Crocs Inc. will likely show a strong start for fiscal year 2023 when it reports earnings for the first quarter later this week, according to some market watchers.
Crocs Inc., which owns the Crocs and Hey Dude brands, previously said it expects Q1 revenues to grow between 27% and 30% compared to Q1 of 2022. Adjusted diluted earnings per share are expected to be between $2.06 and $2.19. For the full year of 2023, Crocs expects revenues to grow between 10% and 13% year over year, or between about $3.9 billion and $4 billion.
According to Williams Trading analyst Sam Poser, Crocs will likely exceed estimates with its Q1 results, led by DTC sales, and is positioned to beat guidance for the entire fiscal year.
“The momentum of both Crocs and Hey Dude remain strong,” Poser wrote in a note earlier this month, noting that Q1 will likely be the most difficult quarter for Crocs this year, due to an expected drop in North American wholesale sales after retailers took a cautious approach to ordering. 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.
Poser added that the company is “well positioned” to achieve its stated goal of $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.
Clog sales makes up the majority of sales for Crocs, but Rees highlighted the continued push into the sandal market. In 2022, clogs were 77% of brand revenues, sandals were 12% and Jibbitz grew 27% to become 8% of brand revenues.
Rees also called out new product innovations and collaborations such as the Salahe Bembury x Crocs Pollex slide and the Crocs Brooklyn flip that are already drumming up 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.
“The Crocs brand has seen success with its frequent collaborations which create a halo effect and momentum,” read a note from Jane Hali & Associates analyst Jessica Ramirez. “Crocs and Hey Dude tap into the comfort trend, which continues to resonate with consumers. As shoppers trade down, both brands are well positioned to benefit from the current environment.”
However, it still remains to be seen if this comfort trend will continue to outlive the pandemic. Q1 will be a key indicator for this.
“Skeptics have long worried that North America is bound to give back some of its pandemic gains, so it will be important for Crocs to show that they can continue to ‘comp the comp,'” wrote Wedbush analyst Tom Nikic in a Monday note to investors.
Crocs Inc. reports earnings for the first quarter on Thursday.