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Crocs’ COVID-19 Playbook Is Working: Stock Jumps on Earnings, Sales Beat

Shares of Crocs Inc. are climbing in Thursday premarket trading after the company posted better-than-expected financial results — perhaps proof that its playbook against the threat of the coronavirus is working.

For the second quarter, the clog maker recorded diluted earnings per share that surged 71.2% to $1.01 on an adjusted basis — well above the prior year’s 59 cents per share and analysts’ bets of 14 cents per share. Revenues, on the other hand, declined 7.6% to $331.5 million but still beat Wall Street’s forecasts of $249.6 million.

Its e-commerce business served as another bright spot, growing 67.7% in the period ended June 30. Although wholesale revenues declined 19.5% and retail revenues fell 41.8%, retail comps advanced 10.5% on a constant currency basis upon the brand’s store reopenings.

As of 9:00 a.m. ET, Crocs’ stock was up nearly 5% to $39.10.

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“Amidst unprecedented market conditions globally, we delivered exceptional performance in our Americas and e-commerce businesses and increased profit despite a very challenging environment,” president and CEO Andrew Rees said in a statement. “Our performance demonstrates the strength of the Crocs brand and underscores the work we’ve done expanding the desirability, relevance and consideration of our brand and product offering globally.”

Leaders at the Niwot, Colo.-based company introduced a “defensive and offensive playbook” that they began to implement in early March, when the coronavirus pandemic started to take hold in the United States . Those defensive measures are now complete, it said, and its offensive action has “started to show results, as evidenced by our second-quarter performance.”

Today, about 98% of Crocs’ 360 company-operated stores are back in business. Four out of its five key geographic regions — the United States, China, Germany and Korea — delivered revenue growth. (Revenues in Japan, however, declined.)

While many of its brick-and-mortar stores were closed, Crocs.com and the brand’s other digital platforms stayed in operation. Beyond a record quarterly sales boost in its e-commerce business, the company noted a strong sell-through in e-tail and wholesale partners’ sites as consumers migrated to online shopping due to stay-at-home orders and widespread lockdowns. These surging growth rates, it added, have recently started to temper as governments continue to loosen restrictions.

Crocs ended the quarter with cash and equivalents of $151.4 million. It also opened its new global headquarters in Broomfield, Colo., during the second quarter.

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