US' Crocs achieves $4.1 bn in FY24, driven by 7.2% DTC sales growth

The company's gross margin remained steady at 58.8 per cent, compared to 55.8 per cent in the previous year. Adjusted gross margin improved by 230 basis points to 58.8 per cent from 56.5 per cent, Crocs said in a press release.

Selling, general, and administrative (SG&A) expenses increased by 18.3 per cent to $1.39 billion, representing 33.8 per cent of revenues, up from 29.6 per cent in the prior year. Adjusted SG&A expenses rose by 19.7 per cent to $1.36 billion, accounting for 33.2 per cent of revenues compared to 28.7 per cent.

Income from operations declined by 1 per cent to $1.02 billion from $1.04 billion, resulting in an operating margin of 24.9 per cent, down from 26.2 per cent. Adjusted income from operations fell by 4 per cent to $1.05 billion from $1.1 billion, with an adjusted operating margin of 25.6 per cent, compared to 27.7 per cent in the previous year.

Diluted earnings per share (EPS) increased by 24.2 per cent to $15.88 from $12.79. Adjusted diluted EPS rose by 9.5 per cent to $13.17 from $12.03, excluding the current period tax impact of intra-entity transactions.

Brand-wise, Crocs recorded an 8.8 per cent revenue increase to $3.28 billion, or 9.8 per cent on a constant currency basis. By channel, direct-to-consumer (DTC) revenues rose by 9.9 per cent to $1.67 billion, or 10.7 per cent on a constant currency basis, while wholesale revenues increased by 7.6 per cent to $1.61 billion, or 8.8 per cent on a constant currency basis. Geographically, North America revenues grew by 3.1 per cent to $1.83 billion, or 3.2 per cent on a constant currency basis, while international revenues surged by 17.0 per cent to $1.45 billion, or 19.2 per cent on a constant currency basis.

In contrast, the Heydude brand experienced a revenue decline of 13.2 per cent to $824 million. By channel, DTC revenues of this brand fell by 3.9 per cent to $368 million, while wholesale revenues saw a steeper decline of 19.5 per cent, dropping to $456 million.

“We delivered another record year for Crocs, Inc highlighted by revenue growth of 4 per cent to $4.1 billion and adjusted earnings-per-share growth of 9 per cent. We generated exceptional operating cash flow of approximately $990 million, which enabled us to return value to shareholders through more than $550 million in share repurchases, while fortifying our balance sheet through the pay down of approximately $320 million of debt,” said Andrew Rees, chief executive officer (CEO) at Crocs.

“Our fourth quarter performance exceeded expectations across all metrics led by Crocs brand growth of 4 per cent, as the North American business outperformed our plan and China growth accelerated from the third quarter. Heydude revenue was flat to last year, higher than anticipated as direct-to-consumer sales inflected to growth,” added Rees.

“In 2024, we stepped up our investment in our brands while driving industry leading margins. We expect operating margin to be approximately 24.0 per cent for 2025, and beyond this year, we are committed to maintaining an annual operating margin at or above this level. We believe that our continued investments in our brands and exceptional cash flow generation will support Crocs, Inc. for sustained growth and value creation over the long-term,” said Susan Healy, chief financial officer (CFO) at Crocs.

Fourth quarter (Q4) financial

In Q4 FY24, Crocs reported consolidated revenues of $990 million, reflecting a 3.1 per cent increase, or 3.8 per cent on a constant currency basis. DTC revenues grew by 5.5 per cent, or 6.1 per cent on a constant currency basis, while wholesale revenues declined slightly by 0.2 per cent but grew by 0.7 per cent on a constant currency basis. The company's gross margin improved to 57.9 per cent from 55.3 per cent, with adjusted gross margin rising by 220 basis points to 57.9 per cent from 55.7 per cent.

SG&A expenses increased by 16.1 per cent to $373 million, representing 37.7 per cent of revenues, up from 33.5 per cent in the prior year. Adjusted SG&A expenses also rose by 23.0 per cent to $373 million, accounting for 37.7 per cent of revenues compared to 31.6 per cent. Income from operations declined by 4.6 per cent to $200 million, resulting in an operating margin of 20.2 per cent, down from 21.8 per cent. Adjusted income from operations fell by 13.5 per cent to $200 million, with an adjusted operating margin of 20.2 per cent, compared to 24.1 per cent in the same period last year.

Diluted EPS surged by 52.9 per cent to $6.36 from $4.16, while adjusted diluted EPS declined by 2.3 per cent to $2.52 from $2.58.

Brand-wise, Crocs revenues increased by 4.0 per cent to $762 million, or 4.9 per cent on a constant currency basis. Channel wise, DTC revenues increased by 5.0 per cent to $447 million, or 5.7 per cent on a constant currency basis, and wholesale revenues increased by 2.7 per cent to $315 million, or 3.8 per cent on a constant currency basis. By geography, North America revenues remained flat at $471 million, both in reported and constant currency terms. International revenues grew by 11.5 per cent to $291 million, or 13.7 per cent on a constant currency basis.

Heydude brand revenues remained unchanged at $228 million. Its DTC revenues grew by 7.2 per cent to $133 million, and wholesale revenues declined by 8.6 per cent to $95 million.

Outlook

For the first quarter (Q1) of 2025, Crocs expects revenues to decline by approximately 3.5 per cent compared to the first quarter of 2024. The Crocs brand is projected to see a slight decline of around 1 per cent or remain flat compared to the prior year, while the Heydude brand is expected to decline by approximately 14 to 16 per cent. The company anticipates an adjusted operating margin of approximately 21.5 per cent, factoring in an estimated 80 basis points of negative impact from foreign currency fluctuations and announced or pending tariffs. Adjusted diluted earnings per share (EPS) is forecast to range between $2.38 and $2.52.

For full fiscal 2025, the company expects revenue growth of approximately 2 to 2.5 per cent compared to 2024. This projection includes an anticipated negative impact of approximately $62 million due to foreign currency fluctuations. The Crocs brand is expected to grow by approximately 4.5 per cent, while the Heydude brand is projected to decline by 7 to 9 per cent compared to the previous year.

The company anticipates an adjusted operating margin of approximately 24.0 per cent, factoring in an estimated 60 basis points of negative impact from foreign currency fluctuations and announced or pending tariffs in full year. The combined GAAP tax rate is expected to be around 21.5 per cent, while the non-GAAP effective tax rate is projected at approximately 18.0 per cent. Adjusted diluted earnings per share (EPS) is forecast to range between $12.70 and $13.15, with this guidance not accounting for any potential impact from future share repurchases. Capital expenditures (capex) for the year are expected to range between $80 million and $100 million.

Fibre2Fashion News Desk (SG)