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Crocs, Inc. (CROX - Free Report) posted solid results for second-quarter 2024, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and grew year over year.
Results gained from strength in the Crocs brand and outstanding international growth. With respect to the HEYDUDE brand, management has been making improvements to aid sustainable growth. As a result, Crocs raised its operating margin and earnings per share view for the current year while reiterating the revenue guidance.
We note that shares of this Zacks Rank #1 (Strong Buy) company have gained 8.9% in the past three months against the industry’s 8.5% decline.
Q2 in Detail
Crocs’ adjusted earnings of $4.01 per share beat the Zacks Consensus Estimate of $3.59 and rose 11.7% year over year.
Revenues rose 3.6% year over year to $1,111.5 million and beat the consensus estimate of $1,105 million. On a constant-currency basis, revenues improved 4.8% year over year. The top line witnessed solid growth in the direct-to-consumer (“DTC”) channel. DTC revenues increased 8.9% while wholesale revenues dipped 1.3%.
The Crocs brand’s revenues grew 9.7% year over year to $914 million, including a 12.5% increase in DTC revenues and a 6.9% rise in wholesale revenues. DTC comparable sales for the Crocs brand rose 11.7%.
The HEYDUDE brand’s revenues fell 17.5% year over year to $198 million. The decline was due to a 23.5% decline in wholesale revenues and a 7.6% decrease in DTC revenues. DTC comparable sales for the HEYDUDE brand fell 17.5%.
Total revenues in North America were up 3% year over year to $489 million while revenues in the International region rose 18.7% to $425 million.
The adjusted gross profit rose 9.5% year over year to $681.9 million. The adjusted gross margin expanded 330 basis points (bps) to 61.4%. Adjusted SG&A expenses, as a percentage of revenues, increased 420 bps to 32%.
Adjusted operating income rose 0.3% year over year to $325.7 million. The adjusted operating margin contracted 100 bps to 29.3% from the year-ago quarter’s 30.3%.
Financial Details
The company ended the quarter with cash and cash equivalents of $167.7 million, long-term borrowings of $1.5 billion and stockholders’ equity of $1.7 billion.
Capital expenditure was $33 million as of Jun 30, 2024. The company anticipates capital expenditure in the range of $100-$110 million in 2024 related to the expansion of its distribution capabilities.
Outlook
Management has issued guidance for the third quarter. The company expects revenues to be down 1.5% to up 0.5% year over year at currency rates as at the end of the second quarter.
Crocs brand’s revenues are likely to grow in the range of 3-5% year over year while HEYDUDE brand’s revenues are anticipated to plunge 14-16%. Adjusted earnings are expected to be in the range of $2.95-$3.10 per share, with the adjusted operating margin likely to be 24.5%.
For 2024, the company continues to anticipate year-over-year revenue growth in the range of 3-5% at constant currency. Revenues for the Crocs brand are still expected to rise 7-9% while the metric for the HEYDUDE brand is predicted to decline in the band of 8-10%.
The adjusted operating margin is now envisioned to be more than 25% compared with the earlier expectation of about 25%. The combined GAAP tax rate is still expected to be 21.5% whereas the adjusted tax rate is likely to be 18%. Adjusted earnings are envisioned to be in the range of $12.45-$12.90 per share, up from $10.92 recorded last year and $12.25-$12.73 guided earlier. This guidance does not reflect the impacts of potential share repurchases ahead.
Other Key Picks
We have highlighted three other top-ranked stocks, namely, G-III Apparel Group (GIII - Free Report) , Gildan Activewear (GIL - Free Report) and Royal Caribbean (RCL - Free Report) .
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII Apparel has a trailing four-quarter earnings surprise of 571.8%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Gildan Activewear, a manufacturer of premium quality branded basic activewear, carries a Zacks Rank #2 (Buy) at present. GIL has a trailing four-quarter earnings surprise of 5.2%, on average.
The consensus estimate for Gildan Activewear’s current financial-year earnings per share indicates growth of 14% from the year-ago corresponding figure.
Royal Caribbean currently carries a Zacks Rank of 2. RCL has a trailing four-quarter earnings surprise of 18.5%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and earnings per share indicates an increase of 17.8% and 67.8%, respectively, from the year-ago reported levels.
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Crocs (CROX) Q2 Earnings Beat, DTC Revenues Rise 8.9% Y/Y
Crocs, Inc. (CROX - Free Report) posted solid results for second-quarter 2024, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and grew year over year.
Results gained from strength in the Crocs brand and outstanding international growth. With respect to the HEYDUDE brand, management has been making improvements to aid sustainable growth. As a result, Crocs raised its operating margin and earnings per share view for the current year while reiterating the revenue guidance.
We note that shares of this Zacks Rank #1 (Strong Buy) company have gained 8.9% in the past three months against the industry’s 8.5% decline.
Q2 in Detail
Crocs’ adjusted earnings of $4.01 per share beat the Zacks Consensus Estimate of $3.59 and rose 11.7% year over year.
Revenues rose 3.6% year over year to $1,111.5 million and beat the consensus estimate of $1,105 million. On a constant-currency basis, revenues improved 4.8% year over year. The top line witnessed solid growth in the direct-to-consumer (“DTC”) channel. DTC revenues increased 8.9% while wholesale revenues dipped 1.3%.
The Crocs brand’s revenues grew 9.7% year over year to $914 million, including a 12.5% increase in DTC revenues and a 6.9% rise in wholesale revenues. DTC comparable sales for the Crocs brand rose 11.7%.
The HEYDUDE brand’s revenues fell 17.5% year over year to $198 million. The decline was due to a 23.5% decline in wholesale revenues and a 7.6% decrease in DTC revenues. DTC comparable sales for the HEYDUDE brand fell 17.5%.
Total revenues in North America were up 3% year over year to $489 million while revenues in the International region rose 18.7% to $425 million.
The adjusted gross profit rose 9.5% year over year to $681.9 million. The adjusted gross margin expanded 330 basis points (bps) to 61.4%. Adjusted SG&A expenses, as a percentage of revenues, increased 420 bps to 32%.
Adjusted operating income rose 0.3% year over year to $325.7 million. The adjusted operating margin contracted 100 bps to 29.3% from the year-ago quarter’s 30.3%.
Financial Details
The company ended the quarter with cash and cash equivalents of $167.7 million, long-term borrowings of $1.5 billion and stockholders’ equity of $1.7 billion.
Capital expenditure was $33 million as of Jun 30, 2024. The company anticipates capital expenditure in the range of $100-$110 million in 2024 related to the expansion of its distribution capabilities.
Outlook
Management has issued guidance for the third quarter. The company expects revenues to be down 1.5% to up 0.5% year over year at currency rates as at the end of the second quarter.
Crocs brand’s revenues are likely to grow in the range of 3-5% year over year while HEYDUDE brand’s revenues are anticipated to plunge 14-16%. Adjusted earnings are expected to be in the range of $2.95-$3.10 per share, with the adjusted operating margin likely to be 24.5%.
For 2024, the company continues to anticipate year-over-year revenue growth in the range of 3-5% at constant currency. Revenues for the Crocs brand are still expected to rise 7-9% while the metric for the HEYDUDE brand is predicted to decline in the band of 8-10%.
The adjusted operating margin is now envisioned to be more than 25% compared with the earlier expectation of about 25%. The combined GAAP tax rate is still expected to be 21.5% whereas the adjusted tax rate is likely to be 18%. Adjusted earnings are envisioned to be in the range of $12.45-$12.90 per share, up from $10.92 recorded last year and $12.25-$12.73 guided earlier. This guidance does not reflect the impacts of potential share repurchases ahead.
Other Key Picks
We have highlighted three other top-ranked stocks, namely, G-III Apparel Group (GIII - Free Report) , Gildan Activewear (GIL - Free Report) and Royal Caribbean (RCL - Free Report) .
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII Apparel has a trailing four-quarter earnings surprise of 571.8%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Gildan Activewear, a manufacturer of premium quality branded basic activewear, carries a Zacks Rank #2 (Buy) at present. GIL has a trailing four-quarter earnings surprise of 5.2%, on average.
The consensus estimate for Gildan Activewear’s current financial-year earnings per share indicates growth of 14% from the year-ago corresponding figure.
Royal Caribbean currently carries a Zacks Rank of 2. RCL has a trailing four-quarter earnings surprise of 18.5%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and earnings per share indicates an increase of 17.8% and 67.8%, respectively, from the year-ago reported levels.