Thanks to ”exceptional consumer demand and strong sell throughs,” Crocs saw its third-quarter revenues jump by 15.7 percent from the year-ago quarter to a record $361.7 million. In constant currencies they gained 15.9 percent. The company recorded growth in all channels and geographies. It also saw record sales in e-commerce, as consumers migrated to online shopping during the pandemic. In addition, net income surged by 73.5 percent to $61.9 million.
The virus impacted the business globally, including through store closures or reduced operating hours and decreased retail traffic in the first half. However, since June 30, 2020, 98 percent of shops were open.
The gross margin improved by 4.8 percentage points to 57.2 percent, due to product mix, higher prices on certain products, and lower levels of promotions and discounts. The operating margin rose by 7.1 percentage points to 19.9 percent.
Wholesale revenues grew by 12.4 percent to $164.5 million, while retail sales rose by 8.9 percent to $117.2 million, with an increase on a comparable store basis of 16.2 percent.
Global e-commerce soared by 35.5 percent, with strong growth in all regions, to represent 37.7 percent of revenues versus 32.2 percent last year. Direct-to-consumer comparable sales, which includes retail and e-commerce, grew by 23.8 percent.
By region, the Americas climbed by 27.3 percent in constant currencies to $171.6 million. However, In Asia-Pacific, revenues declined by 9.0 percent in constant currencies to $67.7 million, but the group recorded a growth in the region of 5.2 percent in direct-to-consumer (DTC) comparable sales and a gain of 2.8 percent in comparable retail store sales.
In Europe, the Middle East and Africa, sales were up by 10.7 percent to $60.0 million in constant currencies. Comparable retail stores sales fell by 4.7 percent. However, the group saw robust online sales, with DTC comparable sales growing by 22.9 percent.
Crocs closed nine stores and opened none during the quarter. The number of stores in the EMEA region was down to 50 from 53.
Based on this performance, Crocs expects revenues to grow between 20 percent and 30 percent in the fourth quarter compared with the fourth quarter in 2019. This translates into full-year revenue growth of approximately 5 percent to 7 percent.
Crocs noted that the global clog market is worth about $5 billion and has outpaced the casual footwear, which is estimated to have grown by 4 percent annually. Crocs claims be the leader in the clog market with an about 20 percent share.
The company highlighted that the global sandal market is much larger, at a towering $30 billion annually, but it is also fragmented and with “no clear leader.” The category represented 19 percent of Crocs’ sales in the third quarter and the company sees the opportunity to increase its share. The key drivers to expanding in the segment are to target female consumers, invest in marketing to support client awareness and stimulate higher purchase frequency ”to address multiple wearing occasions,” Crocs explained.