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Shares of Crocs, Inc. (CROX - Free Report) jumped more than 14% at the close of the trading session on Nov 3, following the impressive performance in third-quarter 2022. The top and bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Solid consumer demand, particularly in the back-to-school season, as well as strength in the Crocs and HEYDUDE brands, contributed to the quarterly results.
However, the company continues to grapple with rising inflation, higher interest rates, unfavorable currency, China's zero COVID strategy, and the war in Ukraine.
Driven by the solid quarterly results, the Zacks Rank #2 (Buy) stock gained 10.9% in the past three months against the industry’s decline of 11.1%.
Image Source: Zacks Investment Research
Q3 in Detail
Crocs’ adjusted earnings were $2.97 per share, surpassing the Zacks Consensus Estimate of $2.58. The figure also advanced 20.2% from earnings of $2.47 in the year-ago period.
Revenues advanced 57.4% (or 63% on a constant-currency basis) year over year to $985.1 million in the reported quarter and beat the Zacks Consensus Estimate of $945 million. The top line witnessed growth across all regions and channels.
Direct-to-consumer revenues rose 45.8% year over year to $535.1 million, while Wholesale revenues surged 80.5% to $450 million in the quarter under review.
The Crocs brand’s revenues grew 14.3% year over year to $715.7 million and surpassed our estimate of $614.8 million. The HEYDUDE brand’s revenues surged 87% year over year to $269.4 million, lagging our estimate of $277.7 million.
Total revenues in the Americas were up 1.7% (1.8% at constant currency) to $445.3 million. This lagged our estimate of $451.2 million. Revenues in the Asia Pacific amounted to $138.5 million and surpassed our estimate of $71.4 million, reflecting a year-over-year increase of 65.5% (82.3% at constant currency). The EMEA region witnessed revenue growth of 26.2% (45.6% at constant currency) to $131.9 million and beat our estimate of $92.2 million.
The adjusted gross profit rose 35% to $542.6 million. However, the adjusted gross margin contracted 910 basis points (bps) to 55.1% due to inflation, higher air freight and logistics costs, the addition of HEYDUDE, unfavorable channel mix, and the adverse impacts of currency. Meanwhile, adjusted SG&A expenses, as a percentage of revenues, declined 420 bps to 27.2%.
Adjusted operating income grew 33.8% year over year to $274.5 million. The adjusted operating margin contracted 490 bps to 27.9% from the prior-year quarter’s 32.8%.
Financial Details
The company ended the quarter with cash and cash equivalents of $143 million, long-term borrowings of $2,595.8 million, and stockholders’ equity of $630.8 million. It also repaid debt of $155.3 million. The company’s liquidity position remains strong, with $611.1 million in available borrowing capacity.
Management incurred a capital expenditure of $89.6 million in the nine months ending Sep 30, 2022. The company anticipates a capital expenditure of $150-$170 million for supply-chain investments in 2022 compared with the prior mentioned $170-$200 million.
Management raised its guidance for 2022 and issued its long-term target. Consolidated revenues are projected to be $3.46-$3.52 billion, suggesting year-over-year growth of 49-52%. This compares favorably with the prior view of $3.4-$3.5 billion, which suggested year-over-year growth of 47-52%. The company expects continued strength in Asia and EMEALA, driven by robust consumer demand.
Revenues related to the HEYDUDE buyout are likely to be $850-$890 million. Management remains optimistic about the HEYDUDE brand. Notably, the HEYDUDE brand is expected to attain $1 billion in revenues in 2023.
The company expects the Crocs brand’s revenues to be $2.61-$2.63 billion compared with the earlier mentioned $2.5-$2.6 billion. This indicates year-over-year growth of 17% on a constant-currency basis and 13% on a reported basis.
Adjusted earnings are envisioned to be $9.95-$10.30, up from the earlier stated $9.50-$10.30. Adjusted operating income is predicted to be $920-$950 million. The adjusted operating margin is anticipated to be 27% compared with the aforementioned 26-27%. The adjusted effective tax rate is likely to be 21%.
For 2026, the company anticipates Crocs Brand revenues of $5.0 billion, while HEYDUDE Brand revenues are likely to be more than $1 billion in 2023. Adjusted operating margin is expected to exceed 26% by 2026.
The Zacks Consensus Estimate for lululemon’s current financial-year sales and earnings suggests growth of 26.7% and 26.8% from the year-ago period’s reported numbers, respectively.
Boyd Gaming currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 11.2%, on average. BYD has a long-term earnings growth rate of 12.8%.
The Zacks Consensus Estimate for BYD’s current financial year sales and EPS indicates growth of 4.4% and 11.7%, respectively, from the year-ago period’s reported levels.
Marriott currently carries a Zacks Rank #2. MAR has a trailing four-quarter earnings surprise of 18.6%, on average. MAR has a long-term earnings growth rate of 40.6%.
The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates growth of 46.8% and 104.1%, respectively, from the year-ago period’s reported levels.
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Crocs (CROX) Beats Q3 Earnings & Revenue Estimates, Ups View
Shares of Crocs, Inc. (CROX - Free Report) jumped more than 14% at the close of the trading session on Nov 3, following the impressive performance in third-quarter 2022. The top and bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Solid consumer demand, particularly in the back-to-school season, as well as strength in the Crocs and HEYDUDE brands, contributed to the quarterly results.
However, the company continues to grapple with rising inflation, higher interest rates, unfavorable currency, China's zero COVID strategy, and the war in Ukraine.
Driven by the solid quarterly results, the Zacks Rank #2 (Buy) stock gained 10.9% in the past three months against the industry’s decline of 11.1%.
Image Source: Zacks Investment Research
Q3 in Detail
Crocs’ adjusted earnings were $2.97 per share, surpassing the Zacks Consensus Estimate of $2.58. The figure also advanced 20.2% from earnings of $2.47 in the year-ago period.
Revenues advanced 57.4% (or 63% on a constant-currency basis) year over year to $985.1 million in the reported quarter and beat the Zacks Consensus Estimate of $945 million. The top line witnessed growth across all regions and channels.
Direct-to-consumer revenues rose 45.8% year over year to $535.1 million, while Wholesale revenues surged 80.5% to $450 million in the quarter under review.
The Crocs brand’s revenues grew 14.3% year over year to $715.7 million and surpassed our estimate of $614.8 million. The HEYDUDE brand’s revenues surged 87% year over year to $269.4 million, lagging our estimate of $277.7 million.
Total revenues in the Americas were up 1.7% (1.8% at constant currency) to $445.3 million. This lagged our estimate of $451.2 million. Revenues in the Asia Pacific amounted to $138.5 million and surpassed our estimate of $71.4 million, reflecting a year-over-year increase of 65.5% (82.3% at constant currency). The EMEA region witnessed revenue growth of 26.2% (45.6% at constant currency) to $131.9 million and beat our estimate of $92.2 million.
The adjusted gross profit rose 35% to $542.6 million. However, the adjusted gross margin contracted 910 basis points (bps) to 55.1% due to inflation, higher air freight and logistics costs, the addition of HEYDUDE, unfavorable channel mix, and the adverse impacts of currency. Meanwhile, adjusted SG&A expenses, as a percentage of revenues, declined 420 bps to 27.2%.
Adjusted operating income grew 33.8% year over year to $274.5 million. The adjusted operating margin contracted 490 bps to 27.9% from the prior-year quarter’s 32.8%.
Financial Details
The company ended the quarter with cash and cash equivalents of $143 million, long-term borrowings of $2,595.8 million, and stockholders’ equity of $630.8 million. It also repaid debt of $155.3 million. The company’s liquidity position remains strong, with $611.1 million in available borrowing capacity.
Management incurred a capital expenditure of $89.6 million in the nine months ending Sep 30, 2022. The company anticipates a capital expenditure of $150-$170 million for supply-chain investments in 2022 compared with the prior mentioned $170-$200 million.
Crocs, Inc. Price, Consensus and EPS Surprise
Crocs, Inc. price-consensus-eps-surprise-chart | Crocs, Inc. Quote
Outlook
Management raised its guidance for 2022 and issued its long-term target. Consolidated revenues are projected to be $3.46-$3.52 billion, suggesting year-over-year growth of 49-52%. This compares favorably with the prior view of $3.4-$3.5 billion, which suggested year-over-year growth of 47-52%. The company expects continued strength in Asia and EMEALA, driven by robust consumer demand.
Revenues related to the HEYDUDE buyout are likely to be $850-$890 million. Management remains optimistic about the HEYDUDE brand. Notably, the HEYDUDE brand is expected to attain $1 billion in revenues in 2023.
The company expects the Crocs brand’s revenues to be $2.61-$2.63 billion compared with the earlier mentioned $2.5-$2.6 billion. This indicates year-over-year growth of 17% on a constant-currency basis and 13% on a reported basis.
Adjusted earnings are envisioned to be $9.95-$10.30, up from the earlier stated $9.50-$10.30. Adjusted operating income is predicted to be $920-$950 million. The adjusted operating margin is anticipated to be 27% compared with the aforementioned 26-27%. The adjusted effective tax rate is likely to be 21%.
For 2026, the company anticipates Crocs Brand revenues of $5.0 billion, while HEYDUDE Brand revenues are likely to be more than $1 billion in 2023. Adjusted operating margin is expected to exceed 26% by 2026.
Other Stocks to Consider
Some other top-ranked companies from the Consumer Discretionary sector are lululemon athletica (LULU - Free Report) , Boyd Gaming (BYD - Free Report) and Marriott International (MAR - Free Report) .
lululemon presently has a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 10.4%, on average. LULU has an expected long-term earnings growth rate of 20%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for lululemon’s current financial-year sales and earnings suggests growth of 26.7% and 26.8% from the year-ago period’s reported numbers, respectively.
Boyd Gaming currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 11.2%, on average. BYD has a long-term earnings growth rate of 12.8%.
The Zacks Consensus Estimate for BYD’s current financial year sales and EPS indicates growth of 4.4% and 11.7%, respectively, from the year-ago period’s reported levels.
Marriott currently carries a Zacks Rank #2. MAR has a trailing four-quarter earnings surprise of 18.6%, on average. MAR has a long-term earnings growth rate of 40.6%.
The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates growth of 46.8% and 104.1%, respectively, from the year-ago period’s reported levels.