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Dive Brief:
- Crocs reported another record year of earnings Thursday, with revenue reaching nearly $3.96 billion. That’s up 11.5% from $3.55 billion a year ago. Net income for the year was $792.6 million, up nearly 47% year over year from $540.2 million.
- The company also reported strong fourth-quarter performance. Revenue for the last three months of the year was $960.1 million, up 1.6% from a year earlier. Net income surged to $253.6 million, up 84% from $137.7 million from last year.
- By brand, Crocs revenue rose 13.3%, slightly surpassing $3 billion for the year. The brand also saw its DTC revenue rise 18.5%. Heydude’s annual revenue rose 6% to $949 million and its operating income reached over $200 million.
Dive Insight:
Overall, Crocs is starting the year “from a position of strength,” CEO Andrew Rees said. During the previous two quarters, the company topped $1 billion in revenue. But Heydude remains a weaker spot from an overall performance perspective. Heydude’s performance was soft in Q3 and Q4. For the fourth quarter, Heydude revenues fell 18.5% from a year earlier to $228 million.
Chief Financial Officer Anne Mehlman said during an earnings call that Heydude sold 7.4 million pairs of shoes in Q4, down 18% year over year. The brand took action to reduce channel inventory and its average selling price of $30.65 was nearly flat to last year, Mehlman said. She was recently promoted to executive vice president and Crocs’ brand president. She will continue serving as CFO until the company appoints a replacement.
Crocs acquired Heydude in February 2022 for $2.5 billion. Since then, Mehlman said the company has repaid $1.2 billion in debt and resumed share repurchases in the second half of 2023. Rees said the company is still in its early days of implementing an outlet retail strategy for Heydude. The brand opened five outlet locations in the second half of last year. Looking ahead, the company plans to open up to 30 outlet stores throughout this year. Heydude will also continue to lean into into collaborations and partnerships in an effort to drive brand visibility.
“While there are question marks around the global macro backdrop and the broader consumer health, I'm confident in our brands, our people, and our purpose and are looking forward to another year of outside share gains, industry-leading profitability and top tier cash flow generation,” Rees said, according to a Seeking Alpha call transcript.
For the full year, Crocs’ overall outlook for revenue growth is 3% to 5% compared to 2023. The company is forecasting 4% to 6% revenue growth for its namesake brand, while revenues for Heydue are expected to remain flat to slightly up.
Analyst Tom Nikic with Wedbush said in a Thursday note that he’s bullish on Crocs following positive momentum from a strong fourth quarter. “We're encouraged by the continued consumer excitement over the brand, and the success that the brand has had with recent innovations (collaborations, new silhouettes, etc.) Admittedly, Heydude has to see a really big reacceleration after Q1 to hit their [full year] plan, but if they can pull it off, we think it will eliminate a big sentiment overhang on the stock.”
via https://www.aiupnow.com
Nate Delesline III, Khareem Sudlow
