Crocs, Inc. CROX shares are trading lower after the company reported third-quarter financial results and lowered its revenue guidance related to the HEYDUDE Brand.
The company reported adjusted earnings per share of $3.60 (+11%), beating the street view of $3.10. Quarterly revenues of $1.062 billion (+2%) beat the analyst consensus of $1.05 billion.
Crocs Brand revenues increased 7.4% to $858 million, or 7.9% on a constant currency basis. HEYDUDE Brand revenues decreased 17.4% to $204 million.
“We have sharpened our strategy around HEYDUDE as we work to create higher brand relevance through our product and marketing initiatives,” said Andrew Rees, Chief Executive Officer. “HEYDUDE’s recent performance and the current operating environment are signaling it will take longer than we had initially planned for the brand to turn a corner.”
North America revenues rose 2.1% to $491 million, while international revenues increased 15.5% to $367 million.
Also Read: What’s In Store For Crocs Q3 Earnings? Analyst Eyes North America Trends
Direct-to-consumer (DTC) revenues increased by 4.4% (4.6% when adjusting for currency). Wholesale revenues fell by 1.4% (0.9% when adjusting for currency).
The gross margin rose to 59.6%, up from 55.6%. The adjusted gross margin also improved by 220 basis points to 59.6%, compared to 57.4% the prior year.
At the end of the quarter, the company had $186 million in cash and cash equivalents. Inventories decreased to $367 million, down from $390 million a year earlier.
Outlook: For the fourth quarter, the company sees adjusted diluted earnings per share of $2.20 to $2.28 versus $2.72 estimate. Revenues are expected to remain flat or increase slightly year over year. The Crocs brand is projected to grow by about 2%, while the HEYDUDE brand is expected to decline by 4% to 6%.
FY24 revenue growth is expected to be around 3% (the lower end of the previous 3% to 5% guidance), with Crocs brand growth at approximately 8% (prior view: 7% to 9%) and HEYDUDE brand revenue down about 14.5% (worse than the previous expectation of a 10% – 8% decline).
Crocs has narrowed its 2024 adjusted EPS forecast to between $12.82 and $12.90 versus the $12.86 estimate versus the previous range of $12.45 to $12.90.
Capital expenditures are now projected to be between $90 million and $100 million, down from the previous guidance of $100 million to $110 million.
Price Action: CROX shares are trading lower by 17.4% to $114.09 premarket at last check Tuesday.
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