Crocs and Skechers reported earnings on Thursday, as footwear stocks have been on the rise to begin the year. CROX shares jumped 15% in 2023, as the company that makes slip-on clogs continues to benefit from revenue generated by its Hey Dude brand purchased last year. SKX stock has risen 19% in the past year, while Skechers is looking to end its streak of declining earnings for three consecutive quarters. CROX shares fell early on Thursday after its Q2 outlook. Skechers will announce its results after the bell.
The Colorado-based Crocs brand is known for its rubbery casual shoes. In recent years, the company has expanded its Crocs portfolio beyond classic slip-ons to include sneakers, boots, sandals and wedges.
The company acquired the Hey Dude trademark in February of last year, for more than $2 billion cash and 2.8 million Crocs stock. Crocs generated $895.9 millions in revenue through the third quarter of 2022 from its increasingly popular brand of comfort shoes made of leather, canvas, and suede. This represents 25% of Crocs' total sales. Hey Dude's full-year sales totaled $986.2 millions.
Crocs' quarterly earnings grew by an average of 31.5% in 2022. This is a significant improvement from the 241% growth it experienced each quarter during 2021. Crocs quarterly sales grew by an average of 53% in the last year, and 68.5% between 2021 and 2022.
Results: Crocs adjusted earnings rose 27.3%, to $2.61 a share. Revenues jumped 33.9% to $884.20 million.
Expectations: FactSet polled analysts who projected Crocs earnings to rise 5.4%, to $2.16 a share. Revenues would also increase 30% to $857 millions.
Crocs Brand revenue increased to $648.8 millions, an increase of 19% over last year. Hey Dude's revenue for the quarter was $235.4 millions, an increase of 104.8% over the same period last year after the acquisition in February. Crocs' international sales grew 31.8% in the past year, while direct-to consumer sales in North America increased 12.1%.
Crocs expects to earn between $2.83 and $2.98 per share in the second quarter. The revenue is expected to increase by up to 9% between $1.026 billion and $1.049 billion. This is lower than FactSet's expectations for Q2 earnings of $3.27 per share based on $1.067 in sales.
Crocs still expects a solid growth in the coming year. Crocs has raised its revenue forecast for 2023 to roughly $3.95 to $4 billion. The company expects to earn between $11.17 and $10.92 per share in adjusted earnings, up from last year's $10.92. FactSet predicts adjusted earnings per share to rise to $11.23 on sales of $4 billion.
The company's shares are showing positive signs across the board. They rank seventh in the IBD Top 50 List of Best-Performing Stocks and lead the Apparel-Shoes Group on the IBD Checkup.
CROX's stock dropped 15.8%, to 124.50 at the opening of Thursday after the results.
Shares fell out of the cup-base buy zone. Crocs stock exceeded the 143.60 purchase point on April 18
CROX has a perfect score of 99 Composite Rating. This score combines several technical indicators to create a single, easy-to read score. The relative strength line of CROX is at a high with a Relative Strength rating of 98.
Crocs are up 14.7% by 2023, and have soared 83% in the last 12 months.
Skechers continues to grow as it attracts more customers away from its competitors. The Manhattan Beach-based company produces a range of slip-ons, comfort shoes, casual and walking footwear.
John Kernan, Cowen's analyst in January, noted that Skechers "value-oriented position is resonating" with consumers as macroeconomic forces influence spending. According to a survey, the company has gained traction with casual and lifestyle footwear. It is also attracting customers away from Nike (NKE), and Adidas. Skechers has been gaining traction with affluent consumers. Its casual footwear market share was dominated by customers earning over $100,000 last year.
Skechers, however, is still struggling to break the stereotype that old people wear shoes. According to the Cowen Survey, its preference share among older adults was three times greater than that of younger customers.
Skechers' earnings have declined by an average of 5% per quarter over the last four quarters. In that period, revenue grew by an average of 18.3%.
Wall Street predicts that Skechers' earnings will fall 23.8% over the past year, to 61 cents a share. Revenues are expected to increase 2% to $1.86 Billion.
Analysts predict that domestic wholesale sales will decline 12.8%, to $470 Million.
SKX is nearing the top of a zone to buy a cup with handle base, after breaking out in April. The current buy zone extends between the 47.80 and 50.19 buy points.
Stocks fell 0.6% early Thursday, after rising 1.7% on Wednesday to close at $50.02. The shares are just above the 10-day moving median and maintaining their other technical lines.
Skechers relative strength is at recent highs. SKX has a 92 RS rating and 91 composite rating.
Shares are up 19% in 2023 so far and by 32% since last year.