US footwear giant Crocs' revenue surges 6.2% in Q3 FY23

Direct-to-Consumer (DTC) revenues were particularly strong, marking a significant increase of 17.8 per cent, or 17.7 per cent on a constant currency basis. However, in contrast, wholesale revenues experienced a dip of 3.6 per cent, or 4.3 per cent on a constant currency basis, the company said in a press release.

The gross margin for the quarter stood at 55.6 per cent, showing an improvement from last year's 54.9 per cent. The adjusted gross margin saw a substantial enhancement of 230 basis points, arriving at 57.4 per cent, compared to 55.1 per cent in the same quarter the previous year.

The period also witnessed a rise in selling, general, and administrative expenses, which climbed to $307.8 million from $277.2 million in the previous year. Consequently, selling, general, and administrative expenses as a per cent of revenues increased to 29.4 per cent from 28.1 per cent. Adjusted selling, general, and administrative expenses also ascended to 29.1 per cent of revenues from last year's 27.2 per cent.

In terms of profitability, income from operations rose by 3.7 per cent to $273.9 million, yet the operating margin saw a slight decrease to 26.2 per cent from 26.8 per cent in the prior year. Adjusted income from operations grew by 7.8 per cent to $295.9 million, and the adjusted operating margin experienced a growth of 40 basis points to reach 28.3 per cent.

The company’s diluted earnings per share increased by 5.5 per cent to $2.87, against $2.72 for the same period last year. Adjusted diluted earnings per share also showed a healthy increase of 9.4 per cent to $3.25.

The Crocs brand's revenues jumped by 11.6 per cent, or 11.1 per cent on a constant currency basis, amounting to $798.8 million. DTC comparable sales soared by 15.3 per cent, while wholesale revenues grew by 4.5 per cent, or 3.6 per cent on a constant currency basis.

In North America, Crocs brand’s revenues stood at $480.7 million, marking an increase of 8.0 per cent, or 8.2 per cent on a constant currency basis. The Asia Pacific region reported revenues of $175.2 million, a remarkable increase of 26.5 per cent, or 28.6 per cent on a constant currency basis. Revenues for Europe, Middle East, Africa, and Latin America (EMEALA) climbed by 8.3 per cent, or 2.7 per cent on a constant currency basis, to reach $142.8 million, the release added.

Conversely, the Heydude Brand saw a revenue decrease of 8.3 per cent to $246.9 million. Despite the decline, DTC revenues for Heydude rose by 14.6 per cent to $100.4 million. However, wholesale revenues witnessed a drop of 19.4 per cent to $146.5 million.

"We delivered a strong third quarter, exceeding the high-end of our guidance, led by double-digit revenue growth in our Crocs brand supported by healthy full-price selling and industry-leading operating margins," said Andrew Rees, chief executive officer. "Both our brands gained share during the back-to-school season. During the quarter, we took decisive action around Heydude to accelerate our marketplace management strategy to ensure long-term brand health. As such, we are adjusting our full-year outlook to reflect this shift."

Fibre2Fashion News Desk (DP)