We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Crocs (CROX) to Ride on Solid Demand & HEYDUDE Amid Cost Woes
Read MoreHide Full Article
Crocs (CROX - Free Report) has been gaining from solid consumer demand, owing to new clog and sandal introductions, as well as continued momentum in the HEYDUDE brand and strong direct- to-consumer growth. This led to a robust surprise trend in the first quarter of 2023. The company’s top and bottom lines surpassed their respective Zacks Consensus Estimate for the 12th straight quarter.
Shares of this Zacks Rank #3 (Hold) company rallied 120.7% in the past year compared with the industry’s growth of 4.3%.
Crocs’ first-quarter adjusted earnings of $2.61 per share increased 27.3% year over year. Revenues improved 33.9% year over year (or 36.2% on a constant-currency basis) to $884.2 million. The top line witnessed growth across all regions and channels.
Image Source: Zacks Investment Research
The company’s recent acquisition of HEYDUDE, which sells lightweight, casual shoes and sandals for men, women and children, is likely to have added value to its fast-growing footwear business. This is the second high-growth, exceptionally profitable brand added to Crocs’ portfolio.
Crocs believes that HEYDUDE’s consumer-insight-driven casual, comfortable and lightweight products perfectly fit its existing range of products. The acquisition is likely to have diversified Crocs’ brand portfolio and added to its digital penetration, as HEYDUDE already has a strong online presence.
Notably, HEYDUDE’s first-quarter revenues increased 104.8% year over year to $235.4 million. For 2023, revenues related to the buyout are likely to grow in the mid-20% range on a reported basis. Management remains optimistic about HEYDUDE, which is expected to achieve its sales target of $1 billion this year.
Driven by these factors, management raised its guidance for 2023. Revenues are anticipated to grow 11-14% (from the previously projected 10-13%) to $3.9-$4 billion. Adjusted earnings are expected in the range of $11.17-$11.73 per share, up from the previous guidance of $11-$11.31. The adjusted operating margin is projected in the band of 26-27% compared with the previously anticipated 26%.
For second-quarter 2023, revenues are expected to grow 6-9% to $1,026-$1,049 million. Adjusted earnings are projected in the range of $2.83-$2.98 per share. The adjusted operating margin is anticipated to be 26%.
However, Crocs has been reeling under inflation, elevated freight costs and higher promotions. As a result, adjusted SG&A expenses increased 17.1% year over year to $277.2 million in the first quarter of 2023. Going ahead, these headwinds might affect the company’s profitability.
Bottom Line
Although inflation and elevated freight costs are looming concerns, we believe that online strength, solid demand and well-planned endeavors are likely to help Crocs sustain its stellar show. Also, a long-term earnings growth rate of 15% and Value Score of A reflect its inherent strength.
Stocks to Consider
Some better-ranked companies in the consumer discretionary sector are Bluegreen Vacations , Royal Caribbean (RCL - Free Report) and lululemon athletica (LULU - Free Report) .
BVH delivered a trailing four-quarter earnings surprise of 24.7%, on average. The Zacks Consensus Estimate for BVH’s 2023 sales and earnings per share (EPS) indicates growth of 3.6% and 17.6%, respectively, from the previous year’s reported figures.
Royal Caribbean sports a Zacks Rank #1 at present. RCL delivered a trailing four-quarter earnings surprise of 26.4%, on average.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates growth of 47.9% and 158.3%, respectively, from the 2022 reported numbers.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s fiscal 2023 sales and EPS implies growth of 16.7% and 18%, respectively, year over year. LULU delivered a trailing four-quarter earnings surprise of 9.9%, on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Crocs (CROX) to Ride on Solid Demand & HEYDUDE Amid Cost Woes
Crocs (CROX - Free Report) has been gaining from solid consumer demand, owing to new clog and sandal introductions, as well as continued momentum in the HEYDUDE brand and strong direct- to-consumer growth. This led to a robust surprise trend in the first quarter of 2023. The company’s top and bottom lines surpassed their respective Zacks Consensus Estimate for the 12th straight quarter.
Shares of this Zacks Rank #3 (Hold) company rallied 120.7% in the past year compared with the industry’s growth of 4.3%.
Crocs’ first-quarter adjusted earnings of $2.61 per share increased 27.3% year over year. Revenues improved 33.9% year over year (or 36.2% on a constant-currency basis) to $884.2 million. The top line witnessed growth across all regions and channels.
Image Source: Zacks Investment Research
The company’s recent acquisition of HEYDUDE, which sells lightweight, casual shoes and sandals for men, women and children, is likely to have added value to its fast-growing footwear business. This is the second high-growth, exceptionally profitable brand added to Crocs’ portfolio.
Crocs believes that HEYDUDE’s consumer-insight-driven casual, comfortable and lightweight products perfectly fit its existing range of products. The acquisition is likely to have diversified Crocs’ brand portfolio and added to its digital penetration, as HEYDUDE already has a strong online presence.
Notably, HEYDUDE’s first-quarter revenues increased 104.8% year over year to $235.4 million. For 2023, revenues related to the buyout are likely to grow in the mid-20% range on a reported basis. Management remains optimistic about HEYDUDE, which is expected to achieve its sales target of $1 billion this year.
Driven by these factors, management raised its guidance for 2023. Revenues are anticipated to grow 11-14% (from the previously projected 10-13%) to $3.9-$4 billion. Adjusted earnings are expected in the range of $11.17-$11.73 per share, up from the previous guidance of $11-$11.31. The adjusted operating margin is projected in the band of 26-27% compared with the previously anticipated 26%.
For second-quarter 2023, revenues are expected to grow 6-9% to $1,026-$1,049 million. Adjusted earnings are projected in the range of $2.83-$2.98 per share. The adjusted operating margin is anticipated to be 26%.
However, Crocs has been reeling under inflation, elevated freight costs and higher promotions. As a result, adjusted SG&A expenses increased 17.1% year over year to $277.2 million in the first quarter of 2023. Going ahead, these headwinds might affect the company’s profitability.
Bottom Line
Although inflation and elevated freight costs are looming concerns, we believe that online strength, solid demand and well-planned endeavors are likely to help Crocs sustain its stellar show. Also, a long-term earnings growth rate of 15% and Value Score of A reflect its inherent strength.
Stocks to Consider
Some better-ranked companies in the consumer discretionary sector are Bluegreen Vacations , Royal Caribbean (RCL - Free Report) and lululemon athletica (LULU - Free Report) .
Bluegreen Vacations sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
BVH delivered a trailing four-quarter earnings surprise of 24.7%, on average. The Zacks Consensus Estimate for BVH’s 2023 sales and earnings per share (EPS) indicates growth of 3.6% and 17.6%, respectively, from the previous year’s reported figures.
Royal Caribbean sports a Zacks Rank #1 at present. RCL delivered a trailing four-quarter earnings surprise of 26.4%, on average.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates growth of 47.9% and 158.3%, respectively, from the 2022 reported numbers.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s fiscal 2023 sales and EPS implies growth of 16.7% and 18%, respectively, year over year. LULU delivered a trailing four-quarter earnings surprise of 9.9%, on average.