Crocs Inc. Raises Full-Year Outlook After Beating Q2 Expectations
Crocs Inc. has raised its full-year outlook after beating expectations for the second quarter, but the stock was down today on soft Hey Dude sales.
The comfort footwear company, which owns the Crocs and Hey Dude brands, reported record quarterly revenues of $1.07 billion, up 12 percent on a constant currency basis. This blew past Crocs’ expected growth range of between 6 percent and 9 percent. Adjusted diluted earnings per share increased 10.8 percent to $3.59, ahead of Crocs’ highest estimate of $2.98.
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The results also beat expectations of analysts surveyed by Yahoo, which expected to see $1.04 billion in revenues and $2.97 EPS.
“Both the Crocs and Hey Dude brands continue to gain share and bring in new consumers with our comfortable offerings,” said Crocs Inc. CEO Andrew Rees in a statement. “We continue to invest behind our strategic priorities that are driving profitable growth.”
By brand, Crocs revenues were $833 million, up 14.9 percent on a constant currency basis, with sales in North America up 12.5 percent to $474.6 million. Hey Dude revenues were up 3 percent to $239.4 million, though wholesale revenues declined 8.4 to $148.8 million.
Despite the beat, shares of Crocs Inc. were down through the day, likely due to slowness at Hey Dude, wrote Wedbush analyst Tom Nikic in a Thursday morning note.
“The Crocs brand seems to be maintaining its momentum, and we’re encouraged by the sequential acceleration in North America, with easier compares ahead,” he wrote. “We’re also encouraged by the strong DTC growth at both brands, as well as the solid margin beat. However, the miss-and-cut at the Hey Dude brand is a disappointment.”
Crocs also downgraded its outlook for full-year growth at the Hey Dude brand and said it now expects revenues to grow between 14 percent and 18 percent in 2023, compared to its previously outlined mid-20 percent growth. However, it upgraded its expectations for Crocs brand growth from between 7 percent and 9 percent to between 12 percent and 13 percent for the full year.
Given its better-than-expected results, Crocs raised its full-year guidance. The company expects revenue growth of between 12.5 percent and 14.5 percent compared to 2022, or sales between $4 billion to $4.065 billion, up from its previous guidance of between $3.95 billion to $4.05 billion.
In Q3, Crocs expects revenues to grow between 3 percent and 5 percent year over year, with sales between $1.013 billion and $1.034 billion. Adjusted diluted earnings per share are expected to land between $3.07 and $3.15.
In the long-term, Crocs is aiming to achieve $5 billion in Crocs brand revenue by 2026. Last quarter, Crocs said it has a pipeline of more than 60 brand partnerships for 2023, 25 percent of which will be regionally led. Overall, Crocs allocated $200 million for marketing purposes to help drive engagement and acquire new customers.
Crocs, which is known for its Classic Clog shoes, has recently doubled down on its category expansion strategy. The brand recently launched a new Mellow collection as it expands its sandal offering and is also investing in the streetwear-obsessed fan with its Echo collection.
The brand continues to drive excitement through collaborations. Just this week, it partnered with MSCHF on a viral knee-high yellow boot worn by Paris Hilton for a campaign, and also generated big buzz with its recent Barbie collab.
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