Crocs sees earnings spike; raises full-year guidance

Niwot, Colorado-based footwear company Crocs, Inc. has announced significant increases in earnings in the second quarter and first half of fiscal 2019, adjusting its full-year financial outlook accordingly.


Crocs' revenue growth was driven by e-commerce in Q2 2019 - Instagram: @crocs
 
In the second quarter ended June 30, 2019, the company’s net income attributable to common stockholders was $39.2 million, compared to $30.4 million in the prior-year period, a 28.8% increase. Diluted earnings per share also posted a formidable rise of 57%, totaling $0.55, up from $0.35 in Q2 2018.
 
Crocs’ earnings growth was even more impressive in the first half of the year, with income shooting up 49% from $42.9 million to $63.9 million over the six-month period, while diluted EPS blasted from $0.51 to $0.87, a 70.6% rise.
 
Revenues for the second quarter were $358.9 million, rising 9.4% (12.5% in constant currencies), compared to the $328.0 million reported in by the company same period in the previous year, despite a negative impact of around $6 million related to store closures.
 
Progress was particularly strong in the Crocs e-commerce channel, where revenues grew 18.0%, compared to a 9.4% increase in wholesale revenues and an 11.8% rise in retail comparable store sales.
 
Over the course of the first half of the year, revenues increased 7.1% to $654.8 million, up from $611.2 million in the same six-month period in the previous year.
 
It’s been a busy few months for Crocs, which has launched new collaborations with Vera Bradley and Chinatown Market since the end of the second quarter, and has also announced that it is planning to cut the volume of products it is currently producing in China for the U.S. market by more than two-thirds within the next year, in light of the impact of the ongoing trade war between the two countries.
 
“We had a terrific quarter, as demand for our product and brand heat continued to climb,” said Crocs President and CEO Andrew Rees in a release. “With strong revenue growth and better than expected gross margins, we expanded our operating margin 200 basis points to approximately 13% of sales and grew our diluted earnings per share 57% compared to last year’s second quarter. We expect our revenue growth in the back half of the year to significantly outpace the first half; accordingly, we are increasing our full year outlook.”
 
Crocs now expects revenues to grow between 9% and 11% in 2019, compared to its prior guidance of between 5% and 7%.
 
In the third quarter, the company predicts revenues in the range of $295 to $305 million, compared to $261.1 million in Q3 2018.

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