Crocs Smashes Q4 Earnings Expectations Amid Accelerated China Growth; Stock Jumps

Crocs, Inc. CROX shares are trading higher after the company reported fourth-quarter results.

Crocs registered quarterly adjusted earnings per share of $2.52, beating the street view of $2.26 as the Crocs brand exceeded expectations in North America, with strong growth in China accelerating.

Quarterly sales of $989.773 million (up 3.1% year over year) outpaced the analyst consensus estimate of $961.92 million.

Crocs brand revenues grew 4.0% to $762 million, or 4.9% on a constant currency basis. Direct-to-consumer revenues rose 5.0% to $447 million, while wholesale revenues increased 2.7% to $315 million.

HEYDUDE’s total revenues remained flat at $228 million. Direct-to-consumer revenues grew 7.2% to $133 million, while wholesale revenues fell 8.6% to $95 million.

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Adjusted gross margin improved 220 basis points to 57.9% compared to 55.7%. Crocs reported an adjusted operating margin of 20.2% in the quarter, lower than 24.1% in the year-ago period.

“We generated exceptional operating cash flow of approximately $990 million, which enabled us to return value to shareholders through more than $550 million in share repurchases, while fortifying our balance sheet through the pay down of approximately $320 million of debt,” said Andrew Rees, Chief Executive Officer.

As of December 31, the company’s cash and cash equivalents were $180 million compared to $149 million in the year-ago period. Inventories were $356 million compared to $385 million.

Earlier this month, the company approved a $1.0 billion increase to our share repurchase authorization, after which approximately $1.3 billion remained available for future common stock repurchases.

Outlook: Crocs projects FY25 adjusted earnings per share between $12.70 and $13.15, surpassing the $12.58 estimate.

Revenue growth is expected to be 2% – 2.5%, at currency rates as of February 10, 2025. Crocs brand is expected to grow about 4.5% in 2024, while HEYDUDE brand is projected to decline by 7% to 9%.

Susan Healy, Chief Financial Officer, added, “We expect operating margin to be approximately 24.0% for 2025, and beyond this year, we are committed to maintaining an annual operating margin at or above this level.”

For the first quarter, the company sees adjusted earnings per share of $2.38 to $2.52 versus the $2.65 estimate.

Revenues are expected to be down approximately 3.5% year over year, at currency rates as of February 10, 2025. Crocs brand is expected to be flat to down 1%, while HEYDUDE brand is projected to decline by 14% to 16%.

Price Action: CROX shares are trading higher by 17.5% to $104.40 premarket at last check Thursday.

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