Crocs (CROX) Raises Q4 Revenue View, Gains Market Share
Crocs, Inc. CROX is gearing up for a stellar performance in 2023. The strong performance can be attributed to a robust holiday season with market share gains for both the Crocs and HEYDUDE brands. Fourth-quarter revenues are poised to surpass the initial guidance, leading to an increased operating margin target for the year.
Management now expects fourth-quarter revenues to increase more than 1% year over year, defying the earlier projections of a decline ranging from 1% to 4%. The Crocs Brand is set to surge by almost 10%, while HEYDUDE is anticipated to experience a decline of 19%.
Crocs guided annual revenues of approximately $3.95 billion. This suggests a noteworthy increase of more than 11% compared to 2022 and marks a slight uptick from the 10-11% growth estimated earlier. The company expects Crocs Brand to achieve more than 13% revenue growth, surpassing the significant milestone of $3 billion, and HEYDUDE revenues to be approximately $949 million. It now expects the full-year non-GAAP operating margin to exceed 27%.
The company's strategic financial moves include a $277 million net debt reduction in the quarter, contributing to a total yearly debt paydown of $665 million. This underscores Crocs' financial prowess and robust free cash flow generation capability.
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As the company steps into 2024, it foresees a continued growth trajectory, with revenues anticipated to increase by 3% to 5% compared to 2023. The Crocs Brand is projected to experience a 4% to 6% upswing, while the HEYDUDE Brand is expected to remain flat or see a slight increase. To fuel future expansion, Crocs plans to reinvest gross margin improvements from 2023 into strategic SG&A investments, targeting non-GAAP operating margins of approximately 25%.
In tandem with its financial success, Crocs is streamlining its segment reporting structure, moving from four segments to two — the Crocs Brand and the HEYDUDE Brand — aligning its reporting with its operational focus. The company stands poised for sustained growth and strategic investments as it continues to carve its path in the competitive footwear industry.
Shares of this Zacks Rank #3 (Hold) company have increased 15.6% in the past three months compared with the industry’s rise of 25.6%.
3 Stocks Looking Red Hot
Here, we have highlighted three better-ranked stocks, namely Abercrombie & Fitch ANF, Hibbett HIBB and Deckers DECK.
Abercrombie & Fitch, an omnichannel specialty retailer of apparel and accessories for men, women and kids, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year revenues suggests growth of 13.5% from the year-ago reported figures. Abercrombie & Fitch has a trailing four-quarter earnings surprise of 713%, on average.
Hibbett, an athletic-inspired fashion retailer, sports a Zacks Rank #1. The Zacks Consensus Estimate for Hibbett’s current fiscal sales suggests growth of 1.7% from the year-ago reported figure.
Hibbett has a trailing four-quarter earnings surprise of 24.2%, on average.
Deckers, a global leader in designing, marketing and distributing innovative footwear, apparel and accessories, currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Deckers’ current fiscal sales and EPS calls for growth of 11.7% and 21.9%, respectively, from the year-ago reported figure. Deckers has a trailing four-quarter earnings surprise of 26.3%, on average.
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