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Crocs (CROX) Gains on Upbeat Outlook, Robust Consumer Demand
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Crocs, Inc. (CROX - Free Report) is the latest to follow suit by revisiting its forecast for the fourth quarter and 2022. The company yesterday raised its revenue guidance, driven by the robust consumer demand trends for its Crocs and HEYDUDE brands. The company called 2022 an exceptional year, with revenues for 2022 expected to rise 53%.
Crocs anticipates 2022 revenues to reach $3.55 billion compared with the $3.46-$3.52 billion mentioned earlier. The revised view indicates an increase of 53% from that reported in 2021 versus the prior mentioned 49-52% rise. For the fourth quarter, the company expects year-over-year revenue growth of 60%. The company expects an adjusted operating margin of 27% for 2022.
The company is encouraged by the significant progress made on debt reduction in 2022. Management noted that it reduced borrowings by $500 million since acquiring HEYDUDE in early 2022. Notably, it lowered the debt levels by $300 million in the fourth quarter.
The company also outlined its initial guidance for 2023 ahead of the ICR conference on Jan 10, 2023. It anticipates year-over-year revenue growth of 10-13% in 2023. This indicates revenues of $3.9-$4 billion.
Shares of CROX rose 1.6% yesterday as investors applauded the company’s commentary on strong demand trends and a raised view. The Zacks Rank #3 (Hold) stock has rallied 51.5% in the past three months compared with the industry’s growth of 13.5%.
Image Source: Zacks Investment Research
What Else Should You Know?
Solid consumer demand, and strength in the Crocs and HEYDUDE brands have been key to driving the robust performance of CROX for the past several quarters. The company’s top and bottom lines surpassed the Zacks Consensus Estimate for the 10th straight quarter in the third quarter of 2022.
With the HEYDUDE acquisition, Crocs added value to its fast-growing footwear business. This is the second high-growth, highly profitable brand added to the Crocs portfolio. Crocs believes that HEYDUDE’s consumer-insight-driven casual, comfortable and lightweight products perfectly fit its existing portfolio. The acquisition diversified Crocs’ brand portfolio and added to its digital penetration, as HEYDUDE has a strong online presence. HEYDUDE operates as a stand-alone division.
Crocs earlier expected HEYDUDE to generate revenues of $700-$750 million, including the period prior to the closing of the acquisition. It expects HEYDUDE to deliver revenues of $620-$670 million on a reported basis, beginning Feb 17, 2022. The HEYDUDE brand is expected to attain $1 billion in revenues in 2023.
Crocs is making significant progress in expanding digital and omnichannel capabilities. We note that digital sales advanced 22% on a constant-currency basis year over year in the third quarter, representing 37.4% of sales. This was mainly driven by growth across all regions and customer acquisitions. Increased focus on the Crocs mobile app and global social platforms aided digital sales. Gains from strategic collaborations, influencer campaigns, and digital and social marketing efforts are upsides.
As part of its long-term strategy and key initiatives to deliver sustainable growth, Crocs expects to generate revenues of more than $5 billion by 2026, witnessing a compounded annual growth rate (CAGR) of more than 17% in the next five years. It expects to attain the revenue target on strong digital sales, improved market share for sandals, growth in Asia, and innovative product and marketing. Management expects four times revenue growth in sandals by 2026.
The company sees long-term opportunities in Asia, primarily in China, the second-largest footwear market in the world. Management expects revenue growth to see a CAGR of 25% and to represent 24% of the total revenues in 2026. It expects at least 50% of total revenues to come from digital channels by the end of 2026.
Driven by strong revenue growth, the company anticipates improved profitability and cash flows through 2026. It expects the adjusted operating margin to be more than 26% and the annual free cash flow in excess of $1 billion by the end of 2026.
Stocks to Consider
Some better-ranked companies from the Consumer Discretionary sector are lululemon athletica (LULU - Free Report) , Oxford Industries (OXM - Free Report) and PVH Corp. (PVH - Free Report) .
lululemon presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 6.7%, on average. LULU has an expected long-term earnings growth rate of 20%.
The Zacks Consensus Estimate for lululemon’s current financial-year sales and earnings suggests growth of 27.8% and 27.7% from the year-ago period’s reported numbers, respectively.
Oxford Industries currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 18.9%, on average.
The Zacks Consensus Estimate for Oxford Industries’ current financial-year sales and earnings suggests growth of 23.1% and 34.2% from the year-ago period’s reported numbers, respectively.
PVH Corp currently carries a Zacks Rank #2. PVH has a trailing four-quarter earnings surprise of 22.9%, on average. PVH has a long-term earnings growth rate of 10.2%.
The Zacks Consensus Estimate for PVH Corp’s current financial-year sales and EPS indicates declines of 3.1% and 18.6%, respectively, from the year-ago period’s reported levels.
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Crocs (CROX) Gains on Upbeat Outlook, Robust Consumer Demand
Crocs, Inc. (CROX - Free Report) is the latest to follow suit by revisiting its forecast for the fourth quarter and 2022. The company yesterday raised its revenue guidance, driven by the robust consumer demand trends for its Crocs and HEYDUDE brands. The company called 2022 an exceptional year, with revenues for 2022 expected to rise 53%.
Crocs anticipates 2022 revenues to reach $3.55 billion compared with the $3.46-$3.52 billion mentioned earlier. The revised view indicates an increase of 53% from that reported in 2021 versus the prior mentioned 49-52% rise. For the fourth quarter, the company expects year-over-year revenue growth of 60%. The company expects an adjusted operating margin of 27% for 2022.
The company is encouraged by the significant progress made on debt reduction in 2022. Management noted that it reduced borrowings by $500 million since acquiring HEYDUDE in early 2022. Notably, it lowered the debt levels by $300 million in the fourth quarter.
The company also outlined its initial guidance for 2023 ahead of the ICR conference on Jan 10, 2023. It anticipates year-over-year revenue growth of 10-13% in 2023. This indicates revenues of $3.9-$4 billion.
Shares of CROX rose 1.6% yesterday as investors applauded the company’s commentary on strong demand trends and a raised view. The Zacks Rank #3 (Hold) stock has rallied 51.5% in the past three months compared with the industry’s growth of 13.5%.
Image Source: Zacks Investment Research
What Else Should You Know?
Solid consumer demand, and strength in the Crocs and HEYDUDE brands have been key to driving the robust performance of CROX for the past several quarters. The company’s top and bottom lines surpassed the Zacks Consensus Estimate for the 10th straight quarter in the third quarter of 2022.
With the HEYDUDE acquisition, Crocs added value to its fast-growing footwear business. This is the second high-growth, highly profitable brand added to the Crocs portfolio. Crocs believes that HEYDUDE’s consumer-insight-driven casual, comfortable and lightweight products perfectly fit its existing portfolio. The acquisition diversified Crocs’ brand portfolio and added to its digital penetration, as HEYDUDE has a strong online presence. HEYDUDE operates as a stand-alone division.
Crocs earlier expected HEYDUDE to generate revenues of $700-$750 million, including the period prior to the closing of the acquisition. It expects HEYDUDE to deliver revenues of $620-$670 million on a reported basis, beginning Feb 17, 2022. The HEYDUDE brand is expected to attain $1 billion in revenues in 2023.
Crocs is making significant progress in expanding digital and omnichannel capabilities. We note that digital sales advanced 22% on a constant-currency basis year over year in the third quarter, representing 37.4% of sales. This was mainly driven by growth across all regions and customer acquisitions. Increased focus on the Crocs mobile app and global social platforms aided digital sales. Gains from strategic collaborations, influencer campaigns, and digital and social marketing efforts are upsides.
As part of its long-term strategy and key initiatives to deliver sustainable growth, Crocs expects to generate revenues of more than $5 billion by 2026, witnessing a compounded annual growth rate (CAGR) of more than 17% in the next five years. It expects to attain the revenue target on strong digital sales, improved market share for sandals, growth in Asia, and innovative product and marketing. Management expects four times revenue growth in sandals by 2026.
The company sees long-term opportunities in Asia, primarily in China, the second-largest footwear market in the world. Management expects revenue growth to see a CAGR of 25% and to represent 24% of the total revenues in 2026. It expects at least 50% of total revenues to come from digital channels by the end of 2026.
Driven by strong revenue growth, the company anticipates improved profitability and cash flows through 2026. It expects the adjusted operating margin to be more than 26% and the annual free cash flow in excess of $1 billion by the end of 2026.
Stocks to Consider
Some better-ranked companies from the Consumer Discretionary sector are lululemon athletica (LULU - Free Report) , Oxford Industries (OXM - Free Report) and PVH Corp. (PVH - Free Report) .
lululemon presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 6.7%, 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 27.8% and 27.7% from the year-ago period’s reported numbers, respectively.
Oxford Industries currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 18.9%, on average.
The Zacks Consensus Estimate for Oxford Industries’ current financial-year sales and earnings suggests growth of 23.1% and 34.2% from the year-ago period’s reported numbers, respectively.
PVH Corp currently carries a Zacks Rank #2. PVH has a trailing four-quarter earnings surprise of 22.9%, on average. PVH has a long-term earnings growth rate of 10.2%.
The Zacks Consensus Estimate for PVH Corp’s current financial-year sales and EPS indicates declines of 3.1% and 18.6%, respectively, from the year-ago period’s reported levels.