Crocs Inc (CROX) Q3 2024 Earnings Call Highlights: Navigating Growth and Challenges

GuruFocus News
4 min read

In This Article:

  • Consolidated Enterprise Revenue: $1.1 billion, 2% growth year-over-year.

  • Crocs Brand Revenue: $858 million, 8% growth year-over-year.

  • HEYDUDE Revenue: $204 million, 17% decline year-over-year.

  • Adjusted Diluted EPS: $3.60, 11% increase year-over-year.

  • Adjusted Gross Margin: 59.6%, up 220 basis points from last year.

  • Adjusted SG&A Rate: 34.2%, up 510 basis points from last year.

  • Adjusted Operating Margin: 25.4%, down 290 basis points from last year.

  • Inventory Balance: $367 million, 6% decline year-over-year.

  • Debt Repayment: $110 million repaid during the quarter.

  • Share Buybacks: $151 million, 1.1 million shares repurchased.

  • 2024 Revenue Growth Guidance: Approximately 3% for the full year.

  • 2024 Adjusted EPS Guidance: Raised to $12.90 at the high end of the prior range.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Crocs Inc (NASDAQ:CROX) reported third quarter results that exceeded guidance in terms of sales and profitability, with consolidated enterprise revenues of $1.1 billion, growing 2% year-over-year.

  • The Crocs Brand grew 8%, with international sales up 17% and North America sales up 2%, showcasing strong global performance.

  • Adjusted diluted EPS increased by 11% to $3.60 per share, indicating improved profitability.

  • The company successfully launched several high-profile collaborations, including partnerships with McDonald's and Bath & Body Works, driving significant consumer engagement.

  • Crocs Inc (NASDAQ:CROX) achieved inventory turns above their goal of 4 times annually, reflecting efficient inventory management.

Negative Points

  • HEYDUDE revenues contracted by 17%, slightly below expectations, indicating challenges in this segment.

  • The company noted a consumer pullback in North America post-Labor Day, anticipating a muted consumer environment until the holiday season.

  • HEYDUDE's performance marketing strategy shift negatively impacted digital performance, contributing to lower-than-expected sellouts.

  • Crocs Inc (NASDAQ:CROX) lowered its full-year revenue growth outlook for HEYDUDE from a decline of 8%-10% to approximately 14.5%, reflecting ongoing challenges.

  • The company anticipates incremental pressure on EBIT margin rates in 2025 due to continued investments in talent, marketing, digital, and retail.

Q & A Highlights

Q: Could you provide more detail on Crocs North America's performance and expectations for DTC growth in Q4? Also, what role will North America play in Crocs' 2025 outlook? A: (Susan Healy, CFO) North America is expected to be flat for the second half, with Q4 DTC positive but offset by a planned decline in wholesale. We're mindful of consumer shopping patterns and macro headwinds. (Andrew Rees, CEO) North America is a stable, profitable, cash-generative business that supports international growth and HEYDUDE investments. We expect modest growth in North America, contributing to our overall portfolio.

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