Crocs Inc.’s store-trimming strategy appears to be paying off.
The lightweight clog maker’s shares are up more than 12% to $25.60 in premarket trading after it posted solid second-quarter earnings of 59 cents per share on an adjusted basis, outdoing analysts’ bets of 46 cents. Adjusted profits advanced 3.1% to $42.6 million, while sales increased 9.4% to meet Wall Street’s predictions of $358.9 million.
Although store closures cut revenues by about $6 million, both e-commerce and same-store sales rose in the double-digits, with the former up 18% and the latter growing 11.8%. Wholesale revenues also climbed 9.4%.
“We had a terrific quarter, as demand for our product and brand heat continued to climb,” said president and CEO Andrew Rees. “We expect our revenue growth in the back half of the year to significantly outpace the first half.” Crocs is now betting that sales for the year reach the range of 9% to 11%, compared with previous guidance of 5% to 7% growth.
Over the past few years, the Niwot, Colo.-based company has shuttered more than 150 stores as it refocused its business around its Classic clog as well as invested more heavily in digital marketing and celebrity-centric collaborations. Since making headlines through its partnership with Drew Barrymore in 2016, Crocs has tapped buzzy names, including rapper Post Malone and actress Zooey Deschanel, as ambassadors, with the former enjoying a number of sold-out releases to date.
The brand has also been riding the wave of ’90s and early ’00s nostalgia among teens and young adults — even trying its hand at high-end fashion with an appearance at London Fashion Week in 2016, when designer Christopher Kane sent embellished marble Crocs down the catwalk.
“This is a brand that has a tremendous long-term runway on a global basis,” Rees said in an exclusive interview with FN early this year. “I don’t think the external community necessarily looks at it like that yet. [Meanwhile], the investment community is just starting to come to the realization that what we’ve been saying might actually be true. In the next 12 to 18 to 24 months, you’ll start to see [both of these groups] come to [align more closely] with our perspective.”
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