Crocs (CROX) Q4 Earnings & Revenues Beat on Solid Demand
Shares of Crocs, Inc. CROX rose more than 4% following an impressive performance in fourth-quarter 2022. The top and bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Solid consumer demand in the Crocs and HEYDUDE brands, as well as strength in clogs, sandals and Jibbitz categories, contributed to the quarterly results.
Driven by the solid quarterly results, the Zacks Rank #2 (Buy) stock has gained 33.4% in the past three months compared with the industry’s growth of 1.2%.
Q4 in Detail
Crocs’ adjusted earnings were $2.65 per share, surpassing the Zacks Consensus Estimate of $2.18 and our estimate of $2.11. The figure also advanced 23.3% from earnings of $2.15 in the year-ago period.
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Revenues advanced 61.1% (or 64.8% on a constant-currency basis) year over year to $945.2 million in the reported quarter and beat the Zacks Consensus Estimate of $938 million and our estimate of $935.6 million. The top line witnessed growth across all regions and channels.
Direct-to-consumer revenues rose 61.2% year over year to $515 million, while Wholesale revenues surged 61.1% to $430.2 million in the quarter under review.
The Crocs brand’s revenues grew 13.5% year over year to $666 million and surpassed our estimate of $664.7 million. The HEYDUDE brand’s revenues advanced 37% year over year to $279.2 million, lagging our estimate of $270.9 million.
Total revenues in the Americas were up 0.3% to $456.9 million. This came ahead of our estimate of $395.6 million. Revenues in the Asia Pacific amounted to $90.7 million and surpassed our estimate of $126.9 million, reflecting a year-over-year increase of 59%. The EMEA region witnessed revenue growth of 60.3% to $118.3 million and beat our estimate of $142.2 million.
The adjusted gross profit rose 35% to $503.8 million. However, the adjusted gross margin contracted 1040 basis points (bps) to 53.3% due to the addition of HEYDUDE. This excludes $7.5 million of costs related to expansion and duplicate rent costs for its distribution centers.
Meanwhile, adjusted SG&A expenses, as a percentage of revenues, contracted 780 bps to 27.3%. This excludes $18.2 million of costs related to the shutdown of the Russia direct operations, and the HEYDUDE acquisition and integration.
Adjusted operating income grew 46.3% year over year to $245.8 million. The adjusted operating margin contracted 260 bps to 26% from the prior-year quarter’s 28.6%.
Financial Details
The company ended the quarter with cash and cash equivalents of $191.6 million, long-term borrowings of $2,298 million, and stockholders’ equity of $817.9 million. It also repaid $300 million Term Loan B facility. The company’s liquidity position remains strong, with $755.8 million in available borrowing capacity.
Management incurred a capital expenditure of $104.2 million in 2022. The company anticipates a capital expenditure of $165-$180 million in 2023 related to the expansion of its distribution capabilities, including the new HEYDUDE distribution center in Las Vegas, the implementation of new technology systems for HEYDUDE and the expansion of its corporate facilities to support growth.
Crocs, Inc. Price, Consensus and EPS Surprise
Crocs, Inc. price-consensus-eps-surprise-chart | Crocs, Inc. Quote
Outlook
Management issued its guidance for 2023, driven by strength in sandals and international for the Crocs Brand and increased US market penetration for HEYDUDE. For 2023, revenues are anticipated to grow 10-13% to $3.9-$4 billion. Adjusted earnings are envisioned to be $11-$11.31, with an adjusted operating margin of 26%. The adjusted tax rate is likely to be 20%.
For first-quarter 2023, revenues are expected to be 27-30% to $660.1 million. Adjusted earnings are forecast to be $2.06-$2.19 and the adjusted operating margin is likely to be 24-25%.
Other Stocks to Consider
Some other top-ranked companies are Ralph Lauren RL, Oxford Industries OXM and Deckers Outdoor DECK.
Ralph Lauren, a footwear and accessories dealer, has a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ralph Lauren’s next-financial-year sales and EPS suggests growth of 5% and 12.8%, respectively, from the year-ago reported figures. RL has a trailing four-quarter earnings surprise of 23.6%, on average.
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.
Deckers Outdoor currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 31%, on average.
The Zacks Consensus Estimate for Deckers Outdoor’s current financial-year sales and earnings suggests growth of 12% and 13.5% from the year-ago period’s reported numbers, respectively.
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