What happened
Shares of Crocs Inc. (CROX 2.03%) popped 27.6% on Thursday after the footwear specialist announced strong third-quarter results and increased its full-year guidance.
On the former, Crocs' revenue climbed 7.3% year over year (9.3% on a constant-currency basis) to $261.1 million, well above management's guidance provided in August for $230 million to $240 million. That translated to net income of $6.5 million, or $0.07 per share, swinging from a $0.03 per-share loss in the same year-ago period, and easily beating expectations for a loss of $0.01 per share.
IMAGE SOURCE: GETTY IMAGES.
So what
Even more impressive, Crocs achieved this growth even after losing $15 million in sales due to strategic store closures and business model changes. Within its top line, e-commerce revenue climbed 23.2%, wholesale rose 9.3%, and retail comparable-store sales jumped 15%.
Crocs also repurchased 604,000 shares of common stock for $11.1 million during the quarter, leaving $182 million remaining under its existing repurchase authorization.
Now what
Given its relative outperformance so far this year, Crocs raised its full-year 2018 guidance to call for revenue to increase 4% to 5% over 2017 (up from its outlook for low-single-digit growth previously), and for gross margin to rise 100 basis points from 50.5% last year (near the high end of its old range for a 70- to 100-point increase).
Finally, Crocs told investors to expect 2019 revenue to climb in the mid-single-digit percent range, assuming e-commerce and wholesale growth will more than offset lower retail sales stemming from store closures. Here again, the market was only anticipating low-single-digit revenue growth in 2019.
All things considered, this was a straightforward beat and raise from Crocs. And even with the stock having more than doubled in the year leading up to this report, Crocs investors have more than enough reason to walk another victory lap today.
