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The stock of Crocs falls premarket after a beat on earnings is offset by softer guidance for Heydude

May 7, 2024
minute read

Crocs Inc. encountered a 4.8% decline in its stock early Tuesday, prompted by the company's robust first-quarter earnings juxtaposed with subdued demand projections for its Heydude brand, anticipated to experience a decline in sales this year.

In 2022, Crocs (CROX) acquired the Italian brand Heydude for $2.5 billion in cash and stock, thereby expanding its product portfolio to include a range of lightweight, casual slip-on shoes catering to men, women, and children.

The company reported a net income of $152.5 million, or $2.50 per share, for the quarter, demonstrating an increase from $149.5 million, or $2.39 per share, in the corresponding period of the previous year.

Adjusting for one-time items, the earnings per share (EPS) reached $3.02, surpassing the FactSet consensus of $2.25.

Revenue climbed to $938.6 million from $884.2 million a year ago, outperforming the $884.0 million FactSet consensus.

Andrew Rees, Chief Executive, attributed the bolstered earnings to robust demand for the core Crocs brand across North America and international markets.

However, Rees acknowledged, "As we continue to prioritize brand health in the North American market for Heydude, and considering what we are seeing quarter-to-date, we are reducing our revenue expectations for the brand for the balance of the year."

During the quarter, Crocs' revenue surged by 14.6% to $744 million, while Heydude's revenue experienced a notable decline of 17.2% to $195 million.

For the upcoming second quarter, Crocs anticipates a revenue increase ranging from 1% to 3%, with the Crocs brand projected to grow by 7% to 9%. Conversely, Heydude's revenue is expected to contract by 19% to 17%. The company forecasts an adjusted EPS ranging from $3.40 to $3.55, compared to FactSet's expectation of $3.48.

Looking ahead to the full year, Crocs anticipates revenue growth ranging from 3% to 5%, with the Crocs brand expected to expand by 7% to 9%. However, Heydude's revenue is anticipated to decline by 10% to 8%. The company forecasts an adjusted EPS ranging from $12.25 to $12.73, against FactSet's expectation of $12.47.

Despite these fluctuations, the company's stock has surged by 36% year-to-date, whereas the S&P 500 index has recorded an 8.6% gain.

Eric Ng
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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