Crocs, Inc. (NASDAQ: CROX), a world leader in innovative casual footwear for women, men, and children, today announced its second quarter 2023 financial results.
“We achieved record quarterly revenues of over $1 billion, representing growth of 12% on a constant currency basis to prior year. Both the Crocs and HEYDUDE brands continue to gain share and bring in new consumers with our comfortable offerings, as evidenced by DTC growth of 26% in the second quarter,” said Andrew Rees, Chief Executive Officer. “We continue to invest behind our strategic priorities that are driving profitable growth.”
Amounts referred to as “Adjusted” or “Non-GAAP” are Non-GAAP measures and include adjustments that are described under the heading “Reconciliation of GAAP Measures to Non-GAAP Measures.” A reconciliation of these amounts to their GAAP counterparts are contained in the schedules below.
Second Quarter 2023 Highlights
- Consolidated revenues of $1,072.4 million increased 11.2%, or 12.0% on a constant currency basis, as compared to 2022.
- Crocs Brand revenues of $833.0 million increased 13.8%, or 14.9% on a constant currency basis, as compared to 2022.
- Crocs Brand growth was fueled by Asia revenue growth of 33.2%, or 39.0% on a constant currency basis, and North America direct-to-consumer (“DTC”) comparable sales growth of 12.9%, as compared to 2022.
- HEYDUDE Brand DTC revenues grew 29.7% and digital revenues increased 36.7% as compared to 2022.
- Operating margin was 29.7% and adjusted operating margin was 30.3%.
- Diluted earnings per share increased 31.4% to $3.39 as compared to the same period last year. Adjusted diluted earnings per share rose 10.8% to $3.59.
- We paid down $299.1 million of debt in the first half of 2023 and reduced gross leverage to 1.8x.
Second Quarter 2023 Operating Results
- Revenues were $1,072.4 million, an increase of 11.2% from the same period last year, or 12.0% on a constant currency basis. DTC revenues, which includes retail and e-commerce, grew 26.0%, or 27.2% on a constant currency basis. Wholesale revenues grew 0.2% compared to 2022, or 0.8% on a constant currency basis.
- Gross margin was 57.9% compared to 51.6% in the prior year. Adjusted gross margin improved 290 basis points to 58.1% compared to 55.2% in the same period last year.
- Selling, general, and administrative expenses (“SG&A”) of $302.8 million increased from $249.8 million in the same period last year, and SG&A as a percent of revenues rose to 28.2% from 25.9% in prior year. Adjusted SG&A rose to 27.8% of revenues versus 25.1% for the same period last year.
- Income from operations increased 28.4% to $318.5 million and operating margin improved to 29.7%, compared to 25.7% for the same period last year, due to higher gross margin and significantly less HEYDUDE acquisition expenses. Adjusted income from operations rose 11.7% to $324.6 million and adjusted operating margin improved 20 basis points to 30.3%.
- Diluted earnings per share increased 31.4% to $3.39, as compared to $2.58 for the same period last year. Adjusted diluted earnings per share increased 10.8% to $3.59 compared to 2022.
Second Quarter 2023 Brand Summary
- Crocs Brand: Revenues increased 13.8%, or 14.9% on a constant currency basis, to $833.0 million. DTC comparable sales increased 19.5%. Wholesale revenues increased 3.8%, or 4.6% on a constant currency basis.
- North America revenues of $474.6 million increased 12.2%, or 12.5% on a constant currency basis.
- Asia Pacific revenues of $198.3 million increased 33.2%, or 39.0% on a constant currency basis.
- Europe, Middle East, Africa, and Latin America (“EMEALA”) revenues of $160.1 million declined 0.2%, or 1.4% on a constant currency basis.
- HEYDUDE Brand: Revenues during the second quarter increased 3.0% to $239.4 million. DTC revenues increased 29.7% to $90.6 million. Wholesale revenues declined 8.4% to $148.8 million following pipeline fill in the same period last year.
Balance Sheet and Cash Flow
- Cash and cash equivalents were $166.2 million as of June 30, 2023, compared to $191.6 million as of December 31, 2022.
- Inventories decreased to $436.3 million as of June 30, 2023, compared to $471.6 million as of December 31, 2022 and $501.5 million as of June 30, 2022.
- Capital expenditures during the six months ended June 30, 2023 were $51.6 million, compared to $56.7 million for the same period last year, reflecting continued investments in our distribution centers and expansion of our corporate facilities to support growth.
- Borrowings were $2,027.5 million as of June 30, 2023 compared to $2,322.4 million as of December 31, 2022, as we repaid $299.1 million of debt. Our liquidity position remains strong with $166.2 million in cash and cash equivalents and $563.7 million in available borrowing capacity as of June 30, 2023.
