Crocs , Inc. (NASDAQ: NASDAQ:CROX) shares plunged 7.7% in extended trading on Thursday after the footwear company reported better-than-expected second-quarter results but issued a disappointing outlook for the third quarter.
Q2 results: Crocs reported adjusted EPS of $4.01, beating analysts’ estimates by $0.47. Revenue came in at $1.11 billion, slightly above the consensus estimate of $1.1 billion.
Strong Crocs brand: The Crocs brand continued to perform well, with revenue increasing by 9.7% to $914 million. Direct-to-consumer (DTC) revenues grew by 12.5%, while wholesale revenues increased by 6.9%.
Struggling HEYDUDE brand: In contrast, the HEYDUDE brand faced challenges, with revenue declining by 17.5% to $198 million. DTC revenues decreased by 7.6%, and wholesale revenues fell by 23.5%.
Upbeat CEO comments: Despite the mixed brand performance, CEO Andrew Rees expressed optimism, highlighting the record second-quarter results and the strength of the Crocs brand. He also mentioned improvements being made to support the long-term health of the HEYDUDE brand.
Crocs expects revenue to decline by 1.5% to 0.5% compared to Q3 2023, with the Crocs brand growing by 3% to 5% and the HEYDUDE brand declining by 16% to 14%. Adjusted operating margin is projected to be approximately 24.5%, lower than analysts’ expectations.
Despite the weaker Q3 outlook, Crocs raised its full-year 2024 guidance. Revenue growth is now expected to be 3% to 5%, compared to the previous guidance of 3% to 4%. Adjusted operating margin is projected to be over 25%, up from the prior guidance of approximately 25%. Adjusted diluted EPS is now seen in the range of $12.45 to $12.90, compared to the consensus estimate of $12.64.
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