.” Performance Graph The following performance graph illustrates a five-year comparison from December 31, 2019 through December 31, 2024 of cumulative total return of our common stock, the Nasdaq Composite Total Return Index, and the Dow Jones U.S.
Additionally, on September 23, 2021, the Board approved an increase of $1.0 billion to our share repurchase authorization. As of December 31, 2023, approximately $875.0 million remained available for repurchase under our share repurchase authorization.
Additionally, on September 23, 2021, the Board approved an increase of $1.0 billion to our share repurchase authorization. As of December 31, 2024, approximately $323.9 million remained available for repurchase under our share repurchase authorization.
Holders The approximate number of stockholders of record of our common stock was 42 as of February 8, 2024. 30 Table of Contents Dividends We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Holders The approximate number of stockholders of record of our common stock was 37 as of February 6, 2025. 31 Table of Contents Dividends We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Added
On February 10, 2025, the Board approved a $1.0 billion increase to our share repurchase authorization, after which approximately $1.3 billion remained available for future common stock repurchases.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

116 edited+34 added−38 removed58 unchanged
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023, which is available free of charge on the SEC’s website at www.sec.gov and our corporate website (www.crocs.com). 33 Table of Contents Year Ended December 31, $ Change % Change Favorable (Unfavorable) 2023 2022 2023-2022 2023-2022 (in thousands, except per share data, margin, and average selling price data) Revenues $ 3,962,347 $ 3,554,985 $ 407,362 11.5 % Cost of sales 1,752,337 1,694,703 (57,634) (3.4) % Gross profit 2,210,010 1,860,282 349,728 18.8 % Selling, general and administrative expenses 1,163,940 1,009,526 (154,414) (15.3) % Asset impairments 9,287 — (9,287) (100.0) % Income from operations 1,036,783 850,756 186,027 21.9 % Foreign currency gains (losses), net (1,240) 3,228 (4,468) (138.4) % Interest income 2,406 1,020 1,386 135.9 % Interest expense (161,351) (136,158) (25,193) (18.5) % Other expense, net (326) (338) 12 3.6 % Income before income taxes 876,272 718,508 157,764 22.0 % Income tax expense 83,706 178,349 94,643 53.1 % Net income $ 792,566 $ 540,159 $ 252,407 46.7 % Net income per common share: Basic $ 12.91 $ 8.82 $ 4.09 46.4 % Diluted $ 12.79 $ 8.71 $ 4.08 46.8 % Gross margin (1) 55.8 % 52.3 % 350 bp 6.7 % Operating margin (1) 26.2 % 23.9 % 230 bp 9.6 % Selling, general and administrative expenses as a percentage of revenues (1) 29.4 % 28.4 % (100) bp (3.5) % Footwear unit sales: Crocs Brand 119,577 115,558 4,019 3.5 % HEYDUDE Brand (3) 32,969 30,519 2,450 8.0 % Average footwear selling price - nominal basis (2) : Crocs Brand $ 24.92 $ 22.72 $ 2.20 9.7 % HEYDUDE Brand (3) $ 28.80 $ 29.35 $ (0.55) (1.9) % (1) Changes for gross margin, operating margin, and SG&A as a percentage of revenues are shown in basis points (“bp”).
Biggest changeYear Ended December 31, $ Change % Change Favorable (Unfavorable) 2024 2023 2024-2023 2024-2023 (in thousands, except per share data, margin, and average selling price data) Revenues $ 4,102,108 $ 3,962,347 $ 139,761 3.5 % Cost of sales 1,691,850 1,752,337 60,487 3.5 % Gross profit 2,410,258 2,210,010 200,248 9.1 % Selling, general and administrative expenses 1,388,347 1,173,227 (215,120) (18.3) % Income from operations 1,021,911 1,036,783 (14,872) (1.4) % Foreign currency losses, net (6,777) (1,240) (5,537) (446.5) % Interest income 3,484 2,406 1,078 44.8 % Interest expense (109,264) (161,351) 52,087 32.3 % Other income (expense), net 1,231 (326) 1,557 477.6 % Income before income taxes 910,585 876,272 34,313 3.9 % Income tax expense (benefit) (39,486) 83,706 123,192 147.2 % Net income $ 950,071 $ 792,566 $ 157,505 19.9 % Net income per common share: Basic $ 16.00 $ 12.91 $ 3.09 23.9 % Diluted $ 15.88 $ 12.79 $ 3.09 24.2 % Gross margin (1) 58.8 % 55.8 % 300 bp 5.4 % Operating margin (1) 24.9 % 26.2 % (130) bp (5.0) % Selling, general and administrative expenses as a percentage of revenues (1) 33.8 % 29.6 % (420) bp (14.2) % Footwear unit sales: Crocs Brand 127,000 119,577 7,423 6.2 % HEYDUDE Brand 26,950 32,969 (6,019) (18.3) % Average footwear selling price - nominal basis (2) : Crocs Brand $ 25.52 $ 24.92 $ 0.60 2.4 % HEYDUDE Brand $ 30.54 $ 28.80 $ 1.74 6.0 % (1) Changes for gross margin, operating margin, and SG&A as a percentage of revenues are shown in basis points (“bp”).
Prior to the February 2024 Amendment, the outstanding principal balance was $820.0 million. Among other things, the February 2024 Amendment provided for a new $820 million tranche of term loans (the “2024 Refinancing Term Loans” and, such facility, the “Term Loan B Facility”) to refinance the then-outstanding principal balance.
Prior to the February 2024 Amendment, the outstanding balance was $820.0 million. Among other things, the February 2024 Amendment provided for a new $820.0 million tranche of term loans (the “2024 Refinancing Term Loans” and, such facility, the “Term Loan B Facility”), to refinance the then-outstanding principal balance.
Refer to Note 1 — Basis of Presentation and Summary of Significant Accounting Policies and Note 5 — Goodwill and Intangible Assets, Net in the accompanying notes to the consolidated financial statements included in Part II - Item 8.
Refer to Note 1 — Basis of Presentation and Summary of Significant Accounting Policies and Note 5 — Goodwill and Intangible Assets, Net, Net in the accompanying notes to the consolidated financial statements included in Part II - Item 8.
Our annual test is performed as of the first day of our fiscal fourth quarter. Our impairment evaluations represent a critical accounting policy as they require significant judgments and assumptions that we believe to be reasonable but that are inherently uncertain and unpredictable. We perform our goodwill impairment testing for each reporting unit that has goodwill.
Our annual test is performed as of the first day of the fourth quarter. Our impairment evaluations represent a critical accounting policy as they require significant judgments and assumptions that we believe to be reasonable but that are inherently uncertain and unpredictable. We perform our goodwill impairment testing for each reporting unit that has goodwill.
Known or Anticipated Trends Based on our recent operating results and our assessment of the current operating environment, we anticipate certain trends will continue to impact our future operating results: • We are operating in an environment where consumers are feeling the effects of elevated interest rates and inflation, and as a result, they are spending more cautiously.
Known or Anticipated Trends Based on our recent operating results and our assessment of the current operating environment, we anticipate certain trends will continue to impact our future operating results: • We continue to operate in an environment where consumers are feeling the effects of elevated interest rates and inflation, and as a result, they are spending more cautiously.
It is possible that the costs of the ultimate tax liability or benefit from these matters may be materially more or less than the amount that we estimated. 46 Table of Contents Income Tax Accounting We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of other assets and liabilities.
It is possible that the costs of the ultimate tax liability or benefit from these matters may be materially more or less than the amount that we estimated. 47 Table of Contents Income Tax Accounting We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of other assets and liabilities.
In 2023, we undertook many additional activities to align business operations that support the economic substance of the IP. We have also recorded certain tax reserves to address potential differences involving our income tax positions. These potential tax liabilities result from the varying application of statutes, rules, regulations and interpretations by different taxing jurisdictions.
In 2024, we undertook many additional activities to align business operations that support the economic substance of the IP. We have also recorded certain tax reserves to address potential differences involving our income tax positions. These potential tax liabilities result from the varying application of statutes, rules, regulations and interpretations by different taxing jurisdictions.
Cash balances held in foreign countries may have additional restrictions and covenants associated with them which could adversely impact our liquidity and our ability to timely access and transfer cash balances between entities. All of the cash held outside of the U.S. could be repatriated to the U.S. as of December 31, 2023 without incurring additional U.S. federal income taxes.
Cash balances held in foreign countries may have additional restrictions and covenants associated with them which could adversely impact our liquidity and our ability to timely access and transfer cash balances between entities. All of the cash held outside of the U.S. could be repatriated to the U.S. as of December 31, 2024 without incurring additional U.S. federal income taxes.
In assessing our valuation allowance as of December 31, 2023, we considered all available evidence, including the magnitude of recent and current operating results, the duration of statutory carryforward periods, our historical experience utilizing tax attributes prior to their expiration dates, the historical volatility of operating results of these jurisdictions and our assessment regarding the sustainability of their profitability.
In assessing our valuation allowance as of December 31, 2024, we considered all available evidence, including the magnitude of recent and current operating results, the duration of statutory carryforward periods, our historical experience utilizing tax attributes prior to their expiration dates, the historical volatility of operating results of these jurisdictions and our assessment regarding the sustainability of their profitability.
The Credit Agreement permits, among other things, (i) stock repurchases subject to certain restrictions, including after giving effect to such stock repurchases, the maximum leverage ratio does not exceed certain levels; and (ii) certain acquisitions so long as there is borrowing availability under the Credit Agreement of at least $40.0 million.
The Credit Agreement permits, among other things, (i) stock repurchases subject to certain restrictions, 40 Table of Contents including after giving effect to such stock repurchases, the maximum leverage ratio does not exceed certain levels; and (ii) certain acquisitions so long as there is borrowing availability under the Credit Agreement of at least $40.0 million.
In 2020 and i n 2021, we also completed transactions that created an amortizable step-up in tax basis of the intangible asset and a corresponding increase in foreign deferred tax assets based on the fair value of that IP. These transactions were also executed using transfer pricing guidelines issued by the relevant taxing authorities.
In 2020 and in 2021, we completed transactions that created an amortizable step-up in tax basis of the intangible asset and a corresponding increase in foreign deferred tax assets based on the fair value of that IP. These transactions were also executed using transfer pricing guidelines issued by the relevant taxing authorities.
This assessment is based on the cash flow projections and operational and fiscal objectives of each of our U.S. and foreign subsidiaries. Foreign withholding taxes have not been provided on cumulative undistributed foreign earnings of the non-U.S. subsidiaries as of December 31, 2023, which are considered to be indefinitely reinvested outside of the U.S.
This assessment is based on the cash flow projections and operational and fiscal objectives of each of our U.S. and foreign subsidiaries. Foreign withholding taxes have not been provided on cumulative undistributed foreign earnings of the non-U.S. subsidiaries as of December 31, 2024, which are considered to be indefinitely reinvested outside of the U.S.
While the validity of any tax position is a matter of tax law, the body of statutory, regulatory and interpretive guidance on the application of the law is complex and often ambiguous. We recognize interest and penalties related to unrecognized tax benefits within the ‘Income tax expense (benefit)’ line in the accompanying consolidated statements of operations.
While the validity of any tax position is a matter of tax law, the body of statutory, regulatory and interpretive guidance on the application of the law is complex and often ambiguous. We recognize interest and penalties related to unrecognized tax benefits within the ‘Income tax expense (benefit)’ line in the accompanying consolidated statements of income.
Additionally, for the years ended December 31, 2023, 2022, and 2021, we performed a qualitative assessment for the goodwill in our Crocs Brand segment, which indicated that it was more likely than not that the estimated fair value exceeded its carrying value.
Additionally, for the years ended December 31, 2024, 2023, and 2022, we performed a qualitative assessment for the goodwill in our Crocs Brand segment, which indicated that it was more likely than not that the estimated fair value exceeded its carrying value.
A discussion of the changes in our results of operations between the years ended December 31, 2022 and December 31, 2021 has been omitted from this Annual Report on Form 10-K but may be found in Item 7.
A discussion of the changes in our results of operations between the years ended December 31, 2023 and December 31, 2022 has been omitted from this Annual Report on Form 10-K but may be found in Item 7.
The Original Term Loan B Credit Agreement, as amended by the August 2023 Amendment and the February 2024 Amendment is referred to herein as the “Term Loan B Credit Agreement.” The Original Term Loan B Credit Agreement provided for an aggregate term loan B facility in the principal amount of $2.0 billion.
The Original Term Loan B Credit Agreement, as amended by the August 2023 Amendment and the February 2024 Amendment is referred to herein as the “Term Loan B Credit Agreement”. The Original Term Loan B Credit Agreement provided for an aggregate term loan B facility in the principal amount of $2.0 billion.
Financial Statements and Supplementary Data of this Annual Report on Form 10-K for a description of recently adopted accounting pronouncements and issued accounting pronouncements that we believe may have an impact on our consolidated financial statements when adopted. 47 Table of Contents
Financial Statements and Supplementary Data of this Annual Report on Form 10-K for a description of recently adopted accounting pronouncements and issued accounting pronouncements that we believe may have an impact on our consolidated financial statements when adopted. 48 Table of Contents
Our effective tax rate has varied dramatically in recent years due to the intra-entity intellectual property rights transfer, differences in our profitability levels and relative operating earnings across multiple jurisdictions, and by changes in the valuation allowance.
Our effective tax rate has varied dramatically in recent years due to intra-entity intellectual property rights transactions, differences in our profitability levels and relative operating earnings across multiple jurisdictions, and by changes in the valuation allowance.
The 2024 Refinancing Term Loans are secured by substantially all of the Company’s and each subsidiary guarantor’s assets on a pari passu basis with their obligations arising from the Term Loan B Credit Agreement and is scheduled to mature on February 17, 40 Table of Contents 2029, subject to certain exceptions set forth in the Term Loan B Credit Agreement.
The 2024 Refinancing Term Loans are secured by substantially all of the Company’s and each subsidiary guarantor’s assets on a pari passu basis with their obligations arising from the Term Loan B Credit Agreement and is scheduled to mature on February 17, 2029, subject to certain exceptions set forth in the Term Loan B Credit Agreement.
Although we believe we have adequate sources of liquidity over the long term, the success of our operations, the global economic outlook, and the pace of sustainable growth in our markets could each impact our business and liquidity. 39 Table of Contents Repatriation of Cash As a global business, we have cash balances in various countries and amounts are denominated in various currencies.
Although we believe we have adequate sources of liquidity over the long term, the success of our operations, the global economic outlook, and the pace of sustainable growth in our markets could each impact our business and liquidity. Repatriation of Cash As a global business, we have cash balances in various countries and amounts are denominated in various currencies.
The Company will also have the option to redeem some or all of the 2029 Notes at any time before March 15, 2024 at a redemption price of 100% of the principal amount to be redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption.
The Company also had the option to redeem some or all of the 2029 Notes at any time before March 15, 2024 at a redemption price of 100% of the principal amount to be redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption.
For more information on our lease obligations and obligations for leases not yet commenced, refer to Note 7 — Leases in the accompanying notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for more information.
For more information on our lease obligations and obligations for leases not yet commenced, refer to Note 7 — Leases in the accompanying notes to the 43 Table of Contents consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for more information.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Business Overview Crocs, Inc. and its consolidated subsidiaries (collectively, the “Company,” “we,” “us,” or “our”) are engaged in the design, development, worldwide marketing, distribution, and sale of casual lifestyle footwear and accessories for women, men, and children.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Business Overview Crocs, Inc. and its consolidated subsidiaries (collectively, the “Company,” “we,” “us,” or “our”) are engaged in the design, development, worldwide marketing, distribution, and sale of casual lifestyle footwear and accessories for all.
We strive to be the world leader in innovative casual footwear for women, men, and children, combining comfort and style with a value that consumers want. The vast majority of shoes within the Crocs Brand’s collection contain Croslite™ material, a proprietary, molded footwear technology, delivering extraordinary comfort with each step.
We strive to be the world leader in innovative casual footwear for all, combining comfort and style with a value that consumers want. The vast majority of shoes within the Crocs Brand’s collection contain Croslite™ material, a proprietary, molded footwear technology, delivering extraordinary comfort with each step.
The Credit Agreement requires us to maintain a minimum interest coverage ratio of 3.00 to 1.00 and a maximum leverage ratio of (i) 4.00 to 1.00 from the quarter ended March 31, 2022 through, and including, the quarter ended December 31, 2023, (ii) 3.75 to 1.00 for the quarter ending March 31, 2024, (iii) 3.50 to 1.00 for the quarter ending June 30, 2024, and (iv) 3.25 to 1.00 for the quarter ending September 30, 2024 and thereafter (subject to adjustment in certain circumstances).
The Credit Agreement required or requires, as applicable, us to maintain a minimum interest coverage ratio of 3.00 to 1.00, and a maximum leverage ratio of (i) 4.00 to 1.00 from the quarter ended March 31, 2022 through, and including, the quarter ended December 31, 2023, (ii) 3.75 to 1.00 for the quarter ended March 31, 2024, (iii) 3.50 to 1.00 for the quarter ended June 30, 2024, and (iv) 3.25 to 1.00 for the quarter ended September 30, 2024 and thereafter (subject to adjustment in certain circumstances).
Borrowings under the Credit Agreement bear interest at a variable interest rate based on (A) a Base Rate (defined as the highest of (i) the Overnight Bank Funding Rate (as defined in the Credit Agreement), plus 0.25%, (ii) the Prime Rate (as defined in the Credit Agreement), and (iii) the Daily Simple SOFR (as defined in the Credit Agreement), plus 1.00%), plus an applicable margin ranging from 0.25% to 0.875% based on our leverage ratio or 1.35% to 1.975% for the Daily Simple SOFR based on the leverage ratio, or (B) the Term SOFR Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 1.35% to 1.975% based on our leverage ratio for one-month interest periods and 1.40% to 2.025% based on our leverage ratio for three-month interest periods.
Borrowings under the Credit Agreement bear interest at a variable interest rate based on (A) a Base Rate (defined as the highest of (i) the Overnight Bank Funding Rate (as defined in the Credit Agreement), plus 0.25%, (ii) the Prime Rate (as defined in the Credit Agreement), and (iii) the Daily Simple SOFR (as defined in the Credit Agreement), plus 1.00%), plus an applicable margin ranging from 0.25% to 0.875% based on our leverage ratio or 1.35% to 1.975% for the Daily Simple SOFR based on the leverage ratio, inclusive of a 0.10% SOFR adjustment, or (B) the Term SOFR Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 1.35% to 1.975% based on our leverage ratio for one-month interest periods and three-month interest periods, inclusive of a 0.10% SOFR adjustment.
Certain factors, such as failure to 44 Table of Contents achieve forecasted revenue growth rates or increases in the discount rates, have the potential to create variances in the estimated fair values of our goodwill and indefinite-lived intangible assets that could result in impairment charges.
Certain factors, such as failure to achieve forecasted revenue growth rates, EBITDA, or increases in the discount rates, have the potential to create variances in the estimated fair values of our goodwill and indefinite-lived intangible assets that could result in impairment charges.
We believe that our cash flows from operations, our cash and cash equivalents on hand, and available borrowings under our Revolving Facility and other financing agreements will be sufficient to meet our ongoing liquidity needs and capital expenditure requirements for at least the next twelve months.
We believe that our cash flows from operations, our cash and cash equivalents on hand, and available borrowings under our Revolving Facility and Citibank Facility will be sufficient to meet our ongoing liquidity needs and capital expenditure requirements for at least the next twelve months.
Historically, actual amounts of customer returns, allowances, discounts, and rebates have not differed significantly from our estimates. A 45 Table of Contents hypothetical 1% increase in our reserves for returns and allowances as of December 31, 2023 would have had an insignificant impact on our 2023 revenues. See Schedule II in Part IV - Item 15.
Historically, actual amounts of customer returns, allowances, discounts, and rebates have not differed significantly from our estimates. A hypothetical 1% increase in our reserves for returns and allowances as of December 31, 2024 would have had an insignificant impact on our 2024 revenues. See Schedule II in Part IV - Item 15.
In the years ended December 31, 2023 and 2022, cost of sales included $515.3 million and $457.0 million, respectively, of distribution expenses primarily related to receiving, inspecting, warehousing, and packaging product in owned and third-party warehouses, combined with transportation costs associated with delivering products from distribution centers to wholesale partners, retail stores, and end customers. Selling, general and administrative expenses.
In the years ended December 31, 2024 and 2023, cost of sales included $487.1 million and $515.3 million, respectively, of distribution expenses primarily related to receiving, inspecting, warehousing, and packaging product in owned and third-party warehouses, combined with transportation costs associated with delivering products from distribution centers to wholesale partners, retail stores, and end customers. Selling, general and administrative expenses.
In addition, at any time before March 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the 2029 Notes at a redemption price of 104.250% of the principal amount with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In addition, at any time before March 15, 2024, the Company could have redeemed up to 40% of the aggregate principal amount of the 2029 Notes at a redemption price of 104.250% of the principal amount with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
We perform our indefinite-lived intangible impairment testing at the asset level. When performing our annual test for impairment, we may assess goodwill and indefinite-lived intangible assets for potential impairment using either a qualitative or quantitative assessment. The qualitative assessment may evaluate factors such as macroeconomic conditions, industry and market considerations, and overall financial performance, among other factors.
When performing our annual test for impairment, we may assess goodwill and indefinite-lived intangible assets for potential impairment using either a qualitative or quantitative assessment. The qualitative assessment may evaluate factors such as macroeconomic conditions, industry and market considerations, and overall financial performance, among other factors.
As of December 31, 2023, we were in compliance with all financial covenants under the Notes.
As of December 31, 2024, we were in compliance with all financial covenants under the Notes.
(2) Represents future interest payment obligations, which are estimated by assuming the amounts outstanding under our Term Loan B Facility (as in effect prior to the February 2024 Amendment), Notes, Revolving Facility, and Citibank Facility and the interest rates in effect as of December 31, 2023, will remain constant into the future.
(2) Represents future interest payment obligations, which are estimated by assuming the amounts outstanding under our Term Loan B Facility, Notes, Revolving Facility, and Citibank Facility and the interest rates in effect as of December 31, 2024, will remain constant into the future.
Since that time, we have amended the Credit Agreement, which, as amended to date, provides for a revolving credit facility of $750.0 million, which can be increased by an additional $250.0 million subject to certain conditions (the “Revolving Facility”).
Since that time, we have amended the Credit Agreement, which, as amended to date, provides for a revolving credit facility of $1.0 billion, which can be increased by an additional $400.0 million, subject to certain conditions (the “Revolving Facility”).
For the year ended December 31, 2022, we performed a quantitative assessment for the HEYDUDE Brand reporting unit goodwill and the HEYDUDE Brand indefinite-lived intangible assets, each of which indicated the estimated fair values exceeded their carrying values.
For the year ended December 31, 2023, we performed a qualitative and quantitative assessment for the HEYDUDE Brand reporting unit goodwill, and we performed a quantitative assessment for the HEYDUDE Brand indefinite-lived intangible assets, each of which indicated the estimated fair values exceeded their carrying values. 44 Table of Contents For the year ended December 31, 2022, we performed a quantitative assessment for the HEYDUDE Brand reporting unit goodwill and the HEYDUDE Brand indefinite-lived intangible assets, each of which indicated the estimated fair values exceeded their carrying values.
We provide for income taxes at the current and future enacted tax rates and laws applicable in each taxing jurisdiction. We account for the tax effects of GILTI as a component of income tax expense in the period the tax arises, to the extent applicable.
We provide for income taxes at the current and future enacted tax rates and laws applicable in each taxing jurisdiction. We account for the tax effects of global intangible low tax income (“GILTI”) as a component of income tax expense in the period the tax arises, to the extent applicable.
As of December 31, 2023, the related net deferred tax asset was $427.1 million, net of a reserve for uncertain tax positions of $200.5 million.
As of December 31, 2023, the related net deferred tax asset was $427.1 million, net of a reserve for uncertain tax positions of $200.5 million. As of December 31, 2024, the related net deferred tax asset was $377.1 million, net of a reserve for uncertain tax positions of $46.8 million.
We maintain valuation allowances of approximately $183.5 million as of December 31, 2023, which may be reduced in the future depending upon the achieved profitability of certain jurisdictions as well as the magnitude of the profitability. 36 Table of Contents Reportable Operating Segments The following table sets forth information related to our reportable operating segments for the years ended December 31, 2023 and 2022.
We maintain valuation allowances of approximately $241.6 million as of December 31, 2024, which may be reduced in the future depending upon the achieved profitability of certain jurisdictions as well as the magnitude of the profitability. 37 Table of Contents Reportable Operating Segments The following table sets forth information related to our reportable operating segments for the years ended December 31, 2024 and 2023.
In addition, at any time before August 15, 2024, the Company may redeem up to 40% of the aggregate 41 Table of Contents principal amount of the 2031 Notes at a redemption price of 104.125% of the principal amount with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In addition, at any time before August 15, 2024, the Company could have redeemed up to 40% of the aggregate principal amount of the 2031 Notes at a redemption price of 104.125% of the principal amount with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
The primary assumptions developed by management and used in the quantitative assessments of the HEYDUDE Brand reporting unit and indefinite-lived trademark included future revenue growth rates and market-based discount rates. The estimated fair values of the HEYDUDE Brand reporting unit goodwill and indefinite-lived trademark exceeded their carrying values.
The primary assumptions developed by management and used in the quantitative assessments of the HEYDUDE Brand reporting unit and indefinite-lived trademark included future revenue growth rates, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), and market-based discount rates. The estimated fair values of the HEYDUDE Brand reporting unit goodwill and indefinite-lived trademark exceeded their carrying values.
During the three months ended December 31, 2023, we completed intra-entity transfers of certain intellectual property rights primarily to align with current and future international operations. Each transfer resulted in a step-up in tax basis of intellectual property rights and a correlated increase in foreign deferred tax assets based on the fair value of the transferred intellectual property rights.
During the three months ended December 31, 2024, we completed an intra-entity transaction related to certain intellectual property rights primarily to align with current and future international operations. The transaction resulted in a step-up in tax basis of intellectual property rights and a correlated increase in foreign deferred tax assets based on the fair value of the intellectual property rights.
During the year ended December 31, 2023, we recognized realized and unrealized net foreign currency losses of $1.2 million compared to net gains of $3.2 million during the year ended December 31, 2022. Interest expense.
During the year ended December 31, 2024, we recognized realized and unrealized net foreign currency losses of $6.8 million compared to losses of $1.2 million during the year ended December 31, 2023. Interest expense.
As of December 31, 2023, we were in compliance with all financial covenants under the Credit Agreement. As of December 31, 2023, the total commitments available from the lenders under the Revolving Facility were $750.0 million.
As of December 31, 2024, we were in compliance with all financial covenants under the Credit Agreement. As of December 31, 2024, the total commitments available from the lenders under the Revolving Facility were $1.0 billion.
Revenues are reported net of various promotions, which range from contractually-fixed percentage price reductions to sales returns, discounts, rebates, and other incentives that may vary in amount, must be estimated, and are reported as a reduction in revenues.
Revenues are recognized in the amount expected to be received when control of the product transfers to customers. Revenues are reported net of various promotions, which range from contractually-fixed percentage price reductions to sales returns, discounts, rebates, and other incentives that may vary in amount, must be estimated, and are reported as a reduction in revenues.
(2) Comparable store status, as included in the DTC comparable sales figures above, is determined on a monthly basis. Comparable store sales include the revenues of stores that have been in operation for more than twelve months.
See the “Use of Non-GAAP Financial Measures” section for additional information. (2) Comparable store status, as included in the DTC comparable sales figures above, is determined on a monthly basis. Comparable store sales include the revenues of stores that have been in operation for more than twelve months.
The Company will have the option to redeem all or any portion of the 2029 Notes, at once or over time, at any time on or after March 15, 2024, at a redemption price equal to 100% of the principal amount thereof, plus a premium declining ratably on an annual basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption.
Interest on each of the 2029 Notes and the 2031 Notes (collectively, the “Notes”) is payable semi-annually. 41 Table of Contents The Company had or will have, as applicable, the option to redeem all or any portion of the 2029 Notes, at once or over time, at any time on or after March 15, 2024, at a redemption price equal to 100% of the principal amount thereof, plus a premium declining ratably on an annual basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In some countries, repatriation of certain foreign balances is restricted by local laws. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. or other countries and could adversely affect our liquidity. As of December 31, 2023, we held $90.7 million of our total $149.3 million in cash in international locations.
In some countries, repatriation of certain foreign balances is restricted by local laws. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. or other countries and could adversely affect our liquidity. As of December 31, 2024, we held $108.0 million of our total $180.5 million in cash in internationa l locations.
During the year ended December 31, 2023, we recognized an income tax expense of $83.7 million on pre-tax book income of $876.3 million, representing an effective tax rate of 9.6%, compared to an income tax expense of $178.3 million on pre-tax book income of $718.5 million in 2022, which represented an effective tax rate of 24.8% .
During the year ended December 31, 2024, we recognized an income tax benefit of $39.5 million on pre-tax book income of $910.6 million, representing an effective tax rate of (4.3)%, compared to an income tax expense of $83.7 million on pre-tax book income of $876.3 million in 2023, which represented an effective tax rate of 9.6%.
The 2023 impact of changes in valuation allowances to the effective tax rate was an unfavorable impact of $156.3 million, equating to a 17.8% unfavorable impact. There is also a $0.9 million favorable change in the valuation allowance related to cumulative translation adjustments.
The 2024 impact of changes in valuation allowances to the effective tax rate was an unfavorable impact of $58.9 million , equating to a 6.5% unfavorable impact. There is also a $0.9 million favorable change in the valuation allowance related to cumulative translation adjustments.
As of December 31, 2023, the Term Loan B Facility (as in effect prior to the February 2024 Amendment) (as defined below) was fully drawn, and there was no available borrowing capacity.
As of December 31, 2024, the Term Loan B Facility (as defined below) was fully drawn, and there was no available borrowing capacity.
There was a $2,035.4 million decrease in cash used in investing activities for the year ended December 31, 2023 compared to the year ended December 31, 2022.
There was a $46.3 million decrease in cash used in investing activities for the year ended December 31, 2024 compared to the year ended December 31, 2023.
This cash is primarily used for the ongoing operations of the business in the locations in which the cash is held. Of the $90.7 million, $2.9 million could potentially be restricted by local laws.
This cash is primarily used for the ongoing operations of the business in the locations in which the cash is held. Of the $108.0 million, an insignificant amount could potentially be restricted by local laws.
Th e current year effective tax rate is lower primarily due to the current year foreign net income tax benefit as a result of intra-entity transfers of certain intellectual property rights and the current year release of valuation allowances.
The current year effective tax rate is lower primarily due to the current year foreign net income tax benefit as a result of an intra-entity transaction related to certain intellectual property rights, offset by the increase of valuation allowances.
If carrying value of the reporting unit exceeds its estimated fair value, an impairment charge is recorded. For the year ended December 31, 2023, we performed a qualitative and quantitative assessment for the HEYDUDE Brand reporting unit goodwill, and we performed a quantitative assessment for the HEYDUDE Brand indefinite-lived intangible asset.
If carrying value of the reporting unit exceeds its estimated fair value, an impairment charge is recorded. For the year ended December 31, 2024, we performed a quantitative assessment for the HEYDUDE Brand reporting unit goodwill and the HEYDUDE Brand indefinite-lived intangible assets. Both quantitative assessments were performed with the assistance of third-party valuation specialists.
The overall increase in revenues was partially offset by net unfavorable currency fluctuations driven by the Chinese Yuan, Argentine Peso, and Japanese Yen. Income from Operations. During the year ended December 31, 2023, income from operations for our Crocs Brand segment was $1,079.3 million, an increase of $227.3 million, or 26.7% from 2022.
The overall increase in revenues was partially offset by net unfavorable currency fluctuations driven by the South Korean Won, Brazilian Real, Japanese Yen, and Chinese Yuan. Income from Operations. During the year ended December 31, 2024, income from operations for our Crocs Brand segment was $1,182.0 million, an increase of $102.7 million, or 9.5% from 2023.
Both quantitative assessments were performed with the assistance of third-party valuation specialists. We performed the quantitative assessment for the HEYDUDE Brand reporting unit goodwill using the discounted cash flow method and the guideline public company method. For the impairment testing of the indefinite-lived trademark, we used the Multi-Period Excess Earnings approach.
We performed the quantitative assessment for the HEYDUDE Brand reporting unit goodwill using the discounted cash flow method. For the impairment testing of the indefinite-lived trademark, we used the Multi-Period Excess Earnings approach.
As a percent of revenues, SG&A increased 100 basis points to 29.4% of revenues. • Income from operations was $1,036.8 million for the year ended December 31, 2023 compared to income from operations of $850.8 million for the year ended December 31, 2022.
As a percent of revenues, SG&A increased to 33.8% of revenues compared to 29.6% in 2023. • Income from operations was $1,021.9 million for the year ended December 31, 2024 compared to income from operations of $1,036.8 million for the year ended December 31, 2023.
The broad appeal of our footwear has allowed us to market our products through a wide range of distribution channels. We currently sell our products in more than 80 countries, through two distribution channels: wholesale and direct-to-consumer.
The HEYDUDE Brand provides an innovative loafer concept that is differentiated through easy on and off, quality, and comfort. The broad appeal of our footwear has allowed us to market our products through a wide range of distribution channels. We currently sell our products in more than 80 countries, through two distribution channels: wholesale and direct-to-consumer.
In 2022 and 2021, we did not record impairments to reduce the net carrying value of certain long-lived assets. See Note 8 — Fair Value Measurements in the accompanying notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for further information related to long-lived asset impairments.
In 2022, we did not record impairments to reduce the net carrying value of certain long-lived assets. See Note 8 — Fair Value Measurements in the accompanying notes to the consolidated financial statements included in Item 8.
The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that the deferred tax assets will not be realized.
Our valuation allowances are primarily the result of uncertainties regarding the future realization of tax attributes recorded in various jurisdictions. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that the deferred tax assets will not be realized.
These estimates and assumptions include, but are not limited to, estimated future revenue growth and discount rates, which by their nature are inherently uncertain and, therefore, may ultimately differ materially from our actual results. Foreign deferred tax assets increased by $611.4 million, inclusive of the reversal of certain deferred tax liabilities.
Significant estimates and assumptions were required to compute the valuation of these transactions. These estimates and assumptions include, but are not limited to, estimated future revenue growth and discount rates, which by their nature are inherently uncertain and, therefore, may ultimately differ materially from our actual results.
The weight we give to any particular item is, in part, dependent upon the degree to which it can be objectively verified. Separate from the intra-entity transfers of intellectual property rights the company released immaterial valuation allowances in various jurisdictions. Valuation allowances recorded against deferred tax assets increased by a net $155.4 million.
The weight we give to any particular item is, in part, dependent upon the degree to which it can be objectively verified. Valuation allowances recorded against deferred tax assets increased by a net $58.0 million.
Our primary source of liquidity is cash provided by operating activities, consisting of net income adjusted for non-cash items and changes in working capital. Cash provided by operating activities increased $327.3 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Our primary source of liquidity is cash provided by operating activities, consisting of net income adjusted for non-cash items and changes in working capital.
During the years ended December 31, 2023 and 2022, we had two reporting units, comprised of a reporting unit within the HEYDUDE Brand segment and a reporting unit within the Crocs Brand segment. During the year ended December 31, 2021, we had one reporting unit in our Crocs Brand segment.
During the years ended December 31, 2024, 2023, and 2022 we had two reporting units, comprised of a reporting unit within the HEYDUDE Brand segment and a reporting unit within the Crocs Brand segment. We perform our indefinite-lived intangible impairment testing at the asset level.
Location closures in excess of three months are excluded until the thirteenth month post re-opening. E-commerce comparable revenues are based on same site sales period over period. (3) We acquired HEYDUDE on February 17, 2022 and, as a result, added the HEYDUDE Brand as a new operating segment.
Location closures in excess of three months are excluded until the thirteenth month post re-opening. E-commerce comparable revenues are based on same site sales period over period.
At December 31, 2023, we had $190.0 million outstanding borrowings and $1.3 million in outstanding letters of credit under the Revolving Facility, which reduces amounts available for borrowing under the Revolving Facility. As of December 31, 2023 and 2022, we had $558.7 million and $748.7 million, respectively, of available borrowing capacity under the Revolving Facility, which matures November 2027.
At December 31, 2024, we had $190.0 million in outstanding borrowings and $0.6 million in outstanding letters of credit under the Revolving Facility, which reduces amounts available for borrowing under the Revolving Facility.
Since the determination of future cash flows is an estimate of future performance, future impairments may arise in the event that future cash flows do not meet expectations. In 2023, we recorded non-cash impairments of $9.3 million related to our former corporate headquarters.
Since the determination of future cash flows is an estimate of future performance, future impairments may arise in the event that future cash flows do not meet expectations.
The Board of Directors may suspend, modify, or terminate the program at any time without prior notice. Share repurchases may be made in the open market or in privately negotiated transactions. The repurchase authorization does not have an expiration date and does not obligate us to acquire any amount of our common stock.
Share repurchases may be made in the open market or in privately negotiated transactions. The repurchase authorization does not have an expiration date and does not obligate us to acquire any amount of our common stock. Under Delaware state law, these shares are not retired, and we have the right to resell any of the shares repurchased.
We had no material off-balance sheet arrangements as of December 31, 2023, other than certain purchase commitments, as described in the footnote (2) above. 43 Table of Contents Critical Accounting Policies and Estimates General Our discussion and analysis of financial condition and results of operations, outside of discussions regarding constant currency, is based on the consolidated financial statements, which have been prepared in accordance with GAAP.
Critical Accounting Policies and Estimates General Our discussion and analysis of financial condition and results of operations, outside of discussions regarding constant currency, is based on the consolidated financial statements, which have been prepared in accordance with GAAP.
As of December 31, 2023, we had borrowings outstanding of $3.3 million on the Citibank Facility, which became due in January 2024. As of December 31, 2022, we had no outstanding borrowings on the CMBC Facility, and we had borrowings outstanding of $4.3 million on the Citibank Facility.
As of December 31, 2023, we had borrowings outstanding of $3.3 million on the Citibank Facility.
Our material future cash obligations as of December 31, 2023 include the following: Less than 1 Year Thereafter Total (approximately, in thousands) Debt-related: Debt obligations (1) $ 23,300 $ 1,641,000 $ 1,664,300 Interest on debt obligations (2) 96,900 375,300 472,200 Purchase commitments (3) 344,300 — 344,300 Lease-related (4) : Lease obligations 71,500 334,400 405,900 Total $ 536,000 $ 2,350,700 $ 2,886,700 (1) Net of $49.0 million of unamortized issuance costs.
Our material future cash obligations as of December 31, 2024 include the following: Less than 1 Year Thereafter Total (approximately, in thousands) Debt-related: Debt obligations (1) $ — $ 1,349,300 $ 1,349,300 Interest on debt obligations (2) 73,900 293,400 367,300 Purchase commitments (3) 301,900 — 301,900 Lease-related (4) : Lease obligations 80,900 349,600 430,500 Total $ 456,700 $ 1,992,300 $ 2,449,000 (1) Net of $40.7 million of unamortized issuance costs.
During the year ended December 31, 2023, HEYDUDE revenues increased compared to the Partial Period in 2022, primarily due to higher volume, driven in part by operating HEYDUDE for a full year in 2023 compared to 2022. Lower ASPs, driven by increased discounting, and unfavorable channel mix partially offset the overall increase in revenues. Income from Operations.
During the year ended December 31, 2024, HEYDUDE revenues decreased compared to 2023, due to lower volume. Higher ASP was driven by less discounting in the current year and favorable channel mix, partially offset by unfavorable product mix. Income from Operations.
Year Ended December 31, % Change Constant Currency % Change (1) Favorable (Unfavorable) 2023 2022 2023-2022 2023-2022 (in thousands) Revenues: Crocs Brand revenues (2) $ 3,012,954 $ 2,659,125 13.3 % 14.0 % HEYDUDE Brand revenues (3) 949,393 895,860 6.0 % 6.0 % Total consolidated revenues $ 3,962,347 $ 3,554,985 11.5 % 12.0 % Income from operations: Crocs Brand income from operations (2) $ 1,079,330 $ 852,025 26.7 % 25.7 % HEYDUDE Brand income from operations (3) 212,386 211,361 0.5 % 0.5 % Enterprise corporate (3) (254,933) (212,630) (19.9) % (19.9) % Total consolidated income from operations 1,036,783 850,756 21.9 % 20.9 % Foreign currency gains (losses), net (1,240) 3,228 (138.4) % Interest income 2,406 1,020 135.9 % Interest expense (161,351) (136,158) (18.5) % Other income (expense), net (326) (338) 3.6 % Income before income taxes $ 876,272 $ 718,508 22.0 % (1) Reflects year over year change as if the current period results were in constant currency, which is a non-GAAP financial measure.
Year Ended December 31, % Change Constant Currency % Change (1) Favorable (Unfavorable) 2024 2023 2024-2023 2024-2023 (in thousands) Revenues: Crocs Brand revenues $ 3,277,967 $ 3,012,954 8.8 % 9.8 % HEYDUDE Brand revenues 824,141 949,393 (13.2) % (13.2) % Total consolidated revenues $ 4,102,108 $ 3,962,347 3.5 % 4.3 % Income from operations: Crocs Brand income from operations (2) $ 1,182,012 $ 1,079,330 9.5 % 12.2 % HEYDUDE Brand income from operations (2) 137,401 212,386 (35.3) % (35.2) % Enterprise corporate (2) (297,502) (254,933) (16.7) % (16.7) % Total consolidated income from operations 1,021,911 1,036,783 (1.4) % 1.4 % Foreign currency gains (losses), net (6,777) (1,240) (446.5) % Interest income 3,484 2,406 44.8 % Interest expense (109,264) (161,351) 32.3 % Other income (expense), net 1,231 (326) 477.6 % Income before income taxes $ 910,585 $ 876,272 3.9 % (1) Reflects year over year change as if the current period results were in constant currency, which is a non-GAAP financial measure.
Cash provided by financing activities decreased by $2,389.3 million in the year ended December 31, 2023 compared to the year ended December 31, 2022.
Cash used in financing activities increased by $26.4 million in the year ended December 31, 2024 compared to the year ended December 31, 2023.
Asia Revolving Credit Facilities During the year ended December 31, 2023, we had two revolving credit facilities in Asia, the revolving credit facility with China Merchants Bank Company Limited, Shanghai Branch (the “CMBC Facility”), which matured in January 2023 and provided up to 10.0 million RMB, or $1.5 million at current exchange rates as of January 2023, and the revolving credit facility with Citibank (China) Company Limited, Shanghai Branch (the “Citibank Facility”), which provides up to an equivalent of $15.0 million.
Asia Revolving Credit Facility During the year ended December 31, 2024, we had one revolving credit facility in Asia with Citibank (China) Company Limited, Shanghai Branch (the “Citibank Facility”), which, as amended, provides up to an equivalent of $15.0 million. As of December 31, 2024, we had no borrowings outstanding on the Citibank Facility.
Additionally, subject to certain conditions, including, without limitation, satisfying certain leverage ratios, the Company may, at any time, on one or more occasions, add one or more new classes of term facilities and/or increase the principal amount of the loans of any existing class by requesting one or more incremental term facilities.
Additionally, subject to certain conditions, including, without limitation, satisfying certain leverage ratios, the Company may, at any time, on one or more occasions, add one or more new classes of term facilities and/or increase the principal amount of the loans of any existing class by requesting one or more incremental term facilities Pursuant to the reduced interest rate margins applicable to the 2024 Refinancing Term Loans, each term loan borrowing which is an alternate base rate borrowing bears interest at a rate per annum equal to the Alternate Base Rate (as defined in the Term Loan B Credit Agreement), plus 1.25%.
As of December 31, 2023, we were in compliance with all financial covenants under the Term Loan B Credit Agreement.
The Term Loan B Credit Agreement also contains customary affirmative and negative covenants, incurrence financial covenants, representations and warranties, events of default and other provisions. As of December 31, 2024, we were in compliance with all financial covenants under the Term Loan B Credit Agreement.
Under Delaware state law, these shares are not retired, and we have the right to resell any of the shares repurchased. During the year ended December 31, 2023, we repurchased 1.7 million shares of our common stock at a cost of $175.0 million, including commissions.
During the year ended December 31, 2024, we repurchased 4.3 million shares of our common stock at a cost of $551.2 million, including commissions. During the year ended December 31, 2023, we repurchased 1.7 million shares of our common stock at a cost of $175.0 million, including commissions.
This benefit was offset by an increase in uncertain tax positions of $318.6 million, and an incremental valuation allowance of $164.0 million for amounts not more-likely-than-not to be realized based on available objective evidence. As such, a net change in deferred tax asset of $128.9 million was recognized along with a corresponding foreign income tax benefit.
As of December 31, 2023, the related net deferred tax asset was $310.7 million, net of a reserve for uncertain tax positions of $318.6 million and a valuation allowance of $164.0 million for amounts not more-likely-than-not to be realized based on available objective evidence.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2023, we had borrowings with a face value of $1,713.3 million, comprised of the Notes, which carry a fixed interest rate, the Term Loan B Facility (as in effect prior to the February 2024 Amendment), the Revolving Facility, and borrowings under our Asia revolving facility.
Biggest changeAs of December 31, 2024, we had borrowings with a face value of $1,390.0 million, comprised of the Notes, which carry a fixed interest rate, the Term Loan B Facility, and the Revolving Facility. We also had $0.6 million in outstanding letters of credit under our Revolving Facility as of December 31, 2024.
An increase of 1% of the value of the USD relative to foreign currencies would have decreased our revenues and income before taxes during the year ended December 31, 2023 by approximately $13.8 million and $2.1 million, respectively. The volatility of the exchange rates is dependent on many factors that cannot be forecasted with reliable accuracy.
An increase of 1% of the value of the USD relative to foreign currencies would have decreased our revenues and income before taxes during the year ended December 31, 2024 by approximately $16.1 million and $2.8 million, respectively. The volatility of the exchange rates is dependent on many factors that cannot be forecasted with reliable accuracy.
Specifically, we translate the statements of operations of our foreign subsidiaries into the USD reporting currency using exchange rates in effect during each reporting period.
Specifically, we translate the statements of income of our foreign subsidiaries into the USD reporting currency using exchange rates in effect during each reporting period.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for a discussion of the impact of the change in foreign exchange rates on our USD consolidated statements of operations for the years ended December 31, 2023 and 2022. 48 Table of Contents ITEM 8.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for a discussion of the impact of the change in foreign exchange rates on our USD consolidated statements of income for the years ended December 31, 2024 and 2023. 49 Table of Contents ITEM 8.
We also had $1.3 million in outstanding letters of credit under our Revolving Facility as of December 31, 2023. As of December 31, 2022, we had long-term borrowings with a face value of $2,379.3 million and $1.3 million in outstanding letters of credit under our Revolving Facility.
As of December 31, 2023, we had long-term borrowings with a face value of $1,713.3 million and $1.3 million in outstanding letters of credit under our Revolving Facility.
Financial Statements and Supplementary Data of this Annual Report on this Form 10-K. As of December 31, 2023, the USD notional value of our outstanding foreign currency forward exchange contracts was approximately $185.0 million. The fair value of these contracts at December 31, 2023 was an asset of $1.4 million and an insignificant liability. See Part I - Item 1A.
Financial Statements and Supplementary Data of this Annual Report on this Form 10-K. As of December 31, 2024, the USD notional value of our outstanding foreign currency forward exchange contracts was approximately $239.6 million. The fair value of these contracts at December 31, 2024 was an insignificant liability. See Part I - Item 1A.
A hypothetical increase of 1% in the interest rate on the variable rate borrowings under our Term Loan B Facility (as in effect prior to the February 2024 Amendment) and Revolving Facility would increase our interest expense over the next twelve months by $10.1 million based on the balances outstanding for these borrowings as of December 31, 2023.
A hypothetical increase of 1% in the interest rate on the variable rate borrowings under our Term Loan B Facility and Revolving Facility would increase our interest expense over the next twelve months by $6.9 million based on the balances outstanding for these borrowings as of December 31, 2024.
As of December 31, 2023, a 10% appreciation in the value of the USD would result in a net decrease in the fair value of our derivative portfolio of approximately $1.5 million. See Item 7.
As of December 31, 2024, a 10% appreciation in the value of the USD would result in a net decrease in the fair value of our derivative portfolio of approximately $3.0 million. See Item 7.

Other CROX 10-K year-over-year comparisons