The stock of Crocs (CROX) is down a staggering 25% on Aug. 7 after the shoemaker delivered forward guidance that sent investors running for the exits.
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The casual-footwear company known for its distinctive rubber shoes managed to beat Wall Street forecasts for its quarterly financial results. The company reported earnings per share (EPS) of $4.23, which was above consensus expectations of $4. Revenue in the period totaled $1.15 billion, in line with estimates.
Unfortunately, Crocs’ third-quarter outlook disappointed. The forward guidance was well below estimates, with management saying they expect revenues to decline between 9% and 11% in the current third quarter. Wall Street had expected sales to rise in Q3. The company blamed tariffs for the gloomy forecast.
Concerning Margins
Margins are also a concern among analysts and investors. Crocs said that it expects to make about 47% of its shoes in Vietnam, which faces a tariff of 20% from the U.S. The company forecast an adjusted operating margin of approximately 18% to 19% for the third quarter, down from 25.4% a year ago.
“The current operating environment is uncertain and challenging to predict,” said Crocs CEO Andrew Rees on the company’s earnings call. “Against this, we have chosen to focus on managing expenses.” However, the CEO said cost controls are likely to hurt Crocs’ short-term sales, adding to the pessimistic outlook. CROX stock has now declined nearly 30% this year.
Is CROX Stock a Buy?
The stock of Crocs has a consensus Moderate Buy rating among nine Wall Street analysts. That rating is based on seven Buy, one Hold, and one Sell recommendations issued in the last three months. The average CROX price target of $120.25 implies 53.18% upside from current levels. These ratings are likely to change after the company’s financial results.
