Crocs Inc. cut its full-year outlook after reporting soft Hey Dude sales and a weaker outlook for the full-year and Q4.
The comfort footwear company, which owns the Crocs and Hey Dude brands, beat expectations for the third quarter, but the stock was down 14 percent in pre-market trading on its softer guidance. Crocs Inc.’s reported quarterly revenues were $1.05 billion, up 6.2 percent from the prior year. This beat Crocs’ expected growth range for the quarter of between 3 percent and 5 percent. Adjusted diluted earnings per share increased 9.4 percent to $3.25, ahead of Crocs’ highest estimate of $3.15.
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The results also beat expectations of analysts surveyed by Yahoo, which expected to see $1.03 billion in revenues and $3.10 EPS.
By brand, Crocs revenues in Q3 were up 11.6 percent to $798.8 million and Hey Dude revenues were down 8.3 percent to $246.9 million, with wholesale revenues for the latter brand down 19.4 percent due to wholesale partners being more cautious on at-once orders.
Crocs Inc. CEO Andrew Rees said that the company cut its full year outlook after it took “decisive action around Hey Dude to accelerate our marketplace management strategy to ensure long-term brand health.” (Hey Dude sales were similarly challenged in Q2.)
Rees added that both Crocs and Hey Dude “gained share during the back-to-school season.”
For the full year, Crocs Inc. now expects revenue growth of between 10 and 11 percent (or sales between $4 billion and $4.065 billion) compared to a prior growth guidance of between 12.5 percent and 14.5 percent. Crocs brand revenue is expected to grow between 12 and 13 percent and Hey Dude revenues are expected to grow between 4 and 6 percent.
In the fourth quarter, Crocs expects revenues to decline between 1 and 4 percent to land between $903 million and $938 million. Adjusted diluted earnings per share are expected to be between $2.05 and $2.35.
In the long-term, Crocs is aiming to achieve $5 billion in Crocs brand revenue by 2026. This year, the brand said it has a pipeline of more than 60 brand partnerships for 2023, 25 percent of which will be regionally led. Crocs also said it had allocated $200 million for marketing purposes to help drive engagement and acquire new customers.
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