Crocs and Skechers reported earnings Thursday as footwear stocks are up and running to start the year. CROX stock leapt 15% in 2023 as the slip-on clog company continues to reap revenue from its Hey Dude brand acquired last year. SKX shares have jumped 19% year to date while Skechers looks to reverse its streak of three consecutive earnings declines. CROX shares dove Thursday on its Q2 forecast. Skechers beat expectations with its late report and posted record quarterly sales.
Crocs
Colorado-based Crocs is best known for its rubbery, casual-wear shoes. The company in recent years expanded its Crocs brand portfolio from the classic slip-on clogs to include boots, sandals, wedges and sneakers.
It acquired the Hey Dude brand last February, paying more than $2 billion in cash, plus 2.8 million Crocs shares. The increasingly-popular brand of suede, leather and canvas comfort shoes generated $895.9 million in revenue for Crocs through the final three quarters of 2022, representing 25% of total sales. Hey Dude full-year sales were $986.2 million.
Meanwhile, Crocs averaged 31.5% quarterly earnings growth in 2022, coming off its incredible 2021 when it averaged 241% EPS growth each quarter. Crocs' quarterly sales bolted an average 53% last year and 68.5% in 2021.
Crocs Earnings
Results: Crocs' adjusted earnings soared 27.3% to $2.61 per share on a 33.9% revenue spike to $884.2 million.
Expectations: Analysts polled by FactSet projected Crocs earnings climbing 5.4% to $2.16 per share on a 30% leap in revenue to $857 million.
Crocs Brand revenues rose to $648.8 million, up 19% from last year. Hey Dude revenue was $235.4 million for the quarter, up 104.8% from the partial period last year following the February acquisition. International sales for the Crocs brand jumped 31.8% over the year while North America direct-to-consumer comparable sales increased 12.1%.
Outlook: For Q2, Crocs sees adjusted earnings between $2.83 per share to $2.98 per share. Revenue is seen rising up to 9%, ranging from $1.026 billion to $1.049 billion. That's lower than FactSet expectations of Q2 earnings at $3.27 per share on $1.067 billion in sales.
Still, Crocs expects solid growth for the year. Crocs raised its 2023 revenue outlook to range from 11% to 14% growth to roughly $3.95 billion to $4 billion in sales. The company forecasts adjusted earnings between $11.17 and $11.73 per share, up from $10.92 last year. FactSet projects adjusted earnings rising to $11.23 per share on $4 billion in sales.
CROX Stock
The stock ranks seventh on the IBD 50 list of top-performing stocks and leads the Apparel-Shoes Group for the IBD Stock Checkup as shares flash positive indicators across the board.
CROX stock dove 15.9% to 124.32 Thursday following the results.
The move sent shares tumbling out of the buy zone for a cup base. Crocs stock surpassed the 143.60 buy point on April 18.
CROX stock has a 98 EPS Rating and perfect 99 Composite Rating, which combines a number of technical indicators into one easy-to-read score. Its relative strength line is at highs with a 98 Relative Strength Rating.
Crocs is up 14.7% in 2023 and rocketed 83% over the past 12 months.
Skechers
Skechers continues to make strides as it pulls customers from competitors. The Manhattan Beach, Calif.-based company makes a variety of slip-on, comfort, casual and walking shoes.
In January, Cowen analyst John Kernan noted Skechers' "value-oriented positioning is resonating with consumers" as macroeconomic pressures influence spending. A survey found the company is gaining traction in casual and lifestyle footwear and pulling customers from Nike and Adidas. Skechers is picking up traction among affluent customers as it gained most of its casual footwear market share last year from consumers making over $100,000.
However, Skechers is struggling to shake the stereotype of old-people shoes. Its preference share among adults 55 or older was three times higher than younger customers last year, according to the Cowen survey.
Meanwhile, Skechers earnings averaged a 5% quarterly decline over the past four quarters. Revenue surged an average 18.3% in that time.
Skechers Earnings
Results: Skechers earnings leapt 32.5% to $1.02 per share on 10% revenue growth to a record $2 billion. On an adjusted basis, earnings jumped 24.7% to 96 cents per share.
Expectations: Wall Street expected Skechers earnings to tumble 20% year over year to 61 cents per share on a 2% revenue increase to $1.86 billion.
Wholesale sales rose 3.5% to $1.294 billion, beating predictions of a 0.7% decline to $1.24 billion.
Domestic wholesale sales fell nearly 18% to $441.9 million. Analysts expected domestic wholesale sales to slide 12.8% to $470 million.
Direct-to-consumer sales spiked 24.5% to $707.3 million, beating forecasts of $616 million. Domestic and international DTC sales both surged by more than 24%.
Inventory at the end of the quarter was $1.5 billion, down 17.4% from Q4.
Outlook: For the second quarter, Skechers guided earnings between 40 cents and 50 cents per share on $1.85 billion to $1.9 billion in sales. That's well below the FactSet earnings projection of 74 cents per share on $1.98 billion in revenue.
Skechers guided full-year earnings between $3 and $3.20 per share on $7.9 billion to $8.1 billion of sales. That's in-line with analyst forecasts of $2.99 EPS on $7.99 billion in revenue.
SKX stock is trading near the top of a buy zone for a cup-with-handle base after breaking out on April 11. The current buy zone extends from the 47.80 buy point to 50.19.
SKX stock edged lower after hours Thursday following the late results. Shares eased 0.3% during trading to close at 49.87. The stock climbed 1.7% Wednesday.
Shares just above their 10-day moving average and holding their other key technical lines.
Skechers' relative strength line is near recent highs. SKX stock has a 92 RS Rating and 91 Composite Rating.
Shares have jumped 19% so far in 2023 and 25% over the past year.
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