CEO Andrew Rees said that the U.S. consumer is behaving cautiously around discretionary spending and is faced with current and implied future price increases.
Crocs (CROX) CFO Susan Healy said during the earnings call on Thursday that the company expects its namesake brand sales to be down mid-single digits in the third quarter, led by declines in North America and offset in part by growth in international markets.
“This includes our expectation that the second half wholesale environment will be challenging for both brands based on the visibility we have in our current order books,” Healy stated on the post-earnings call.
The retail user message count on Crocs jumped 300% in the last 24 hours on Stocktwits, as of Thursday morning. Retail sentiment on the stock improved to ‘extremely bullish’ from ‘bullish’ territory a day ago, with chatter at ‘extremely high’ levels, according to Stocktwits data.
Crocs expects third-quarter consolidated revenue to be down between 9% and 11%. “This revenue range is based on the visibility we have to orders from our wholesale partners, a reduction of discounts in our cross DTC channels, the pullback of performance marketing for Heydude, the incremental cleanup actions we have elected to take for Heydude, as well as the potential range of outcomes against a weakening U.S. consumer backdrop,” Healy added.
Shares of Crocs were down nearly 25% in early Thursday trading. The company’s revenue of $1.15 billion came in line with Wall Street estimates, according to data compiled by Fiscal AI.
“We see the U.S. consumer behaving cautiously around discretionary spending. They are faced with current and implied future price increases, which we think have the potential to be a further drag on an already choiceful consumer,” CEO Andrew Rees said. “Against this backdrop, our retail partners are acting more carefully and reducing their open-to-buy dollars in future seasons,” he added.
A user on Stocktwits noted that while North America remains weak, international growth continues and presents a bigger opportunity.
Crocs’ stock has declined over 28% year-to-date and nearly 41% in the last 12 months.
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