Back to top

Image: Bigstock

Crocs (CROX) Q4 Earnings and Revenues Surpass Estimates

Read MoreHide Full Article

Crocs, Inc. (CROX - Free Report) reported better-than-expected fourth-quarter 2020 results, wherein both top and bottom lines increased year over year. Despite a tough retail environment due to the COVID-19 pandemic, brand strength and strong cash flow contributed to quarterly growth.

Notably, the company marked its highest revenue and adjusted operating profit in its history in the said quarter. Going ahead, it remains on track with new product launches and strategic partnerships, including global launches with Justin Bieber and Post Malone to a collaboration agreement with Rare Market in Korea. That said, Crocs expects continued momentum in brands and robust growth in all regions.

Encouragingly, management issued an upbeat guidance for the first quarter of 2021 and reiterated its sales view for 2021.

Despite solid results, shares of Crocs fell more than 3% during the close of the trading session on Feb 23. Overall, shares of the Zacks Rank #1 (Strong Buy) stock has soared 33.7% in the past three months, outperforming the industry’s growth of 4%.

 

Q4 Highlights

Crocs’ adjusted earnings came in at $1.06 during fourth-quarter 2020, surpassing the Zacks Consensus Estimate of 82 cents. Moreover, the figure surged significantly from 12 cents in the year-ago quarter.

Revenues increased 56.5% (56.1% in constant-currency) to $411.5 million in the reported quarter and exceeded the Zacks Consensus Estimate of $394 million. Wholesale and retail revenues improved 52.2% and 40.9% year over year, respectively. Solid performance in the Americas and the EMEA region along with healthy demand in its key products, including Clogs, Sandals, Jibbitz and Visible Comfort technology, drove the top line. Apart from these, e-commerce grew 92% year over year in the quarter under review, marking the 15th successive quarter of double-digit growth.

The company’s adjusted gross profit advanced 27.9% to $230.6 million. Moreover, adjusted gross margin expanded 670 basis points (bps) to 56% on the back of a favorable product mix along with fewer promotional activities and discounts.

Also, adjusted SG&A expenses grew 23.1% to $143.6 million in the fourth quarter. Meanwhile, adjusted SG&A, as a percentage of sales, contracted 950 bps to 34.9%.

Adjusted operating income came in at $87 million, up from $12.9 million in the last-year quarter. Moreover, adjusted operating margin expanded to 21.1% from the prior-year quarter’s 4.9%. The uptick can be attributable to lower SG&A costs, robust sales and improved gross margins.

Segments at a Glance

Total revenues in the Americas region were up 99.2% (100.5% at constant currency) to $310.3 million in the fourth quarter. Also, revenues in the EMEA region came in at $49.4 million, increasing 14.9% (11.4% in constant-currency) year over year. However, the Asia-Pacific region witnessed a revenue decline of 19.5% (22.1% at constant-currency) to $51.8 million.

Financial Details

Crocs ended 2020 with a cash balance of $135.8 million. The company generated $266.9 million in cash from operating activities. Further, it incurred capital expenditures of $42 million and the metric is expected to be roughly $100-$130 million in 2021.

Further, it repurchased 1.7 million shares worth $131.7 million under its $1-billion share repurchase plan. As of Dec 31, 2020, management has $337.8 million remaining in its existing share repurchase program.

The company also has $180 million available for borrowing under its credit facility as of Dec 31. This brings the liquidity level to $319.4 million, which is likely to help the company stay afloat amid this pandemic.

Crocs, Inc. Price, Consensus and EPS Surprise

Outlook

Driven by solid fourth-quarter results, management envisions first-quarter 2021 revenues to grow 40-50%, which is significantly higher than an estimated growth of 25.5% suggested by the Zacks Consensus Estimate. Further, gross margin is likely to be negatively impacted by a $3-million investment related to distribution centers. Also, adjusted operating margin is projected to be 17-18%.

For 2021, it continues to expect revenue growth between 20% and 25%, which appears favorable when compared with a 22.2% growth suggested by the Zacks Consensus Estimate. Moreover, adjusted operating margin is anticipated to be 18-19%, with $12-$15 million of distribution center investments expected to affect the gross margin.

Other Stocks to Consider

PVH Corp. (PVH - Free Report) , a Zacks Rank #1 stock, has an impressive long-term earnings growth rate of 18%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Deckers Outdoor Corp. (DECK - Free Report) has a long-term earnings growth rate of 21.5% and a Zacks Rank #2 (Buy).

Steven Madden (SHOO - Free Report) has a long-term earnings growth rate of 15%. The stock flaunts a Zacks Rank #2.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>