What Happened?

Shares of footwear company Crocs (NASDAQ:CROX) jumped 21% in the pre-market session after the company delivered solid fourth-quarter 2024 results, surpassing analysts' revenue, EPS, and EBITDA estimates. Revenue increased by 3.1%, led by a 4% rise in the core Crocs brand, while HEYDUDE sales remained flat. Strength in direct-to-consumer sales, particularly in China and North America also helped offset weaker wholesale performance. 

Guidance for the next quarter was underwhelming, with projected revenue expected to decline by 3.5%, weighed down by softness in HEYDUDE sales. However, full-year EPS guidance exceeded expectations, offering some reassurance to investors. Overall, this quarter wasn't perfect, but it was quite solid.

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What The Market Is Telling Us

Crocs’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Crocs and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 4 months ago when the stock dropped 18.8% on the news that the company reported weak third-quarter earnings as management lowered full-year revenue guidance. The revision is mainly reflected in the HEYDUDE Brand, with full-year sales expected to be down approximately 14.5%, compared to the previous forecast of a 10% to 8% decline. Also, management added that it would take longer than expected for the brand to turn the corner. Similarly, its EPS forecast for the next quarter missed expectations. 

On the other hand, Crocs exceeded analysts' constant currency revenue estimates during the quarter, and its EPS outperformed Wall Street's estimates. 

Zooming out, we think this was an underwhelming quarter, made more painful because peers like SKX and DECK reported strong quarters just last week.

Crocs is down 2.7% since the beginning of the year, and at $107.06 per share, it is trading 33% below its 52-week high of $159.68 from June 2024. Investors who bought $1,000 worth of Crocs’s shares 5 years ago would now be looking at an investment worth $2,776.

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