Crocs Sales Spike 34% In Major Q1 Surprise. But CROX Stock Weakens On Q2 Forecast

Crocs and Skechers report earnings Thursday as footwear stocks are up and running to start the year. CROX stock leapt 37% in 2023 as the slip-on clog company continues to reap revenue from its Hey Dude brand acquired last year. SKX shares have jumped 19% year to date while Skechers looks to reverse its streak of three consecutive earnings declines. CROX shares weakened premarket Thursday after Crocs posted a major earnings surprise. Skechers announces results after the closing bell.

X

Crocs

Colorado-based Crocs (CROX) is best known for its rubbery, casual-wear shoes. The company in recent years expanded its Crocs brand portfolio from the classic slip-on clogs to include boots, sandals, wedges and sneakers.

It acquired the Hey Dude brand last February, paying more than $2 billion in cash, plus 2.8 million Crocs shares. The increasingly-popular brand of suede, leather and canvas comfort shoes generated $895.9 million in revenue for Crocs through the final three quarters of 2022, representing 25% of total sales. Hey Dude full-year sales were $986.2 million.

Meanwhile, Crocs averaged 31.5% quarterly earnings growth in 2022, coming off its incredible 2021 when it averaged 241% EPS growth each quarter. Crocs’ quarterly sales bolted an average 53% last year and 68.5% in 2021.

Earnings

Results: Crocs’ adjusted earnings soared 27.3% to $2.61 per share on a 33.9% revenue spike to $884.2 million.

Expectations: Analysts polled by FactSet projected Crocs earnings climbing 5.4% to $2.16 per share on a 30% leap in revenue to $857 million.

Crocs Brand revenues rose to $648.8 million, up 19% from last year. Hey Dude revenue was $235.4 million for the quarter, up 104.8% from the partial period last year following the February acquisition. International sales for the Crocs brand jumped 31.8% over the year while North America direct-to-consumer comparable sales increased 12.1%.

Outlook: For Q2, Crocs sees adjusted earnings between $2.83 per share to $2.98 per share. Revenue is seen rising up to 9%, ranging from $1.026 billion to $1.049 billion. That’s lower than FactSet expectations of Q2 earnings at $3.27 per share on $1.067 billion in sales.

Still, Crocs expects solid growth for the year. Crocs raised its 2023 revenue outlook to range from 11% to 14% growth to roughly $3.95 billion to $4 billion in sales. The company forecasts adjusted earnings between $11.17 and $11.73 per share, up from $10.92 last year. FactSet projects adjusted earnings rising to $11.23 per share on $4 billion in sales.

CROX Stock

CROX stock dropped nearly 3% to 143.42 premarket Thursday following results. The stock ranks seventh on the IBD 50 list of top-performing stocks and leads the Apparel-Shoes Group for the IBD Stock Checkup as shares flash positive indicators across the board.

Shares are trading in the buy zone for a cup base after surpassing the 143.60 buy point on April 18. The current buy zone, which stretches 5% beyond the buy point, extends to 150.78.

CROX stock has a 98 EPS Rating and perfect 99 Composite Rating, which combines a number of technical indicators into one easy-to-read score. Its relative strength line is at highs with a 98 Relative Strength Rating.

Crocs is up 37% in 2023 and rocketed 109% over the past 12 months.

Skechers

Skechers (SKX) continues to make strides as it pulls customers from competitors. The Manhattan Beach, Calif.-based company makes a variety of slip-on, comfort, casual and walking shoes.

In January, Cowen analyst John Kernan noted Skechers’ “value-oriented positioning is resonating with consumers” as macroeconomic pressures influence spending. A survey found the company is gaining traction in casual and lifestyle footwear and pulling customers from Nike (NKE) and Adidas. Skechers is picking up traction among affluent customers as it gained most of its casual footwear market share last year from consumers making over $100,000.

However, Skechers is struggling to shake the stereotype of old-people shoes. Its preference share among adults 55 or older was three times higher than younger customers last year, according to the Cowen survey.

Meanwhile, Skechers earnings averaged a 5% quarterly decline over the past four quarters. Revenue surged an average 18.3% in that time.

Skechers Earnings

Wall Street expects Skechers earnings will tumble 23.8% year over year to 61 cents per share on a 2% revenue increase to $1.86 billion.

Analysts expect domestic wholesale sales to slide 12.8% to $470 million.

SKX stock is trading near the top of a buy zone for a cup-with-handle base after breaking out on April 11. The current buy zone extends from the 47.80 buy point to 50.19.

Shares edged 0.6% lower early Thursday after climbing 1.7% Wednesday to close at 50.02. Shares just above their 10-day moving average and holding their other key technical lines.

Skechers’ relative strength line is near recent highs. SKX stock has a 92 RS Rating and 91 Composite Rating.

Shares have jumped 19% so far in 2023 and 32% over the past year.

You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison

YOU MAY ALSO LIKE:

Looking For The Next Big Stock Market Winners? Start With These 3 Steps

Learn How To Time The Market With IBD’s ETF Market Strategy

See Stocks On The List Of Leaders Near A Buy Point

Short-Term Trades Can Add Up To Big Profits. IBD’s SwingTrader Shows You How