Crocs Inc. has raised its full-year outlook after shattering expectations for the first quarter.
The comfort footwear company, which owns the Crocs and Hey Dude brands, reported revenues of $884.2 million, up 36.2% on a constant currency basis. This blew past Crocs’ expected range of 27% to 30% growth. Adjusted diluted earnings per share increased 27.3% to $2.61, ahead of Crocs’ highest estimate of $2.19.
Crocs brand revenues were up 21.6% on a constant currency basis to $648.8 million, with wholesale revenue up 22.4% and DTC sales up 19.2%. Hey Dude sales were $235.4, up 104.8%, with sales of $167.9 million and DTC sales of $67.5 million. Overall sales in North America grew 10%.
Crocs Inc. CEO Andrew Rees said a strong response to Crocs sandals and new clogs helped spur growth in the brand. He also called out DTC momentum in Hey Dude. Earlier this month, FN reported that Hey Dude was cutting ties with some of its wholesale partners, as Crocs had done before in prior quarters, to focus on DTC sales.
“Our exceptional first quarter results are a testament to the strength of our brands,” Rees said in a statement.
However, Crocs shares still dropped on the news, likely due to a more conservative outlook for Q2 that was below consensus. In Q2, Crocs expects revenues of between $1.03 billion to $1.05 billion, a growth of between 6% and 9% compared to Q2 2022. Adjusted diluted earnings per share are expected to be between $2.83 and $2.98. According to Baird analyst Jonathan Komp, the consensus was $1.067 billion in revenues and $3.23 in EPS.
At market close, Crocs shares were down more than 15%.
Komp called the market reaction to the Q2 outlook “overblown” in a note to investors and said he believes that “the Crocs brand still is outperforming and remains positioned for earnings upside.”
For 2023, Crocs expects revenues to grow between 11% and 14% compared to 2022, with sales between $3.95 billion to $4.05 billion.
In the long-term, Crocs is aiming to achieve $5 billion in Crocs brand revenue by 2026.
In March, CEO Andrew Rees said that demand for the Crocs and recently acquired Hey Dude brand had been strong thus far in Q1. In particular, he said DTC sales perfomance in North America had surpassed the brand’s initial conservative outlook, which expected more consumer resistance. He also called out new product innovations and collaborations such as the Salahe Bembury x Crocs Pollex slide and the Crocs Brooklyn flip that have garnered excitement for the brand in 2023. Crocs also made waves earlier this month when it named Salehe Bembury the creative director for his Crocs x Pollex Pod collection.
Crocs said it has a pipeline of more than 60 brand partnerships for 2023, 25% of which will be regionally led. Overall, Crocs allocated $200 million for marketing purposes to help drive engagement and acquire new customers.