Crocs (CROX) has a spring in its step this morning (+7%) as the stock trades higher following its Q1 report. Non-GAAP EPS jumped 57% yr/yr to $0.36, well ahead of market expectations. Revenue rose 4.5% yr/yr to $295.95 mln, which was above prior guidance of $280-290 mln.
Just over half of sales (53% of 2018 revs) are made via the wholesale channel (third party footwear retailers, sporting goods stores etc.), about 30% are sold via its retail channel (company stores, kiosks), and the remaining 17% are sold online. In Q1, wholesale revenue grew 5.2% yr/yr, e-commerce sales grew 16.5%, and retail same store comps were a robust +8.7%.
In terms of guidance, Crocs expects Q2 revenue of $350-360 mln, in line with market expectations. The summer season (Q2/Q3) is vitally important to Crocs, so it's good to see Crocs provide solid guidance for Q2. Crocs also reaffirmed full year revenue at $1.14-1.16 bln.
In addition to earnings, Crocs also announced it will increase its share buyback authorization by $500 mln. This increase is on top of the existing $500 mln share repurchase program, which has $100 mln remaining. As such, the remaining $600 mln is a good size pool for share repurchases. That should help buoy the stock if it shows weakness later in the year.
Crocs says 2019 is off to a great start. CEO Andrew Rees said, "Revenues exceeded expectations as demand for our product and excitement around the brand continued to yield accelerated sell-throughs." Rees was "particularly pleased with the exceptional direct to consumer (online sales) segment, successfully comping an earlier Easter last year." Rees notes that Crocs has "now delivered five consecutive quarters of double-digit DTC comp growth."
Last year was a bit of a transition year for Crocs. The company has been closing underperforming stores, it has changed its marketing message, it has been reducing discount sales channels, and it has gotten back to focusing on its flagship clogs. The company had been experimenting with other styles, but clogs are front and center again.
Overall, this was a good quarter for Crocs and a good start to 2019. It's still early but hopefully it's an indication that all the changes being made are having an impact. The stock has been recovering nicely over the past year, going from the mid-teens to around $29 currently. It seems investors are buying into the changes.