Footwear company Crocs Inc (NASDAQ:CROX) shares are dropping after the company slashed its FY23 outlook.

CROX reported third-quarter FY23 sales growth of 6.2% year-on-year to $1.046 billion, beating the analyst consensus estimate of $1.03 billion.

On a constant currency basis, Direct-to-consumer (DTC) revenues grew 17.8%, and wholesale revenues fell 3.6%.

Crocs Brand revenues increased 11.6% to $798.8 million. Crocs Brand's North America revenues totaled $480.7 million, up 8% Y/Y. Crocs Brand's Asia Pacific revenues jumped 26.5%, and EMEALA revenues climbed 8.3%.

HEYDUDE Brand revenues decreased 8.3% to $246.9 million, with DTC revenues up 14.6% to $100.4 million and wholesale revenues down 19.4% to $146.5 million.

Adjusted EPS of $3.25 beat the consensus estimate of $3.10.

The gross margin expanded 70 basis points to 55.6%, while the adjusted gross margin improved 230 basis points to 57.4%.

Selling, general and administrative expenses increased 11% to $307.8 million.

Income from operations rose 3.7% to $273.9 million, and the operating margin was 26.2% versus 26.8% a year ago.

The company held $127.3 million in cash and equivalents as of September 30, 2023.

Inventories decreased to $390.2 million as of September 30, 2023, compared to $471.6 million as of December 2022 and $513.7 million as of September 30, 2022.

Outlook: CROX slashed its FY23 sales forecast to $3.905 billion - $3.94 billion from $4 billion - $4.065 billion prior view, against the street view of $4.01 billion.

The company continues to expect revenues for the Crocs Brand to grow approximately 12% to 13% on a reported basis while reducing the HEYDUDE Brand revenue growth forecast to 4% to 6% on a reported basis from the prior view of 14% to 18% growth.

Crocs also cut FY23 adjusted EPS outlook to $11.55 - $11.85 from $11.83 - $12.22 prior view versus the consensus of $12.09.

CROX sees Q4 revenue of $903 million - $938 million versus the consensus of $1.02 billion. Adjusted EPS of $2.05 - $2.35 against the consensus of $2.77.

Price Action: CROX shares are trading lower by 7.55% at $80.81 on the last check Thursday.