Crocs posts blowout earnings, Hasbro tops Q1 estimates

Yahoo Finance’s Brian Sozzi breaks down how Crocs, Hasbro and Eli Lilly’s stocks are faring on Tuesday.

Video Transcript

JULIE HYMAN: Let's run through some of the other many, many earnings reports that we got out this morning. Jared Blikre a few minutes ago was just talking about Crocs and its blowout quarter. Apparently, huge demand for these things. Brian Sozzi, talk us through some of the numbers here on how Crocs did.

BRIAN SOZZI: Yeah, it amazes me, Julie. An inflationary environment, which we are, in fact, in, that Crocs could essentially sell $29 shoes and be profitable and be profitable in a very big way. I mean, operating margins up significantly. Gross margins up 730 basis points, which was interesting. They not only saw 93% sales growth in their direct-to-consumer business, so those are retail stores, that's online, but also their wholesale business, which, in many respects, are department stores. Sales there are up 50%.

I think we're learning here that consumers are going back out. And they want a couple of things. They want some new jeans. We've heard that from Levi's a couple of weeks ago when we talked to them. They need new jeans for whatever reason if they don't fit in their prior jeans after being inside eating a lot of frozen food from Conagra the past year. So they need new jeans. And they also appear to be speaking or just want to show off their style or their renewed sense of style with Crocs shoes. Very interesting. And if you go to the Crocs website, listen, I mean, it's a different company. They're not just selling those boring clogs.

MYLES UDLAND: I just think it's an amazing stock story. I mean, it was a $7 stock in the middle of 2017. It went to 45 or something right before the pandemic. Crashed like everything else did. And now it's almost 100 bucks a share. I mean, the turnaround plan or the turnaround trajectory that we've seen in Crocs has just been amazing. And yeah, Sozzi, they've changed the mix. I mean, they've done some interesting collaborations with celebrities. I remember talking-- this one's been a couple of years ago now. It feels like it was in the studio. Post Malone did a collab with Crocs. And you can get the little things that go in the holes, the little decorations. You saw them there.

So I mean, that all kind of mixes it up, but ultimately, it's a company that's growing its top line at 50%. Whether it's part of the reopening trade or not, I mean, Crocs is certainly charting a path that has been durably successful here for it over the last couple of years on an example of how you can go from this weird fad-- I mean, when I was in high school, this was, like, the first time they came out. It was, like, what are these things? And here we are, many, many years later, and it's a $6 billion company.

JULIE HYMAN: I mean, the interesting thing, to your point, Sozzi, about them being able to make money on this, is that oil prices have been going up. And that's what these things are made of, right? They're made from petroleum. So I don't know exactly how that works. I haven't looked deeply enough into the report.

BRIAN SOZZI: It's fascinating, Julie. Those things that Michael-- that Myles was talking about-- Michael-- that Myles was talking about that go in your shoes, they're a price for 5 bucks. They're called Jibbitz. I mean, what do they cost? Maybe a couple of pennies to make. So there's some big profit margin in their business. And interestingly, they continue to expand off a high base from last year.

JULIE HYMAN: All right, let's talk about something else that's made from petroleum products for house. Toys, a lot of toys. Hasbro was out with its numbers, too, Sozz, and you're looking at those numbers.

BRIAN SOZZI: Yeah, all these toys will be plant-based soon, Julie. It'll all be recyclable. Well, just hang in there. We'll get there. But anyway, the big headline here from Hasbro is that they're selling their music business. The eOne entertainment music business, which happens to include Death Row Records, for close to $400 million. And this deal is getting so far a nice positive reception from the Street. Maybe not necessarily the earnings report, though.

Now, keep in mind, we just saw-- we just talked to Mattel's CEO Ynon Kreiz last week. They had a very big quarter, a little bit of a different story here to Hasbro. Some early concern on the revenues at the entertainment business, that's eOne business that they bought, I believe, last year for big money. Sales there down 32%. Again, a lot of businesses, a lot of just producing types of content within that eOne business are just not happening. And they're going to take a little while to come back. Hence, you see the revenues down.

JULIE HYMAN: All right, let's quickly wrap it up with Eli Lilly, which was out with its numbers as well. And those shares have been trading lower, excuse me. All of this talk about vaccinations, but Eli Lilly, of course, is making some of the treatments for the coronavirus. But the government changed which treatments it was ordering. There is a solo antibody treatment that Eli Lilly makes.

But the federal government has migrated away from that, and orders have migrated away from that to a combination antibody treatment. And so that that pushed the sales for the company below what it had anticipated revenue for this year. Going to be at most $27.6 billion. But Lilly says, before, it had been $28 billion, had been the upper end of that forecast. So that was the source of the issue there for Eli Lilly. And the shares are down more than 3% today.