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Crocs (CROX) Gains From Business Strength Amid Cost Woes
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Crocs, Inc. (CROX - Free Report) has been benefiting from healthy consumer demand for new clogs and sandals, as well as continued momentum in the Crocs and HEYDUDE brands and strong direct-to-consumer growth. In the second quarter of 2023, the company’s revenues increased 11.2% year over year to $1,072.4 million, driven by growth across all regions and channels. Its direct-to-consumer sales in the quarter surged 26% year-over-year.
Shares of this Zacks Rank #3 (Hold) company increased by 32.2% in the past year against the industry’s decline of 7.5%.
Image Source: Zacks Investment Research
CROXs acquisition of HEYDUDE, which sells lightweight, casual shoes and sandals for men, women and children, has added value to its fast-growing footwear business. Crocs believes that HEYDUDE’s consumer-insight-driven casual, comfortable and lightweight products complement its existing product portfolio. The acquisition has added to the company’s digital penetration, as HEYDUDE already has a strong online presence.
HEYDUDE brand’s second-quarter revenues advanced 3% year over year to $239.4 million. For 2023, revenues related to the HEYDUDE buyout are likely to grow in the range of 14%-18% 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 12.5-14.5% (from the previously projected 11-14%) to $4,000-$4,065 million. Adjusted earnings are expected in the range of $11.83-$12.22 per share, up from the previous guidance of $11.17-$11.73. The adjusted operating margin is projected to be 27.5%, higher than the previously anticipated range of 26-27%.
For third-quarter 2023, revenues are expected to grow 3-5% to $1,013-$1,034 million. Adjusted earnings are projected in the range of $3.07-$3.15 per share. The adjusted operating margin is anticipated to be 27%.
However, CROX has been experiencing rising costs and expenses over time. In the second quarter, its adjusted SG&A expenses increased 23.1% year over year to $298.3 million. The metric grew 17.1% in the first quarter. The persistence of this trend may weigh on the company’s profitability in the upcoming quarters.
Although inflationary pressure has somewhat eased, rising interest rates have also been a concern for Crocs. For instance, in the second quarter, its interest expenses increased by 30.6% on a year-over-year basis.
Stocks to Consider
Some better-ranked companies in the consumer discretionary sector are Royal Caribbean (RCL - Free Report) , lululemon athletica (LULU - Free Report) and Alto Ingredients (ALTO - Free Report) .
RCL delivered a trailing four-quarter earnings surprise of 28.5%, on average.
The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates growth of 53.6% and 177.7%, respectively, from the 2022 reported numbers.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current fiscal year sales and EPS implies growth of 17.1% and 18.4%, respectively, year over year. LULU delivered a trailing four-quarter earnings surprise of 9.9%, on average.
Alto Ingredients has a Zacks Rank #2 at present.
ALTO delivered an earnings surprise of 242.9% in the last reported quarter. The Zacks Consensus Estimate for ALTO’s upcoming quarter’s EPS indicates growth of 125% from the previous year’s reported figure.
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Crocs (CROX) Gains From Business Strength Amid Cost Woes
Crocs, Inc. (CROX - Free Report) has been benefiting from healthy consumer demand for new clogs and sandals, as well as continued momentum in the Crocs and HEYDUDE brands and strong direct-to-consumer growth. In the second quarter of 2023, the company’s revenues increased 11.2% year over year to $1,072.4 million, driven by growth across all regions and channels. Its direct-to-consumer sales in the quarter surged 26% year-over-year.
Shares of this Zacks Rank #3 (Hold) company increased by 32.2% in the past year against the industry’s decline of 7.5%.
Image Source: Zacks Investment Research
CROXs acquisition of HEYDUDE, which sells lightweight, casual shoes and sandals for men, women and children, has added value to its fast-growing footwear business. Crocs believes that HEYDUDE’s consumer-insight-driven casual, comfortable and lightweight products complement its existing product portfolio. The acquisition has added to the company’s digital penetration, as HEYDUDE already has a strong online presence.
HEYDUDE brand’s second-quarter revenues advanced 3% year over year to $239.4 million. For 2023, revenues related to the HEYDUDE buyout are likely to grow in the range of 14%-18% 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 12.5-14.5% (from the previously projected 11-14%) to $4,000-$4,065 million. Adjusted earnings are expected in the range of $11.83-$12.22 per share, up from the previous guidance of $11.17-$11.73. The adjusted operating margin is projected to be 27.5%, higher than the previously anticipated range of 26-27%.
For third-quarter 2023, revenues are expected to grow 3-5% to $1,013-$1,034 million. Adjusted earnings are projected in the range of $3.07-$3.15 per share. The adjusted operating margin is anticipated to be 27%.
However, CROX has been experiencing rising costs and expenses over time. In the second quarter, its adjusted SG&A expenses increased 23.1% year over year to $298.3 million. The metric grew 17.1% in the first quarter. The persistence of this trend may weigh on the company’s profitability in the upcoming quarters.
Although inflationary pressure has somewhat eased, rising interest rates have also been a concern for Crocs. For instance, in the second quarter, its interest expenses increased by 30.6% on a year-over-year basis.
Stocks to Consider
Some better-ranked companies in the consumer discretionary sector are Royal Caribbean (RCL - Free Report) , lululemon athletica (LULU - Free Report) and Alto Ingredients (ALTO - Free Report) .
Royal Caribbean sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
RCL delivered a trailing four-quarter earnings surprise of 28.5%, on average.
The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates growth of 53.6% and 177.7%, respectively, from the 2022 reported numbers.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current fiscal year sales and EPS implies growth of 17.1% and 18.4%, respectively, year over year.
LULU delivered a trailing four-quarter earnings surprise of 9.9%, on average.
Alto Ingredients has a Zacks Rank #2 at present.
ALTO delivered an earnings surprise of 242.9% in the last reported quarter. The Zacks Consensus Estimate for ALTO’s upcoming quarter’s EPS indicates growth of 125% from the previous year’s reported figure.