Crocs Soars 19% on Stellar Q4 Results, Raises Outlook for 2025

Crocs (NASDAQ: CROX) has seen its stock price rise dramatically, jumping 19% over the last week to $107 as of February 18. This impressive performance far outpaces the S&P 500, which only grew by 1% in the same timeframe. The catalyst for this surge can be traced back to the company’s fourth-quarter results that surpassed expectations, fueled by strong international sales and a boom in digital transactions. Revenue for the quarter reached $990 million, exceeding forecasts of $961 million and marking a 3% year-over-year increase. Meanwhile, adjusted earnings per share came in at $2.52, down 2% from last year, yet this still beat predictions.

Looking Ahead: Crocs Projects Mixed Results for 2025

For the first quarter of 2025, the company anticipates revenues to decline approximately 3.5% compared to the previous year. Adjusted diluted earnings per share are expected to range between $2.38 and $2.52. Over the course of 2025, Crocs aims for mid-single-digit revenue growth for its Crocs brand, while actively addressing an expected 7-9% drop in HeyDude revenue. In an effort to combat the effects of currency fluctuations and tariffs, Crocs is targeting an adjusted operating margin of 24%. Analysts project adjusted earnings per share for the full year 2025 to fall between $12.70 and $13.15. Investors are encouraged to focus on the company’s digital advancements, international growth, and strategic expense management as crucial elements for future growth.

Brand Performance: A Tale of Two Brands

The uneven performance between Crocs’ brands tells an interesting story. While the flagship Crocs brand reported a solid 4% revenue growth in the fourth quarter, the acquisition of the HeyDude brand in 2022 has not yet met growth expectations. Specifically, HeyDude recorded flat revenue, leaving some investors frustrated, especially considering the $2.5 billion acquisition price. Nonetheless, the Crocs brand remains a powerhouse, contributing approximately 80% of the company’s total business. This reliance on a strong core brand may justify a higher valuation for Crocs stock, especially given its impressive revenue growth and profit margins. In Q4, Crocs’ adjusted operating margin stood at over 20%, which surpasses industry norms, although it declined from 24% recorded the previous year. For context, Nike (NYSE: NKE) reported an operating margin of 11% in its most recent quarter.

Financial Snapshot: Growth Amid Challenges

Crocs reported total consolidated revenues of $4.1 billion for fiscal 2024, showing a 3.5% increase year-over-year. Adjusted earnings per share surged 9.5% to $13.17, while diluted earnings per share rose 24% to $15.88. The Crocs brand alone saw revenues increase by 9% year-over-year to $3.3 billion, propelled by a 10% boost in direct-to-consumer sales and an 8% rise in wholesale. In contrast, the HeyDude brand experienced a 13% revenue decline to $824 million, influenced by a 4% drop in direct-to-consumer sales and a sharper 20% fall in wholesale sales.

Stock Performance: A Volatile Journey

Crocs’ stock performance over the past four years has been quite variable. Annual returns have displayed significant volatility compared to the S&P 500, with returns of 105% in 2021 followed by drops of -15% in 2022 and -14% in 2023. However, in 2024, the stock bounced back with a 17% increase. In contrast, the Trefis High Quality (HQ) Portfolio, which consists of 30 stocks and tends to experience less volatility, has outperformed the S&P 500 over the past four years. The HQ Portfolio has provided better returns with lower risk, offering a steadier investment experience.

[1] Returns as of 2/19/2025
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.