Great. Good morning, everyone. Thank you for I guess, good evening. We've been here so long, I still thought it was morning. So anyway, great to see you all. Thank you for coming to the Crocs Fireside Chat. My name is Carrie Burke. I'm a Managing Director here at Goldman. And I'll be speaking today with Andrew Reif, Director and CEO of Crocs, a global leader in casual footwear with two iconic brands. Thank you for being here with us today. Thank you, Carrie. I believe you have a few statements you'd like to make at the open before we turn to Q I'll Great. Pass it to And I'll try and wrap those up quickly. So my lawyers would like me to read a little short Safe Harbor. So we will make some forward looking statements that are not historical facts. These statements are subject to risk, etcetera, etcetera. And the replay of this will be available on our website. So just to kind of set the stage for two minutes, some of you are very familiar with Crocs, some of you are not. We have two brands, despite the name of the company. One is Crocs. That's about 80% of our business. That is diversified across a broad range of footwear from clogs to sandals and also personalization. The Crocs brand trades around the world in over 80 countries and is very well diversified from a geographical perspective. We also own a second brand, Hey Dude, which many of you must probably be less familiar with. Hey is a casual footwear brand. Its iconic styles are the Wally and the Wendy, which are loafer styles. We bought it a number of years ago. Hey Dude is about 20% of our overall sales. It's primarily sold here in The United States, so with a nascent international business that is emerging. And is profitable today, but is a brand that we're investing in for future growth. As a company, one of the most important characteristics of our company is that we are incredibly profitable, very high cash flow and that is a key part of our shareholder return strategy in terms of being able to leverage that cash flow to buy back stock and return equity or return monies to shareholders. Recently, we announced our Q2 earnings. We had a very solid performed very well really in the first half of the year. As we look to the back half of the year, a couple of things going on. We are increasingly cautious around the consumer. We see signs of the consumer being more cautious than they have been historically. And potentially what might differentiate us from some other companies that sell into the footwear space is we have a very broad consumer base from the very high end consumer to a very moderate consumer. We particularly see that concern around pricing, around the constrained budgets with that moderate consumer. We also see retailers, our wholesale customers acting cautiously in this environment, and we see a little pressure from an athletic trend. So as athletic is taking a little bit of open to buy in some key channels, it's really squeezing the casual portion of the business. In addition to some of those headwinds, we've also made some important strategic choices around protecting our brands for their long term success, long term growth and long term position in the marketplace, reducing discounts in terms of how much so trying to get some benefit or get some money back to compensate for tariffs by focusing on net price, so reducing discounts on the Crocs brand. We're also taking some strategic steps on the Hadoop brand to clean up distribution. So as we look to the rest of the year, our guidance is more muted. We thought we think about Q3 guidance we provided for Q3. Overall sales will be down 9% to 11%. And the majority of that compression would really come from Hey Dude with the Crocs brand in the low single digits in terms of decline with growth internationally. So hopefully that kind of sets the stage. Don't want take too much of your time, but Perfect. Thank you. Well, you were one of many companies that had announcements over Labor Day weekend and on Friday. So why don't we start with the Friday announcements on the CFO transition? Yes. So we were really happy to announce a new CFO for Crocs, Patrick Reagan. We'll be starting as CFO in on the September 22, so in just a few short weeks. Patrick joins us most recently from Shark Ninja, which I think we're also here at the conference and where he was CFO. But prior to that, he was he spent fourteen years with Nike in a variety of positions, including some international placements. So we're excited that Patrick brings, I think, a wealth of footwear experience. And as he said in his in our courting process was Crocs is one of the companies he really dreamed about working for. So we're excited. Great. You also reaffirmed your quarterly guidance? Absolutely. Any insights you can share on back to school, how you're seeing trends so far? Yes. I think I would say back to school in the third quarter has really much played out as we expected it to, right? So obviously, we reaffirmed our guidance. I think back to school is not necessarily the hugest time for our brands, right? It's very much an athletic or a key brand period. Our brands do well in back to school, but it's not a significant peak. We did see back to school tighten up a little bit in terms of the number of weeks that the consumer was out shopping. The other thing that did happen in Q3, which was beneficial, was the tax holidays. They're often timed with back to school, but we saw many states across the country extend their tax holidays. For example, Florida was essentially had a tax holiday for a month this year and it was a week last year. So that was another dynamic that was going on during the quarter. I think we still see the consumer behaving as they've behaved to this point in the year. The low end consumer is choiceful and cautious. The high end consumer has got plenty of money and is shopping. But I think we've kind of calibrated about right from a guidance perspective. Yes. Why don't we double click on the Crocs brands first? Some of the areas of focus for investors as of late has been your more cautious tone on North America. What are some of the key drivers of that slowdown? You just mentioned the consumer being a little bit Maybe I'll kind of double click on that and then also say what we're going to do about it, right? Perfect. So really the key driver of that more cautious tone in North America is that consumer concern. And I think we're appropriately thinking that the consumer there's no we don't see a pivot point in the near future for the consumer to change their current trajectory. We plan that forward. And then additionally, the strategic actions we've taken, so trying to get net price by reducing discounts on the Crocs brand, that's particularly within our DTC channels where we can control that directly. So in terms of how we're reacting to that, I think it's important that we can continue to diversify our clog business. We're introducing a number of new clogs over the current remainder of this year into next year with Echo RO, with Crafted, which is a classic clog covered with materializations. Those continued those appear to be performing very well out of the gates. And then also Fuzz and Line product for the winter, where we have some significant renovations and innovations of the products that we had in the marketplace there. Sandals performed very well in 2025 during the summer sandal season, particularly here in North America as we expanded distribution on sandals and wearing occasions. And we have, I would say, significant enhancement to our lineup for next year, and we anticipate sandals performing well in North America and Rest Of World. And then personalization, we continue to lean strongly into personalization, continues to be an incredible megatrend. We a fun fact, we opened a store several weeks ago here in SoHo, New York, where we massively expanded our personalization offering, and it dramatically increased the percentage of sales. Erin will yell at me if I tell you how much, but dramatically increase the percentage of sales that we do on personalization. And as everybody is probably intuitively aware, that's an incredibly high margin category. So that's exciting. On your Q2 earnings, you highlighted that improving athletic trends could pose a headwind to casual footwear more broadly. Could you explain your thought process behind that a little bit more? Yes. I mean, it's just really the dynamics of open to buy, right? So if I think about our large wholesale customers, Family Channel, Sporting Goods, They I think they're planning their business appropriately cautiously, particularly the Family Channel, the Sporting Goods, I think a little bit more optimistic. But so the essential plan in their business is down, as they think about the remainder of this year and early part of next year. So that constrains Open to Buy. And then if they need and want to give a bigger share to athletic, it further constrains open to buy. So it's just the dynamics of where they think the consumer is going to be. Now obviously, our job is to give the consumer incentive to purchase Crocs and get them into the store to purchase Crocs. And I think they're also taking a little bit of a wait or see approach, which is they're not essentially spending all of their open to buy, they're keeping some in their pocket and not chasing things that are working. So if we can drive consumer demand larger than the purchases, we can potentially get some opportunity there. Crocs is more international than I think most people probably realize. Where do you see white space internationally? And what gets you excited about your continued momentum there? Yes. We see a lot of white space internationally. So another fun fact, in Q2, Crocs sales were actually bigger outside The United States than they were inside The United States. And if you went back to, I'll get this wrong, but I think it's 2014, 2015, Crocs was about 60% international sales, 40% domestic. And what's happened since then is the domestic business, The U. S. Business has just grown extremely rapidly, and now we're growing the international business rapidly. So it's obviously a big world. So what we do is really focus on the big markets. So the biggest footwear markets are really China, Japan, Western Europe, India is important, South Korea is important. So we have a series of markets we call Tier one markets. Those markets have full multichannel distribution. They have teams on the ground and they have top tier marketing spend in terms of generating the brand in the markets. We also use distributors in a lot of markets where we don't want to put all of those resources on the ground or there's something unique about the market or risky about the market that we don't want to take on. So South Africa, for example, which happens to be a really good market for Crocs and Hey Dude, but it's not a market that we want to have feet on the ground and investments in the local currency. So that's our kind of approach to thinking about the international business. But the macro point is that the average penetration, the average market share we have in our international markets is about a third what we have in our major leading markets like The U. S. So if you were to believe that you could get to the same market share, there's a lot of white space in the majority of the globe. Okay. Let's switch to Hadood. So you're taking some significant actions to reset the brand in the near term. You speak a little bit about some of the changes that you've made and where you see the company going? Yes. So let me sort of step all the way back again for Hey Dude. We bought the brand almost three years ago actually over three years ago now. And the reason we bought the brand, I mean, the reason we bought a brand that was significantly scaled already is we wanted to give some diversification to shareholders and investors in the Crocs, Inc. Company. Because historically, if you invested in Crocs, you were buying a company with a single brand and very highly concentrated in a relatively small set of products. So we heard very strongly from investors that they wanted more diversification and we felt this was a compelling brand to drive that to enable that diversification because it sold at a similar price point and similar distribution. It felt like it was a consumer that we understood, but yet enabled a much bigger market size for us to focus on. We've definitely had some challenges since we've purchased the brand, since we operated over the last three years. At this point, I think we're doing really a number of critical things. Number one is we're cleaning up the wholesale market here in The United States. As I mentioned at the beginning, the majority of Hadoop sales are here in The United States. And we felt like we were over distributed and we had too much aged inventory in the marketplace in the wholesale marketplace. We've taken a number of made a number of investments to clean that up over the last several quarters, but we decided to make a bigger investment in the remainder of this year and get that behind That was one thing. The second thing we decided to do is as we looked at the performance marketing spend, we figured we saw that we felt like we're spending too much money on performance marketing and not enough on brand marketing. So we've taken the performance marketing budget down, which does have a cost in terms of we missed sales that we might otherwise have been able to attract. But as we looked at the marginal profitability of those sales, it was very, very low, if not negative. So we're improving the profitability of the brand, taking a bit of a sales hit, but resetting for the future. So those are the actions we're taking right now. More importantly is what we're trying to do for the future. So we've got a significant number of new team members. So we've retooled the team for Hadoo, brought in a Head of Commercial from Adidas several months ago, Rupert Campbell is doing extremely well. We brought in a new Head of Product for the brand, actually came over from Crocs, who is doing an amazing job and really strengthened the team internally within Heydude. So as we look at our product pipeline, we look at our marketing strategies, we look at what we're planning to do over the next twelve months, I think we feel really good about the trajectory we're on. And I would say from an investor's perspective, I think just be assured, we recognize this is something we need to fix, and we're going to focus on it intensively to fix it. And no one in the room is wearing a cowboy hat. But if you want to talk a little bit about your new Hey Dude Country launch, that Yes. Could be interesting as I know. So Hey Dude Country it's really a pivot to the core consumer, right? So we spent some time over the last twelve months really trying to attract a new consumer to Hey Dude. And those investments, while productive, were not sufficiently productive to counteract for the distraction they provided in terms of talking to the core consumer. Now you might say that's a tautology that pretty much always happens. Well, it's definitely occurred. So Hey Dude Country allows us to pivot as an umbrella back to our core consumer. So for those of you that are not aware, the Hey Dude brand is most strong in select areas of the country. So if you think about kind of the Midwest running down to Texas and then what I call a lowercase h going up through Tennessee and the Carolinas down into Florida, that's Hey Do Country, right? So those are the places where the brand has the highest awareness, where the products on the shelf in our stores that we might operate or a store that one of our wholesalers operate, it sells at a very different trajectory than it does in the Northeast or the West Coast. So what we're doing with Hey Do Country is celebrating our core consumer. We're focusing our marketing investment on them, encouraging them to come back and buy new pairs. We're then also looking for people that look like them in other parts of the country so we can expand the brand. We're looking more towards him than her, but ignoring her because he is definitely the core of the consumer. And I would say early signs, our relationship with Riley Green, some of the work that we've done today, some of the work that we're doing at college football with NIL athletes, etcetera, and also producing SEC branded shoes, we're really feeling we're seeing early signs that it's getting traction with the consumer and it's encouraging. And moving from marketing for Hey Dude over to marketing for Crocs, any other brand strategies or marketing on that we should think about? Yes. I think we're definitely focused on we made some strategic choices around personnel. So Terence Riley, as some of you a name some of you may be aware of, Terence was with us a while ago and he was the Chief Marketing Officer for Crocs as we really invented the marketing strategy that we've been pursuing for Crocs. Terence took a break from us and went to Stanley, the drink company, not the tool company, and really drove the incredible popularity and growth of the Stanley business. He came back to us a year ago. Initially, we had him as Head of Hey Dude, but now we moved him to a position called where he oversees marketing for both brands. And I think what Terence's secret sauce is really all about marketing innovation. How do you reach the consumer in new and innovative ways that you can stand out relative to other people who are trying to reach the consumer and get in their ears. And I would say a few things focusing on that we're liking the trajectory of is social selling. The Crocs brand is the number one brand, number one footwear brand on TikTok shop here in The U. S. The Hey Dude brand is the number three brand on Hey Dude on TikTok Shop, actually was the number one last week. So both of our brands are performing extremely strongly and we're leaning into social selling. Now why are we leaning into social selling, you might ask? Because a couple of things. One is you it's basically marketing that you get paid for is the way to think about it. So we can make money and the margins are very appealing in terms of selling the product. And we're able to measure a halo from that activity to our other channels. We can measure a halo over onto our website. We can measure a halo over onto Amazon. We can measure a halo into store. So we're really excited about that. We've obviously done a lot of this in China over the last several years, but we're delighted that, that channel is available here in The U. S. Today. And TikTok Shop is opening quite quickly around the world. So we've already opened in The UK. We're opening in Western Europe. Some of the biggest markets are in Southeast Asia from a consumer connectivity. The other thing that we're also experimenting with is live streaming. Again, comes over from China, where it's a really critical selling tool. And again, it's a selling tool, so there's a commercial aspect to it. But more importantly, there's a storytelling aspect to it. And as I think about the consumer today, the consumer is receptive to authentic messages and storytelling from people like them or people that they can relate to versus TV commercials. So I would say really focus on the innovation associated with marketing and reaching the consumer in new and unexpected ways. Great. One question that we're asking every company at our conference is the health of the consumer. And do you expect the health of the consumer to be better, the same or worse in 2026 versus 2025? I would say in The U. S, I think the consumer will be the same as they are in the back half of 2025 and 2026. I don't see any significant pivot point that I believe is going to make them be worse or better. So my assumption is they'll be the same. But obviously, it's a relatively unpredictable landscape today. On a global basis, the answer could be a little bit different. I think on a global basis, I think in Asia, the consumer actually could be more buoyant than it is today, because the China economy is quite a pressure on the China consumer, but also the broader Asian economies, because so much of their commerce flows to those economies. And I think that they're very proactively stimulating that consumer in those economies. So I think there'll be some improvement there. And with that as a backdrop, how are you thinking about the competitive landscape today? It's dynamic. I think as we think about the places that we compete, we see competition from above and below, right? So we see smaller brands coming up that are maybe trying to take a piece of our business, whether it be on the molded side or on the hated side. But we also see some of the bigger brands as we scaled, trying to address the wear in occasion that we address. So I think there's always competition, but as we've gotten bigger, we do see more competition. And I think the onus is on us is to continue to innovate from a product perspective and bring new and unexpected and successful products to market, but also innovate from a marketing perspective and engage the consumer in ways that other companies wouldn't be prepared to do. So TikTok Shop, for example, right, like we are a pretty modest sized brand in The U. S. Marketplace. It's sort of mind blowing that we'd be the number one brand on TikTok Shop relative to all those others that exist. And so I think that's just a testament to the speed at which we can move and the willingness to experiment and take risks, which doesn't exist in other brands. And how are you feeling about your ability to take price? Do you think you have price selects that you'd like to see either in Crocs and Hey Dude or is it by SKU? How are you thinking about that? Yes. It's a tricky question because obviously, we've got that headwind of tariffs. And I think we've talked publicly, we believe our headwind for tariffs are about $90,000,000 next year. We'll get some of that back from supply chain efficiencies. We'll get some of that back from manufacturing efficiencies. But price is going to be a key equation to that as well. We are pretty strategic about price. We're really looking for on a couple of different dimensions. One is what is competitive price today. And in this case, we're to think about what competitive price might be in the future, because we do believe there will be a systemic rise in footwear prices over the next twelve to eighteen months. We haven't seen a ton of that come through yet, but we do believe it's coming. And then the other thing we're looking at is what are the places in our product portfolio that consumer is less sensitive. So a limited release or a collaboration has a lot of pent up demand. Obviously, they're much less sensitive. And also, what is the state of the brand and the heat of the brand in the relevant market. So we have historically over the last seven years taken a lot of price in The U. S. Over the last two to three years, we've been taking quite a bit of price strategically around the world on the Cross brand. And over the next year or so, I think you'll see us strategically move prices. We're not anxious to be the leader in that price increase game. We think we one of the powers of the Crocs brand is we give incredible value to our consumers. So we will go up when the competition goes up, but we're not leading them up. Appreciate that you're sitting here without your CFO, but I'm still going to ask one question on margin. Recognize you don't currently for have 2025, but previously, you had guided towards long term margin of 24. Should we still be thinking about that over the longer term? Yes. So look, think there's a couple of things in that. Number one is the 24% obviously just accentuates to everybody what an incredibly profitable company this is, right? So we generate incredible profit margins and cash flow that goes with that. The 24% we did we were very clear when we articulated that, that was in a normalized trade environment and a normalized FX environment because FX is meaningful to this company given how much business we do outside The United States. I don't think we're in a normalized tariff or trading environment in 2025. So I don't think we should be thinking about that as the right margin performance for the company. But when those things do normalize over time, we do think that's viable in the future, but I don't think it's right now. Perfect. That concludes my prepared questions. Do you have any closing comments or thoughts you'd like to leave with the audience? Yes. I mean, think probably the most fairly generic, but I would say the footwear space is an incredible space, right? As I think about all the different businesses I've worked within over my career, the footwear space is an incredible space. It's a high margin, it's branded, it's global in nature, it's a great marketplace to play in. So we're excited to be participating in this market. And as I think about companies that I invest in, I think about markets that are really great markets to participate in and the wins at your back. And then we're excited about our company. We have two incredible brands, I think gives the consumer incredible value. They play into what we think is global megatrends associated with the footwear space, comfort, easy on and off, high value. And we add an element of personalization and excitement, which comes through most strongly on the Crocs side. So we're very optimistic about our ability to continue to grow these brands in a long term sustainable way around the world. Perfect. Well, thank you so much for taking the time with all of us today. We appreciate it. Thank you so much.