Crocs Sinks 6.4% Despite Q4 Beat

Crocs, Inc. (CROX) reported better-than-expected fourth-quarter results. Backed by continued demand momentum, both earnings and revenue exceeded expectations. However, shares fell 6.4% to close at $94.80 as its FY22 guidance fell below expectations.

Crocs designs and manufactures innovative footwear for men, women, and children. Its shares have lost 28.4% year-to-date vis-à-vis registering a gain of 26.1% over the past year.

The company is also on track to close the HEYDUDE acquisition in February 2022, subject to certain closing conditions. The acquisition was announced in December 2021 for an aggregate price of $2.5 billion.

Better-Than-Expected Results

Crocs Q4 adjusted earnings doubled to $2.15 per share, 15 cents higher than analysts’ estimates of $2.00 per share.

Similarly, quarterly revenues grew 42.6% year-over-year to $586.63 million, surpassing analyst estimates of $585 million. The solid revenue growth was aided by a 44.5% growth in Crocs’ Direct-to-consumer business, which includes retail and eCommerce, and a 40.3% growth in its wholesale business.

Fiscal 2021 revenues advanced 66.9% to $2.31 billion and adjusted earnings more than doubled to $8.32 per share.

CEO Comments

Crocs CEO, Andrew Rees, said, “Our fourth straight year of revenue growth was fueled by continued strong consumer demand for the Crocs brand globally. We are excited about our sustainable growth trajectory for both the Crocs and HEYDUDE brands and are confident in our plan to grow to $6 billion in revenues by 2026.”

Reaffirming FY 2022 Outlook

Looking ahead, Crocs reaffirmed its guidance based on the current business momentum. In Q1FY22, Crocs forecasts revenues (including HEYDUDE revenues) to be between $605 million and $630 million, marginally below the consensus estimates of $639.4 million. On an organic basis, Crocs expects revenue to be between $520 million and $535 million.

For FY22, revenues for Crocs are expected to increase 20% above the FY21 numbers. Further, revenues from HEYDUDE are expected to be between $700 million and $750 million.

FY22 adjusted earnings are projected in the range of $9.70 per share to $10.25 per share.

Consensus View

Responding to Crocs’ results, Stifel Nicolaus analyst Jim Duffy lowered the price target for the stock to $101 (6.5% upside potential) from $130, but maintained a Hold rating.

Duffy noted that CROX Q4 results had mixed sentiments, but cautioned about the slowing brand popularity, which is reflected in its FY22 guide.

Overall, the CROX stock commands a Strong Buy consensus rating based on 6 Buys and 2 Holds. The Crocs stock prediction of $197.14 implies a whopping 107.9% upside potential to current levels.

Stock Investors

According to TipRanks’ Stock Investors tool, investor sentiment is currently Very Positive on Crocs, with 16.4% of portfolios tracked by TipRanks increasing their exposure to CROX stock over the past 30 days.

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