icon
icon
icon
icon
Upgrade
icon

Crocs (CROX) Reports Strong Q4 Results and Projects Growth in 2024

AInvestMonday, Jan 8, 2024 2:44 pm ET
2min read

Introduction:

Crocs Inc. (CROX) shares soared 18% today after announcing preliminary Q4 results that surpassed expectations. The shoemaker, known for its iconic clog-style footwear, has also provided a positive outlook for sustained revenue growth in 2024. This performance comes as a welcome relief after a challenging quarter and in the face of headwinds affecting the broader footwear industry. The shoemaker, which also owns the HEYDUDE brand, had been selling off since mid-December, experiencing a near 20% decline in share price due to a combination of factors, including disappointing quarterly results from fellow footwear giant Nike (NKE) and the broader challenges facing the footwear industry.

Strong Q4 Results:

Despite facing headwinds such as inflation, higher interest rates, and the resumption of student loan payments, Crocs managed to deliver better-than-expected results for Q4. The company reported revenue growth of more than 1% year-over-year, surpassing its previous forecast. Management had forecasted Q4 revenues of $903-938 million, a 1-4% decrease and well below consensus estimates. The Crocs brand led the way with an impressive 10% revenue growth, while HEYDUDE, the company's subsidiary, experienced a 19% decline in sales.

Positive Trends and Market Share:

Crocs demonstrated several positive trends during the quarter, including continued market share growth in North America for its core brand. The company also experienced healthy demand and achieved meaningful adjusted gross margin expansion. These factors contributed to the company's ability to overdeliver on its financial targets and mitigate the impact of a challenging operating environment.

2024 Revenue Growth and Margins:

Looking ahead to 2024, Crocs expects its revenue to grow between 3% and 5% compared to the previous year which would be its slowest growth since 2018. This projection includes anticipated growth rates of 4% to 6% for the Crocs brand and flat to slightly up for the HEYDUDE brand. This represents a slight slowdown compared to FY23 due to the ongoing challenges, elevated promotions, and consumers' preference for value products.

The company also plans to invest in brand-accretive initiatives, which may result in adjusted operating margins of approximately 25% in 2024, a slight decrease compared to the previous year. Despite this margin decline, Crocs' ability to improve gross margins over 2023 is a positive sign of efficiency and strategic focus.

Full -year 2023 revenues are expected to grow over 11% compared to 2022, slightly above the guidance of 10% to 11% growth, with the Crocs Brand growing over 13%

Building Confidence and Potential Turnaround:

Crocs' buoyant Q4 guidance and optimistic revenue forecast for 2024 have instilled greater confidence in the company's ability to navigate upcoming challenges and overcome inflationary pressures. The sustained demand for the Crocs brand serves as a strong foundation for future growth. By planning appropriately and executing its strategy effectively, Crocs is well-positioned to embark on a broader turnaround.

Shares of CROX were testing support at the 200-day moving average ($88) when this guidance hit. Investor expectations were low and the news grabbed plenty of attention as investors piled back into the stock. Its 58 million float and 10% short interest set up perfectly for a squeeze. The stock will probe resistance at the 50-weekly ($106) which looms as a key level for traders to watch. CROX needs to establish ground above the $100-psyche to create a base to move above resistance levels. 

Conclusion:

Crocs has demonstrated resilience and impressive growth in the face of various challenges, including inflation and competitive pressures in the footwear industry. The company's strong Q4 results and positive outlook for 2024 underscore its ability to adapt and capitalize on consumer demand. With sustained revenue growth, a focus on brand accretive initiatives, and a commitment to operational efficiency, Crocs appears poised for continued success in the coming years.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. Investing in stocks involves risks, and investors should conduct their own research and analysis before making any investment decisions.

$CROX(CROX)


Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.