Crocs Issues Upbeat Q3 Revenue Guidance on Strong Demand
Contrary to many apparel companies struggling to make ends meet as clothing and accessories have taken a backseat for customers amid the coronavirus pandemic, Crocs, Inc. CROX has been enjoying healthy customer demand. With work-from-home and stay-at-home trends being the new normal, people are leaving home only for essential purposes. Thus, people are ditching the purchase of fancy clothing and shifting to more comfortable collections. Evidently, tracksuits, sweatpants, slippers and flip-flops are the latest fashion hits.
Driven by the coronavirus-led trends, Crocs has been making its way back into people’s feet. The company is making efforts to increase customer engagement during these trying times by using various social media platforms. In the second quarter, global revenues fell 7.6% to $331.5 million, but majority of key geographical areas performed well. Moreover, Crocs has been witnessing an online boom with e-commerce revenues skyrocketing 67.7% in the said quarter. Keeping in these lines, it has leased a new distribution center near its existing facility in Dayton, OH, which is likely to support its growing e-commerce demand.
Further, the company’s array of products, solid online show, licensing partnerships, collaborations with celebrities and social media influencers make it well-positioned to overcome the economic hurdles amid the pandemic. Management provided a positive revenue outlook for third-quarter 2020 on the back of robust demand and solid sell-throughs. Notably, revenues are envisioned to grow roughly 10% to $321.8 million in the third quarter. Also, strength in the top line is expected to continue in 2021 as well.
Apart from these, Crocs noted that 98% of its stores have resumed operations as part of its store reopening efforts. This will help provide some cushion to the top line, which has been hit hard since the onset of the pandemic due to temporary store closures.
Bottom Line
Crocs, which shares space with Nike NKE, is certainly one of the footwear companies that has responded well to the current scenario and gained from the changing customer preferences. With such well-chalked plans on board, this Zacks Rank #1 (Strong Buy) stock is poised to maintain its strong momentum in the near term. We note that shares of this company have gained 32.4% in the past three months, outperforming the industry’s growth of 13.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Hanesbrands HBI, a Zacks Rank #1 stock, has an impressive long-term earnings growth rate of 3.3%.
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