Crocs, Inc. reported that revenues passed the billion-dollar mark in the second quarter to $1.07 billion, an increase of 11.2 percent from the same period last year, or 12.0 percent on a constant-currency basis. Direct-to-Consumer (DTC) revenues, which include retail and e-commerce, grew 26.0 percent, or 27.2 percent on a constant-currency basis. Wholesale revenues grew 0.2 percent compared to 2022, or 0.8 percent on a constant-currency basis.

  • Crocs brand revenues increased 13.8 percent, or 14.9 percent on a constant-currency basis, to $833.0 million in the second quarter. DTC comparable sales increased 19.5 percent. Wholesale revenues increased 3.8 percent, or 4.6 percent on a constant-currency basis.
  • Heydude brand revenues increased 3.0 percent year-over-year to $239.4 million in Q2. DTC revenues increased 29.7 percent to $90.6 million. Wholesale revenues declined 8.4 percent to $148.8 million following pipeline fill in the same period last year.

“We achieved record quarterly revenues of over $1 billion, representing growth of 12 percent on a constant-currency basis to the prior year,” said Andrew Rees, CEO, Crocs, Inc. “Both the Crocs and Heydude brands continue to gain share and bring in new consumers with our comfortable offerings, as evidenced by DTC growth of 26 percent in the second quarter. We continue to invest behind our strategic priorities that are driving profitable growth.”

Gross margin was 57.9 percent of sales in Q2, compared to 51.6 percent in the prior-year comp quarter. Adjusted gross margin improved 290 basis points to 58.1 percent compared to 55.2 percent in the same period last year.

Selling, general, and administrative expenses (SG&A) of $302.8 million in Q2 increased from $249.8 million in Q2 last year, and SG&A as a percent of revenues rose to 28.2 percent from 25.9 percent in the prior-year period. Adjusted SG&A rose to 27.8 percent of revenues versus 25.1 percent for the same period last year.

Income from operations increased 28.4 percent to $318.5 million and operating margin improved to 29.7 percent, compared to 25.7 percent for the same period last year, due to higher gross margin and significantly less Heydude acquisition expenses. Adjusted income from operations rose 11.7 percent to $324.6 million and adjusted operating margin improved 20 basis points to 30.3 percent.

Diluted EPS increased 31.4 percent to $3.39 per share, as compared to $2.58 per share for the same period last year. Adjusted diluted earnings per share increased 10.8 percent to $3.59 a share compared to the 2022 quarter.

Balance Sheet and Cash Flow
Cash and cash equivalents were $166.2 million as of June 30, compared to $191.6 million as of December 31, 2022.

Inventories decreased to $436.3 million as of June 30, compared to $471.6 million as of December 31, 2022 and $501.5 million as of June 30, 2022.

Capital expenditures during the six months ended June 30 were $51.6 million, compared to $56.7 million for the same period last year, reflecting continued investments in our distribution centers and expansion of our corporate facilities to support growth.

Borrowings were $2.03 billion as of June 30, compared to $2.32 billion as of December 31, 2022, as CROX repaid $299.1 million of debt. The company’s liquidity position was said to remain strong with $166.2 million in cash and cash equivalents and $563.7 million in available borrowing capacity as of June 30, 2023.

Outlook
Looking ahead, Crocs, Inc. expects third-quarter earnings as follows:

  • Revenues to grow approximately 3 percent to 5 percent compared to third quarter 2022, resulting in revenues of approximately $1.01 billion to $1.03 billion at currency rates as of the latest reported period.
  • Adjusted operating margin of approximately 27.0 percent.
  • Adjusted diluted earnings per share of $3.07 to $3.15.

For the full year 2023:

  • Consolidated revenue growth to now be 12.5 percent to 14.5 percent compared to 2022, resulting in revenues of approximately $4.00 million to $4.07 million at currency rates as of the end of the last reported period.
  • Adjusted operating margin to now be approximately 27.5 percent.
  • Non-GAAP adjustments of approximately $35 million, primarily related to investments in our distribution centers to support growth and to be fairly balanced across the cost of sales and SG&A.
  • Combined GAAP tax rate to be approximately 23 percent and the non-GAAP effective tax rate of approximately 20 percent.
  • Adjusted diluted earnings per share to now be between $11.83 and $12.22 a share. Adjusted diluted earnings per share guidance does not assume any impact from potential future share repurchases.
  • Capital expenditures to be approximately $165 to $180 million, primarily related to the expansion of our distribution capabilities including the new Heydude distribution center in Las Vegas opening later this year, implementation of new technology systems for Heydude, and expansion of the corporate facilities to support growth.

Photo courtesy Crocs