Crocs Report Stellar Quarterly Beat and Raise Outlook; Shares Surge 9.3%


Crocs, Inc. (CROX) shares jumped 9.3% on Thursday to close at $148.60 after the company delivered blowout third-quarter results and raised its FY2021 revenues expectations.

The quarterly beat was driven by robust demand for the company’s footwear and impressive performances across all segments and regions despite global supply chain disruption and the closure of its Vietnamese factories.

Markedly, shares of the world leader in innovative casual footwear, with a market capitalization of $9 billion, have almost trebled over the past year. (See Crocs stock charts on TipRanks)

Encouragingly, adjusted earnings of $2.47 per share skyrocketed 163% year-over-year and massively beat analysts’ expectations of $1.85 per share. The company reported earnings of $0.94 per share in the prior-year period.

To add to investors’ excitement, revenues jumped 73% year-over-year to $626 million and exceeded consensus estimates of $608 million. The top-line benefited from robust revenue growth across all regions. Revenues in the Americas grew 94.5%, Asia Pacific increased 21.2%, while Europe, the Middle East, and Africa witnessed growth of 42.8% on a constant currency basis.

Direct-to-consumer revenues grew 60.4%, whereas wholesale revenues grew 88.2%. Furthermore, digital sales experienced double-digit growth across all regions and grew 68.9% to represent 36.8% of revenues during the quarter.

Notably, the adjusted gross margin expanded 680bps to 64.2% compared to 57.2% in the prior-year quarter. Moreover, the company’s industry-leading operating margin also magnified 1250 bps to 32.4% from 19.9% in the year-ago period.

Crocs Raises FY2021 Outlook Despite Global Supply Challenges

The company stated that it has taken prompt initiatives to resolve the impact of global supply-chain disruptions by shifting production, enhancing factory throughput, leveraging air freight, and enabling strategic allocation of units.

Based on its confidence to deliver short- and long-term growth, Crocs raised its outlook for the full year and also provided guidance for FY2022.

The company now forecasts FY2021 revenues to grow between 62% and 65% year-over-year versus the prior guidance range of 60% to 65%. Further, for FY2022, revenue is projected to grow more than 20% compared to FY2021.

The company expects to achieve adjusted operating margins of approximately 28% for both 2021 and 2022.

Crocs CEO Andrew Rees commented, “Globally, our teams are managing through the supply chain disruptions to mitigate the impact on our business. Despite the temporary disruptions, we expect 2022 revenues to grow over 20% from 2021 fueled by the strength of our brand and consumer demand globally.”

Following the outstanding Q3 results, Piper Sandler analyst Erinn Murphy increased the price target to $215 (44.7% upside potential) from $212 and reiterated a Buy rating.

Murphy commented, “The brand continues to reach new highs with consumer demand, and we are encouraged by discipline around inventory management.”

Consensus among analysts is a Strong Buy based on 7 Buys and 2 Holds. The average Crocs price target of $186.71 implies 25.7% upside potential to current levels.

Furthermore, Crocs scores a 9 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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