Okay. Welcome to BIPER's Consumer and Tech Conference. I'm Ana Andreeva, and I cover footwear, beauty, and brands here for the firm, and super excited. Next up, you have Croc from the management team. We have CFO Patrick Reagan. Welcome. Great to have you. Yeah, great to be here. Thank you. Okay. Fantastic. So there's been a bit of a footwear angst, you know, as of late in the industry. And, you know, certainly a shift with some of the legacy kind of a sneaker, lifestyle sneaker players telling us that the consumer is, you now, going more towards the brown shoe, the dressy shoe, you you know, et cetera. It's definitely an interesting shift, you know going on across this industry. Just talk about how you think your brands, you know, fit into that and potentially benefit from that. Yeah. Yeah. So I think, you Know, what we've been seeing, you know, recently in footwear is just kind of a continuation of, you KNOW, some cyclicality that you see every few years. You know, what I would say is that, you know, specifically means to Crocs is, you know, how we compete is really through the diversification of our product offering. So for those of you who may not be as familiar with the story, probably when you think about Crocs, you know, the image that comes up in your mind is our iconic classic clog. But really, you know is on a note, we're so much more than that. So if you think about, you know our product-offering, we are the industry leader in clogs. We're the globally recognized leader. Our product is iconic and recognized throughout the world. But that's just the beginning of the story. The continuation of the story is that from a diversification perspective within clogs, we compete through many different silhouettes. For example, we have our Echo franchise, which is very much more of a streetwear, kind of edgier, fashion-forward silhouette. We have Croc Band, which is more collegiate, a little bit younger in nature. We also, outside of clogs, compete in sandals. So not many people know this, but we are nearly a half a billion dollar a year in annual revenues in our sandal business. And we've been developing this over the last few years, but really just getting to scale in the last couple. And, you know, within that, our leading silhouettes are the Getaway, the Brooklyn, the Miami. We've recently introduced the Miami Silhouette, which is a little bit upscale and has done really well. So we've got clogs, we've Got Sandals. We also have a lot of lifestyle product, which continues our diversification story. So within lifestyle, we have a product that helps and aids in terms of recovery from athletics called the Mellow, which has been meeting with a lot of success in the space. And this year, we had an absolute runaway hit with our ballet flats, which was something that we were testing into as a we began the year and ended up chasing throughout the year, unable to really fulfill all the demand that was in the marketplace. And so, you know, that's kind of, you know, a little bit of what we have in the Crocs side of the house. And then from a HeyDude perspective, which is our complementary brand to Crocs, we've been doing a lot of work, again, from a diversification standpoint, building on the success of our Wally Wendy icons and moving into all things in all ways for our consumer, whether that's boating, fishing through our Hay 2.0 franchise, as well as our work franchises and our boots franchise. So we feel great about where we are. Yes, there's always some cyclicality, but we feel through the breadth and the depth of our diversification we're well positioned within the space. So part of the bear case we often hear from investors on Crocs is you had a phenomenal 1H of this year, but a lot of that upside was driven by sandals, and you mentioned some of the innovation. Now that the seasonality is kicking in and we're here in September, the business will slow inevitably. So how would you respond to that, just any particular kind of areas of opportunities this fall and back to school that you see compared to last year? I mean, I know casual and comfy is a big area that you usually lean into, so anything you can share on that. Yeah, I'd say a few different things, maybe one to address kind of the bear case, which is growth through sandals. It's interesting, for those of you who have been around the company for a while, and I have because I've been in the footwear space for quite some time, The bear case traditionally for Crocs was always that we were overly reliant on one product, which is very much not the case today. Now, as it relates maybe closer in, yes, there was growth certainly driven by sandals, which we absolutely love and we feel like could have been even larger just from a size of consumer adoption. We left some dollars on the table. But I would say as we kind of turn the clock now, there's a few things that are at work as we move from spring, summer, into holiday, fall, and winter. Number one is the season for sandals is no longer kind of constrained and confined just to spring, winter. The shoulder seasons are much longer. I mean, it's going to be 98 degrees here today. I'm afraid to step outside in my suit, that's for sure. but you know I'd say number one that season is longer so it gives us you know some ability to drive additional revenue but you Know I'd also say that from a seasonality standpoint this is where our diversification strategy really kind of provides us a lot of strength and so as we now turn into you know fall holiday time period as we think about some of you know what's becoming iconic in terms of silhouettes within you know our fur line clogs and our sandals or I'm sorry our slippers business we've got two uh silhouettes that we're really excited about the first one is uh called the unforgettable so think of about a play on words forgettable unforgettable which is a lined uh silhouette which is exceptionally comfort uh comfortable it's also very warm so really kind of plays counter to uh you know the the uh cyclicality of or i'm sorry the seasonality And then the Cozy, which is spelled with three Zs, so Cozy is also another cold weather silhouette. And so as we think about that, you know, that helps to then during the cold weather months, you know, augment where we've seen growth from a sandals business. Now that's on the Crocs side, on the Hey Dude side, you know, we have, you know, what I would say a less seasonal business. Certainly there's, you know, kind of ebbs and flows towards the year. But, you know, particularly within our boots business and our work business, we have, you know, quite a bit of ammunition in terms of products as we go into the fall and holiday selling seasons. That sounds great. And, you Know, you've talked about this before and you just mentioned this now, but innovation pipeline at Crocs especially, but also Hey Dude improved, I mean, really significantly this year. usually that starts right internally with people changes so can you talk about you know what's changed and durability of some of those changes and I know as you think about marketing bringing parents back and elevating his position has really provided you know halo effect you know for the business just maybe any update on that yeah so product innovation and in marketing I would say You know, within, you know, those two, and I'll add a third here in a second, but from a product innovation standpoint, I mean, we are a product company, right? We are a project company. So, you know, if we're not innovating on behalf of the consumer, then, you know, we just, we lose. And so, I think, you know, on to your question, you know, going back about 12, 18 months, probably closer to 18 now, you know, there was just kind of a refocus. I wouldn't say a change, but there was just a refokus and a heightened sense of urgency around product innovation. Not that it wasn't there, it was, but I think all things can be heightened and, you know, our CEO, Andrew Reese, really kind of started hammering home with the organization that we have to just always be on the front foot in terms of innovating on behalf of the consumer. And so as you saw that repositioning come through. And then when I came in last year to the role as CFO, we really kind of established that we were going to ring fence investment into the product innovation standpoint. Some of that comes through talent. Some of it comes through experimentation. Some of that come through understanding when you've got some hits on your hands and how you can get into the marketplace faster. So I think that has been number one. So we really built the company and evolve the company now to say, you know, that is above and beyond all things ring fence from an investment standpoint, what we're doing in the product and product innovation space. The second one, which we're hitting on with Terrence Riley. Terrence Riley, for those of you who don't know, he's our chief marketing officer. He had been at Crocs for a while, went to Stanley. So for all of you whose retirements were put off by those expensive Stanley cups that, you know, probably number about five or six or seven in your house. I know I have about seven. That was Terrence. The, you know, what he's brought to the organization, he initially came back in through a more commercial role, but he was recently elevated about eight, nine months ago or so to the chief marketing officer. And really he's bought, you know, kind of the view, the visioning of, you know, what, you know, true global brand awareness is at scale. And, you know, Terrence is a masterful storyteller at heart, and, you know, what he's been able to bring in terms of focus to, you know, the Crocs brand through some of the stories that we've been doing on TikTok and some of the work that we've been doing in terms of reinvigorated ad campaigns and marketing campaigns through Hey Dude has been amazing. He's also, if you guys haven't seen this, this is actually, you know, kind of fun. I'd encourage you to have a laugh. But, you know, he has brought a real-life mascot to the Crocs brand called Niles. Niles is a crocodile. He was hatched roughly about six weeks ago. Nils has already been to a few NFL games. Niles has got over 25,000 followers. And we've been building, you know, kind of the brand and the brand affinity through a fun, playful way with Niles. You can search on LinkedIn and YouTube. And Niles went through an employee onboarding experience, which is kind of comical. We thought he might have eaten one of our employees at one point in time. And so, you know, we're getting and we're having a lot of fun with this. We're getting a lot resonance from a consumer standpoint about where and how we can, you know, continue to make the brand fun, refreshed, and inviting. That's awesome. No, thank you for that. I'll make sure to follow Niall to add to his following. You've done a really good job on DTC side of things and have seen nice acceleration this year, despite being less promotional. North America wholesale, right, That's been more of a challenge, and last year you were in the cleanup mode and actually exited that pretty quickly because, like you said, I mean, cleanup modes in that channel can really take, you know, quite a while, and you guys did it quickly. Would you give us just the state of the union on North America wholesale at this stage? I mean, what are you seeing in terms of appetite from the partners towards the brands, just given all of the improved innovation across the portfolio? Yeah, yeah. So, you know, I would start by saying that, you Know, all of our channels of distribution are important for us. You know, we don't try to, you kind of elevate one way of engaging with the consumer over the other. at our heart. And part of our ethos is what we say, we're delightfully democratic. And so, you know, we aim and focus on selling to the consumer wherever he or she may be. So we just, we want to be in their path. If they want to shop with us through Famous Footwear, we want to be there. If want to shopping goods, we wanna be there, so I kind of put that as just table stakes. We don't, you know, try to point the consumer in, you know, any one direction or the other. Now, that being said, you know, is we've been really increasingly focusing on our innovation journey and our new product introduction strategy. What inevitably happens is you have more control and it's a little bit easier to bring that product to market at scale with the brand story and the brand storytelling through your own channels. And so on to your question, what happens is, you know, we typically get a little bit slower uptake on the wholesale side of the business through versus what we, you Know, control internally. And so you'll see those styles coming to market first in our stores, in our dot com, in TikTok shop and with our other marketplace partners. And then typically what we see and what we're starting to see and what we continue to see is then wholesale partners will then come back in and, you know, invest their open to buy behind those styles as they've seen a little bit more proven success out in our own channels. And so, you Know, wish it wouldn't happen that way. We'd like to be, you Now, equal to all things, all folks, but it's just I think it's a little more of a cautious play, which I understand. But, you know, we view it as our responsibility to prove it to the wholesale partners before they adopt. You've talked about those at-once orders, right, picking up for the business and understanding that overall, you Know, of course, consumers, your partners are staying very cautious. But would you say that's still continuing and at-once is becoming kind of a bigger portion of the P&L? Sure. Yeah. So maybe, you Now, I'll just define, for those of you who might not know what that once is you know is we sell in a season to our wholesale partners you know we're on what's called a sell-in model so we secure orders in advance our partners get a certain discount for ordering in advance and then as we make our way through the season if we have inventory which is a big if then we enable our partners then to buy on what some replenishment model or an at-once model. And so what we have been seeing, and I'm glad you asked this question because it's actually a green shoot in terms of where our business is, is that as we've seen what I discussed earlier in terms OF a bit of cautiousness on our traditional wholesale partners in their open to buys on new product, what we HAVE seen is that when they get the product, their replenishment models kicks in or their at- once model kicks in and then they're ordering more in season. Now, that's a green shoot because that tells us the demand is there. And then where that kind of makes its way through then is that gives them more confidence in upcoming seasons to kind of get a little bit more robust in terms of where they're investing open to buy dollars in some of these new products. So that's great. So green shoots, that makes sense. And just a follow up to that, I know classic clog rationalization was a big part of the cleanup and sounds like that's pretty much behind us at this stage, but what do you see in terms of just the appetite towards that franchise, just knowing how important it is for the business? Yeah, I mean, it is our icon. So the classic clog, it's, you know, as I mentioned earlier, one of the most recognizable footwear silhouettes on the planet and has really, you know, made our brand what it is today. You know, however, you know, no longer are we just the classic clog company. We're much more than that, which I talked about a little bit earlier. However, you Know, that doesn't mean by any stretch of the imagination that it's not important. And so it's also important for us to keep that franchise and that silhouette but fresh. We're able to do that through, you know, our collaboration engine. And so, you know, another thing that's maybe not super well known about our company is, you know, we have deep, longstanding relationships with, you know, a number of global brand companies. Disney, for example. So we do a lot of work with Disney through their Pixar franchises. You know, you kind of think about cars um uh etc so in fact i've got um you know my son has got some lightning mcqueens uh at home right now monsters inc um uh toy story uh we also work with lego and have a huge collaboration going on with leo uh right now in terms of you know reinvigorating and continuing to keep uh the classic top of mind and then you know appropriate for the time of year we're in We have a deep partnership with the NFL in terms of bringing the classic clog to its, you know, wide-growing, very diverse fan base who, you Know, many times happen to be new consumers in our file through personalization with their favorite NFL team. Great. No, thank you for that. Just switching gears, you Now, hey, Jude, certainly has been some ebbs and flows since you guys acquired the business. what grade would you give hey dude at this stage you've made some interesting changes there with leadership right rupert uh promoted to evp and and president and also with marketing uh so curious you know how do you feel about the brand at this page and you know what are you hearing from the wholesale partners as well yeah um well you know maybe i'm not going to grade my two children in terms of the brands on stage. But, you know, what I would say is, you know, the strategic intent behind the Hey Dude acquisition was right on. You know, for years and years and the core criticism from an investor thesis standpoint with Crocs was kind of like the one-hit wonder, although, you know, it's been the one hit wonder that's been around for, you know, two and a half decades now. So there's a lot of staying power. You You know, Hey Dude was, you know, kind of a forward-leaning, you know, response to that by, you know, giving us a very complimentary brand that had reached into an entirely different consumer base. And so I think, you know, from a strategic standpoint, check. It was check, check, check. From an execution standpoint, and maybe this is where the grading comes in, is, you know, the bring it in house could have been better. It started off pretty fast from a revenue growth standpoint, and then fell into a bit of a trap, which tends to happen, not just with acquisitions, but in retail in general, is over-inventoried in the marketplace and too much inventory coming into the marketplace. And so I think that was an aggressive misstep. However, you know, the team took last year towards, you know, last six, seven months of the year to kind of correct on that. We, you Know, kind of worked through excess inventory in the marketplace with our marketplace partners, inventory that we owned. We bought, brought back inventory that was out in distribution channels. We did that in Q3 and Q4 of last year. we knew that we had the product right on we just had too much product in the marketplace and so we did pretty much you know what I would say you know and I've been in this business for you know a couple decades we did like a two and a half year reset in the space of about nine months and so you know as we went into 2026 one of our strategic and tactical imperatives was to return Hey Dude to growth in this year. So we were declarative back when we guided initially for the year. And we said, Hey Dude will return to growth. And the second half of the year. The great thing is that we've been ahead of every milestone that we internally placed for ourselves. For Q3, We guided Hey Dude flat to down 3%, which was an improvement over our previous two guides. And we feel really good about where we are, and we feel real good about the second half of the year. So I think it's been a little bit of a bumpy ride, but that tends to happen in the acquisition space. That's great. And in the last, you know, minute and change, this may take longer, but we'll try to be brief. You made the change with your large marketplace partner. We've gotten a lot of questions about that. I know you have as well. It adds a little bit of noise, right, to the model. But maybe talk about just the rationale for this, and is this more advantageous for Crocs, and why? Yeah. So we announced in our last earnings call that we had made a shift in evolution with one of our important strategic marketplace partners. You know, to kind of give you the Cliff Notes version on this, because this is more of a war and peace novel than Cliff Notes, the relationship, it kind of ebbed and flowed over the course of a few years to where it wasn't optimal for either one of us. wasn't optimal for our partner, wasn't optimal for us, and we felt like if we could reset the relationship, we would be better together in terms of optimizing the potential. And so, you know, during the course of May, June, July, we had, you know, a series of kind of top-to-top and working group meetings with the partner, and we arrived, you Know, kind of in the late July timeframe in a space in a place that was much better in terms of a partnership go-forward model and so there's really not much more to it than that strategically I view it is is a plus I think we're gonna get farther together under this new relationship than we had in the in the past and you know we're looking forward to it okay well on that we'll pause thank you again really terrific to have the team all right great thank you