Crocs, Inc. CROX reported stronger-than-expected second-quarter earnings and sales, yet its shares fell as the company faces a revenue decline in its HEYDUDE brand and a cautious third-quarter forecast.
The company reported adjusted earnings per share of $4.01 (+12%), beating the street view of $3.56. Quarterly sales of $1.112 billion (+4%) beat the analyst consensus of $1.102 billion.
Crocs Brand revenues increased 9.7% to $914 million, while HEYDUDE Brand revenues decreased 17.5% to $198 million.
“Strength in the quarter was led by our Crocs Brand with exceptional growth internationally. As it relates to HEYDUDE, we are making improvements to support long-term brand health and are focused on driving brand heat by accelerating marketing in the second half of the year,” said Andrew Rees, Chief Executive Officer.
Adjusted gross margin improved 330 basis points to 61.4% compared to 58.1%.
Direct-to-consumer revenues grew 8.9%, or 10.0% on a constant currency basis. Wholesale revenues contracted 1.3%, flat on a constant currency basis.
The company exited the quarter with cash and equivalents of $168 million compared to $166 million. Inventories at quarter end were $377 million.
“Our terrific cash flow generation provides us the flexibility to reinvest in our business, pay down debt and repurchase shares,” Rees adds.
Outlook: Crocs projects third-quarter revenue to be down 1.5% to up 0.5% year-over-year, at currency rates, with adjusted EPS estimated between $2.95 and $3.10, falling short of the $3.33 estimate.
Crocs continues to forecast FY24 revenue growth of 3% to 5% year-over-year, with adjusted EPS expected to range from $12.45 to $12.90, slightly above the $12.64 estimate (prior view: 12.25 to $12.73).
Price Action: CROX shares are trading lower by 5.80% to $126.57 premarket at last check Thursday.
Photo via Wikimedia Commons
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