In a challenging month for Dow Jones stocks, the rebounding Nike (NKE) emerged as one of the top performers in the index. Despite a significant decline in former leader On Holding‘s (ONON) stock, footwear stocks, in general, demonstrated strong performance, surpassing other industry groups. However, Crocs (CROX) experienced a decline after lowering its outlook in its Q3 report.
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Crocs Earnings
The earnings growth of the clog and casual footwear brand slowed for the second consecutive quarter, with a 9.4% increase to $3.25 per share (adjusted). Total revenue also experienced decelerating gains, rising 6.2% to $1.045 billion.
In contrast, analysts polled by FactSet expected Crocs to report earnings of $3.10 per share (adjusted) on $1.03 billion in revenue.
Crocs brand revenue grew by 11.6% to $798.8 million, while the HEYDUDE brand saw an 8.3% decrease to $246.9 million.
For the fourth quarter, Crocs projected adjusted earnings between $2.05 and $2.35 per share, with a 1% to 4% decline in revenue ranging from $903 million to $938 million.
However, these projections fell well below FactSet forecasts of $2.78 per share on $1.02 billion in sales.
Crocs’ full-year earnings guidance ranged from $11.55 to $11.85 per share (adjusted), down from the previous outlook of $11.83 to $12.22 per share. The company reported earnings of $10.92 per share for fiscal 2022 and expects a 10% to 11% increase in revenue for FY2023, ranging from $3.9 billion to $3.94 billion. These projections were lower than the previous guidance of revenue between $4 billion and $4.065 billion.
According to Wall Street estimates, full-year earnings for Crocs are expected to reach $12.08 per share, with $4.08 billion in revenue.
On October 20, Raymond James upgraded CROX stock from market perform to outperform, setting a price target of $110. Analyst Rick Patel noted Crocs’ positive performance in the first half of the year and highlighted further momentum based on Google Trends and mobile app data checks, as well as its promising international opportunities.
After its Q3 outlook fell short of Wall Street consensus expectations, CROX stock reached its yearly high in April and experienced a decline in late July.
CROX Stock
Crocs stock plummeted 17.2% premarket on Thursday, breaking below the short-term technical support at the stock’s 21-day exponential moving average. The stock has been trading within a tight range as it potentially forms a bottom in the six-month pullback, with resistance being tested at the 50-day moving average prior to the report.
October Performance
The Dow Jones Industrial Average recorded its third consecutive monthly decline, with losses limited to 1.4% in October. As a result, the blue chip benchmark is now down 2.8% year to date and 7.8% below its August 1 high in the correcting market. Among Dow Jones stocks, Caterpillar (CAT) and Chevron (CVX) reported significant losses in October, with declines of 17.2% and 13.6%, respectively.
On the other hand, shoemakers demonstrated strong gains among the industry groups tracked by IBD. The 11-stock group rallied 11.2% during the month, signaling strength heading into the holiday shopping season.
Leading the group in October were Deckers Outdoor (DECK), Weyco Group (WEYS), and Nike. Crocs also managed to make a 1.2% gain for the month, putting a halt to its three-month slide. However, the stock is still down nearly 20% year to date as of Wednesday.
Shoe Surge
Footwear stocks gained momentum in October, despite the uncertainty surrounding the upcoming holiday shopping season. According to St. Louis Federal Reserve data, shoe sales typically begin to climb in October and peak in December.
Of the 197 industry groups tracked by IBD, the Apparel-Shoes group recorded the second-best gain in October. Discount retailers also performed well, with a gain of 4.4%, making it the third-best-performing group.
Deckers Outdoor saw a rally of about
