Crocs (CROX 27.17, +5.73, +26.7%) shares have jetted to a seven-year high today after the company reported a strong third quarter and upbeat guidance for the fiscal year.
The casual footwear manufacturer and distributor saw its revenues increase 7.3% year-over-year to $261.1 million, and pivoted from a loss of $0.03 per diluted share a year ago to a profit of $0.07 per diluted share this year.
The strong bottom-line growth was driven by the top line, as well as a healthy 250 basis points improvement in its gross margin rate of 53.3% and good expense management that led to a 420 basis points improvement in its operating margin rate of 5.3%.
Notably, Crocs made impressive inroads with its inventory management strategy, as inventories declined 16.1% year-over-year. That decline was aided by strong demand for its products, which was apparent on many levels, and it left an impression that Crocs won't have to be super promotional entering the holiday selling season.
E-commerce sales rose 23.2% year-over-year, with all regions -- the Americas, the Asia Pacific, and Europe -- experiencing double-digit growth. Wholesale revenues jumped 9.3%, led by a 12.8% jump in the Asia Pacific region. Retail sales dropped 0.8%, yet that was a byproduct of a reduced store count. Importantly, retail comparable store sales surged 15%.
The company is anticipating a strong finish to the fiscal year.
Crocs projects 2018 revenue to be up 4-5% year-over-year, up from its prior guidance of a low single-digit increase, and believes its 2018 gross margin will rise 100 basis points year-over-year to 50.5%, up from its prior guidance of 70 to 100 basis points. In addition, Crocs said it is expecting 2019 revenues to show a mid-single digit increase over 2018.
Crocs impressed investors on nearly all fronts this morning, and its stock has responded accordingly, getting an added benefit most likely from some short-covering activity. With today's gain, shares of CROX are up 115% year-to-date as investors have responded favorably to restructuring efforts that have paid off with increased sales and improved profitability.