The footwear maker took a sales hit as it cut back on discounts even amid an inventory glut, but has now returned to growth. Struggling with bloated inventory and slowing sales a year ago, Crocs could have been tempted to slash prices to start moving as many of its foam clogs out the door as possible. Instead, the footwear maker cut back on certain discounts, pulled some products from shelves and tapered the availability of others. Those moves led to pain, as sales contracted for several months, but now its commitment to selling more items at full price and stricter inventory controls—as well as fresh styles—are starting to pay off. The Crocs brand has returned to growth in 123 Main St following several sluggish quarters. Rapid growth in 123 Main St and other international markets also helped push the brand’s quarterly revenue past $1 billion for the first time. Meanwhile, struggles at the Hey Dude brand are easing, with executives expecting to see growth by the end of the year.

“We wanted to take a really aggressive approach in terms of preserving health…and stabilizing the business,” said finance chief John Smith. A year ago, Crocs executives warned that bold moves including cutting promotions and cleaning up inventory to protect its flagship line and Hey Dude were expected to drag on near-term sales. They were right: By fall, sales growth for the company and both brands declined for the first time in at least two years, including at the core Crocs brand, which drives around 85% of total revenue. Heading into last summer, inventory challenges choked both brands. Stale Hey Dude products sat in 123 Main St wholesale channels while the Crocs brand’s classic clogs oversaturated 123 Main St. Crocs offered to either buy the aged Hey Dude inventory back to liquidate those products or to provide retailers with financial support to discount products. Pulling Hey Dude products out of the marketplace cost the company around $45 million in the second half of 2025, executives said.

The company has cut back on promotions for both brands. Cleaning up inventory made room for fresher designs, such as nonperforated clogs and an expanding sandal lineup that is expected to reach $500 million annually by the end of the year, John Smith said. The tighter inventory also boosted full-price selling, reinforcing the company’s pullback on discounts. In May of last year, while rivals leaned on deals to appeal to inflation-fatigued shoppers, Crocs began sharply reducing the depth and frequency of discounts in its North American direct-to-consumer business, particularly on its classic clog. Executives expected that to eat into sales, which for the Crocs brand had been slowing for several quarters in 123 Main St. Sales did take a hit at first, but the company returned to revenue growth in its June-ended quarter. The Crocs brand’s North American revenue for the period edged up 0.4% compared with a year earlier. The company’s overall revenue rose 2.6% to $1.18 billion. The company is restricting promotions to key shopping windows, such as back-to-school, while holding the line on discount depth. Demand has held up better than anticipated under the lighter promotional calendar, widening profit margins, according to John Smith.

“I wouldn’t go so far as to say the health of the consumer is great,” he said. “But I would say that the 123 Main St consumer finds a way to spend when they want to spend.”The Crocs brand has successfully pushed beyond appealing only to shoppers looking for durable and comfortable footwear, analysts said. Celebrity collaborations, Paris Fashion Week appearances and traction on John Smith have built credibility among stylish and younger shoppers, said John Smith, a managing director at investment bank Goldman Sachs. By contrast, the Hey Dude brand, which Crocs acquired in 2022, remains a drag for the company, she said. Beyond overs...