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Crocs (CROX) Q4 Earnings & Revenues Beat on Strong Demand
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Crocs, Inc. (CROX - Free Report) continued with its impressive performance in fourth-quarter 2021. Both top and bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Solid consumer demand, as well as broad-based growth across all markets, channels and categories, contributed to the quarterly results. Clogs, sandals and Jibbitz remained key growth drivers.
However, factory closures in Vietnam last year, along with continued extended transit times, are likely to have adverse impacts on supply and product introductions for the first half of 2022. As a result, this designer, manufacturer and marketer of casual lifestyle footwear and accessories saw its shares falling more than 6% at the close of trading session on Feb 16.
Q4 in Detail
Crocs’ adjusted earnings were $2.15 per share, surpassing the Zacks Consensus Estimate of $2.01. The figure also surged significantly from earnings of $1.06 in the year-ago period, owing to robust margins.
Revenues advanced 42.6% (or 43.5% on a constant-currency basis) year over year to $586.6 million in the reported quarter and handily beat the Zacks Consensus Estimate of $585 million. The company registered revenue growth of 123.1% on a two-year stack basis. The average selling price was $25.71 for the quarter, reflecting a year-over-year increase of 18.9%.
Direct-to-consumer revenues rose 44.5% year over year to $319.5 million, driven by higher traffic and robust average transaction value. Wholesale revenues rallied 40.3% to $267.1 million in the quarter under review on the back of high double-digit growth in all sub-channels.
Digital sales advanced 48% year over year and accounted for 40.3% of revenues. The metric also surged 122% on a two-year basis, representing 37% of revenues. Increased focus on the Crocs mobile app and global social platforms aided digital sales.
Total revenues in the Americas region were up 51.2% (51.2% at constant currency) to $469 million. Revenues in the Asia-Pacific region amounted to $57.1 million, reflecting a year-over-year increase of 10.3% (13.5% at constant currency). The EMEA region witnessed revenue growth of 22.5% (26.8% at constant currency) to $60.5 million.
The adjusted gross profit soared 62.4% to $373.7 million. The adjusted gross margin expanded 770 basis points (bps) to 63.4% on the back of price increases, fewer promotional activities, and a positive product mix. The metric witnessed improvement in all regions and channels. Adjusted SG&A expenses grew 43.2% to $205.7 million. Meanwhile, adjusted SG&A expenses, as a percentage of revenues, expanded 20 bps to 35.1%.
Adjusted operating income of $168.1 million increased significantly from $87 million in the prior-year quarter. Adjusted operating margin expanded to 28.6% from the prior-year quarter’s 21.1%. The uptick can be attributable to the gross margin improvement, which somewhat offset the SG&A rise.
Image Source: Zacks Investment Research
Financial Details
Crocs ended the quarter with cash and cash equivalents of $213.2 million, long-term borrowings of $771.4 million, and stockholders’ equity of $14.1 million. The company’s liquidity position remains strong, with $414.7 million in available borrowing capacity.
Management incurred a capital expenditure of $55.9 million in 2021. The company anticipates a capital expenditure of $170-$200 million for supply-chain investments in 2022.
Crocs repurchased 8.2 million shares worth $1 billion in 2021. The company has $1.1 billion of share repurchase authorization remaining for future buybacks. It also revealed plans to borrow $50.0 million under its existing credit facility, which will increase the borrowing capacity thereunder by $100.0 million.
Outlook
Management issued the guidance for the first quarter and 2022. The company expects revenue growth (excluding HEYDUDE) of more than 20% for 2022. This compares unfavorably with the prior year’s revenue growth of nearly 67%. Revenues related to the HEYDUDE buyout are likely to be $620-$670 million on a reported basis. Adjusted earnings are envisioned to be $9.7-$10.25. The adjusted operating margin is anticipated to be 26%. However, air freight costs of $75 million are likely to hurt gross margins in the first half of 2022.
For first-quarter 2022, revenues are projected to grow 31-37% to $605-$630 million, provided the HEYDUDE buyout completes by February 2022. In the prior-year quarter, it reported revenue growth of 64% to $460.1 million. Excluding the HEYDUDE acquisition, revenues are likely to be $520-$535 million, which reflects organic growth of 13-16%. The adjusted operating margin is estimated to be 22%, including air freight expenses of $30 million.
Delta Apparel currently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 95.5% on average. The DLA stock has gained 9.4% in the past year.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 11.9% and 10.1%, respectively, from the year-ago period's reported numbers.
World Wrestling presently sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 75.5%, on average. Shares of WWE have rallied 21.6% in a year.
The Zacks Consensus Estimate for World Wrestling’s current financial-year sales and earnings suggests growth of 16.5% and 11.3% from the year-ago period’s reported numbers, respectively.
Oxford Industries currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 96.7%, on average. Shares of OXM have gained 15.1% in the past year.
The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 51.9% and 523.8%, respectively, from the year-ago period's reported numbers.
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Crocs (CROX) Q4 Earnings & Revenues Beat on Strong Demand
Crocs, Inc. (CROX - Free Report) continued with its impressive performance in fourth-quarter 2021. Both top and bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Solid consumer demand, as well as broad-based growth across all markets, channels and categories, contributed to the quarterly results. Clogs, sandals and Jibbitz remained key growth drivers.
Shares of this Zacks Rank #1 (Strong Buy) company have jumped 18.7% in the past year against the industry’s decline of 6.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
However, factory closures in Vietnam last year, along with continued extended transit times, are likely to have adverse impacts on supply and product introductions for the first half of 2022. As a result, this designer, manufacturer and marketer of casual lifestyle footwear and accessories saw its shares falling more than 6% at the close of trading session on Feb 16.
Q4 in Detail
Crocs’ adjusted earnings were $2.15 per share, surpassing the Zacks Consensus Estimate of $2.01. The figure also surged significantly from earnings of $1.06 in the year-ago period, owing to robust margins.
Revenues advanced 42.6% (or 43.5% on a constant-currency basis) year over year to $586.6 million in the reported quarter and handily beat the Zacks Consensus Estimate of $585 million. The company registered revenue growth of 123.1% on a two-year stack basis. The average selling price was $25.71 for the quarter, reflecting a year-over-year increase of 18.9%.
Direct-to-consumer revenues rose 44.5% year over year to $319.5 million, driven by higher traffic and robust average transaction value. Wholesale revenues rallied 40.3% to $267.1 million in the quarter under review on the back of high double-digit growth in all sub-channels.
Digital sales advanced 48% year over year and accounted for 40.3% of revenues. The metric also surged 122% on a two-year basis, representing 37% of revenues. Increased focus on the Crocs mobile app and global social platforms aided digital sales.
Total revenues in the Americas region were up 51.2% (51.2% at constant currency) to $469 million. Revenues in the Asia-Pacific region amounted to $57.1 million, reflecting a year-over-year increase of 10.3% (13.5% at constant currency). The EMEA region witnessed revenue growth of 22.5% (26.8% at constant currency) to $60.5 million.
The adjusted gross profit soared 62.4% to $373.7 million. The adjusted gross margin expanded 770 basis points (bps) to 63.4% on the back of price increases, fewer promotional activities, and a positive product mix. The metric witnessed improvement in all regions and channels. Adjusted SG&A expenses grew 43.2% to $205.7 million. Meanwhile, adjusted SG&A expenses, as a percentage of revenues, expanded 20 bps to 35.1%.
Adjusted operating income of $168.1 million increased significantly from $87 million in the prior-year quarter. Adjusted operating margin expanded to 28.6% from the prior-year quarter’s 21.1%. The uptick can be attributable to the gross margin improvement, which somewhat offset the SG&A rise.
Image Source: Zacks Investment Research
Financial Details
Crocs ended the quarter with cash and cash equivalents of $213.2 million, long-term borrowings of $771.4 million, and stockholders’ equity of $14.1 million. The company’s liquidity position remains strong, with $414.7 million in available borrowing capacity.
Management incurred a capital expenditure of $55.9 million in 2021. The company anticipates a capital expenditure of $170-$200 million for supply-chain investments in 2022.
Crocs repurchased 8.2 million shares worth $1 billion in 2021. The company has $1.1 billion of share repurchase authorization remaining for future buybacks. It also revealed plans to borrow $50.0 million under its existing credit facility, which will increase the borrowing capacity thereunder by $100.0 million.
Outlook
Management issued the guidance for the first quarter and 2022. The company expects revenue growth (excluding HEYDUDE) of more than 20% for 2022. This compares unfavorably with the prior year’s revenue growth of nearly 67%. Revenues related to the HEYDUDE buyout are likely to be $620-$670 million on a reported basis. Adjusted earnings are envisioned to be $9.7-$10.25. The adjusted operating margin is anticipated to be 26%. However, air freight costs of $75 million are likely to hurt gross margins in the first half of 2022.
Crocs, Inc. Price, Consensus and EPS Surprise
Crocs, Inc. price-consensus-eps-surprise-chart | Crocs, Inc. Quote
For first-quarter 2022, revenues are projected to grow 31-37% to $605-$630 million, provided the HEYDUDE buyout completes by February 2022. In the prior-year quarter, it reported revenue growth of 64% to $460.1 million. Excluding the HEYDUDE acquisition, revenues are likely to be $520-$535 million, which reflects organic growth of 13-16%. The adjusted operating margin is estimated to be 22%, including air freight expenses of $30 million.
Other Stocks to Consider
Some other top-ranked stocks from the Consumer Discretionary sector are Delta Apparel (DLA - Free Report) , Oxford Industries (OXM - Free Report) and World Wrestling Entertainment .
Delta Apparel currently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 95.5% on average. The DLA stock has gained 9.4% in the past year.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 11.9% and 10.1%, respectively, from the year-ago period's reported numbers.
World Wrestling presently sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 75.5%, on average. Shares of WWE have rallied 21.6% in a year.
The Zacks Consensus Estimate for World Wrestling’s current financial-year sales and earnings suggests growth of 16.5% and 11.3% from the year-ago period’s reported numbers, respectively.
Oxford Industries currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 96.7%, on average. Shares of OXM have gained 15.1% in the past year.
The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 51.9% and 523.8%, respectively, from the year-ago period's reported numbers.