CEO Andrew Rees described how the Crocs brand surpassed the $3bn mark and grew across all regions and channels with its HeyDude brand returning to a “pull-market position.”
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In the third quarter, Crocs shared it had paid down its $277m in net debt and taken the company’s full-year debt down to $665m.
Since acquiring Heydude in February 2022, Crocs said in its latest release it has repaid $1.2bn in debt and resumed its share repurchase activity in the second half of 2023.
In the fourth quarter, HeyDude’s revenue hit $950m and delivered over $200m in operating income resulting in improved gross margins and healthy inventory levels exiting the year. Crocs opened five HeyDude outlet locations in the second half and plans to open 30 more in 2024.
The Crocs brand revenue grew 14% driven by a 9.3% increase in wholesale and 19% in DTC revenue.
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By GlobalDataIn 2023 North America grew 8% and international grew 23% with the Q4 representing Croc’s 12th consecutive quarter of “strong double-digit growth outside of North America, according to Rees.
Globally, South Korea and the UK grew double-digits Australia and China each grew triple-digits.
Rees added: “While we reported a record revenue in China, it still only represents 4% of revenues underscoring the untapped potential we have in the region.”
Due to an increase in embracing the personalisation of products, Rees is confident in the brand’s international growth agenda in South Korea.
He added: “We delivered a record year for Crocs Inc. capped off by a strong fourth quarter that exceeded expectations across all metrics. Revenues of nearly $4bn grew over 11% underpinned by industry-leading operating margins and double-digit earnings per share growth.”
Highlights from Crocs fourth quarter results:
- Revenue increased 1.6% to $960m compared to last year,
- Operating income decreased 4.8% to $210m,
- Net income increased to $253m compared to last year’s $137m.
Rees commented: “We are starting off 2024 from a position of strength and taking the opportunity to reinvest into several key strategic areas as we continue to lay the foundation for durable market share gains.”
Updated Q1 2024 and FY24 outlook
Q1
- The brand expects revenues for the first quarter of 2024 to be down 1.5% to up 0.5% compared to the previous year’s quarter,
- Crocs is predicted to grow 6-8% and HeyDude is to contract 23-20% compared to the first quarter of 2023,
- Adjusted operating margin of 22% and adjusted diluted earnings per share of $2.15 to $2.25.
Full Year 2024
- Revenue is expected to grow 3-5% compared to 2023,
- Crocs revenue is to grow 4-6%, whilst the HeyDude brand is expected to be flat to slightly up,
- Adjusted operating margin of 25% and adjusted diluted earnings per share of $12.05 to $12.50
- Non-GAAP adjustments of $10m that is primarily related to HeyDude’s distribution and logistics project, impacting the cost of goods sold.
