Shares of Crocs have risen an impressive 55% over the past year, a performance that far outpaces Nike’s 23% decline and outperforms big tech names like Apple, Microsoft and Alphabet.
So one of this year’s best-performing stocks may be at the back of your shoe closet, comments Pan Kuan-yuk in her article in the Financial Times’ Lex column.
Crocs was an early winner of the pandemic. Sales tripled to nearly $3.6 billion between 2019 and 2022 as stay-at-home Americans ditched their heels and leather shoes for more comfortable footwear. The company is projected to have $4.1 billion in revenue this year.
Her chunky shoes, which look like a cross between a flip flop and a plastic strainer, have become a staple for nurses, food service workers and gardeners since their launch in 2002.
Under CEO Andrew Reese, who took the helm in 2017, the company has sought to broaden its reach. Collaborations with artists and brands such as Post Malone, Bad Bunny, the NBA and even KFC have made Crocs a fashion must-have among younger shoppers.
Clever social media marketing, investments in e-commerce and booming sales of Jibbitz – tiny decorative charms that Crocs fans buy to personalize their shoes – also contributed to the company’s strong sales growth.
Despite the increase in share price, Crocs shares don’t look expensive. The stock trades at just 10 times forward earnings. Deckers Outdoor — whose own empire of ugly Uggs, Hoka sneakers and Teva sandals helped it post explosive quarterly results this week — commands a price multiple of nearly 30 times that of Nike and Birkenstock.
HeyDude, which specializes in casual footwear and acquired Crocs for $2.5 billion in 2022, may be responsible for the discount. Crocs is trying to turn things around at the business, which has weaker margins and sales than its namesake brand. HeyDude’s revenue, down 19% last year, fell another 11% in the first six months of the year.
This also means that improvements to HeyDude could be a catalyst for further growth in Crocs’ stock price. The story is similar for the company’s debt. Net borrowing stood at $1.7 billion at the end of June, compared with $750 million at the end of 2021, before the HeyDude deal. The company has deleveraged and should continue to do so, Pan Kwan Yuk concludes.
SOURCE: ot.gr
#Crocs #pandemic #shares #soaring
