Performing better than what analysts had estimated, Crocs reported a sales increase of 73.0 percent in the third quarter to a record level of $625.9 million, with a gain of 72.2 percent on a constant-currency basis. The company posted an exceptionally high operating margin of 32.2 percent, up from 19.9 percent in the year-ago period. The net profit more than doubled to $153.5 million from $61.9 million in the third quarter of 2020.
The management is now budgeting a sales increase of 62 to 65 percent for the full financial year. On the other hand, the current disruption in the supply chain is expected to limit the growth next year to a level above 20 percent, the management indicated, with incremental air freight costs of $75 million.
Crocs’ business is being heavily impacted by the recent factory closures in Vietnam, where the production will take time to go back to former levels. To mitigate the impact, Crocs has shifted some production to other locations, improved factory throughput and made greater use of airfreight, while allocating product units strategically.
The biggest growth was reached in the Americas during the third quarter, up by 94.5 percent. In terms of local currencies, sales went up by 42.8 percent in EMEA and by 21.2 percent in Asia-Pacific. The Americas remained the biggest market with a turnover of $455.9 million, followed by EMEA at $86.3 million and Asia-Pacific at $83.6 million.
Online sales rose by 68.9 percent, representing 36.8 percent of revenues, down from 37.7 percent in the same period a year ago, but up from 32.2 percent in the third quarter of 2019. Overall, direct-to-consumer revenues rose by 60.4 percent, but wholesale revenues went up at a faster pace of 88.2 percent.
The gross margin improved by 6.7 percentage points to 63.9 percent. On an adjusted basis, it rose by 6.8 points to 64.2 percent. Operating expenses declined to 31.4 percent of revenues on an adjusted basis, compared with 36.6 percent a year earlier. As a result, on an adjusted basis, the operating margin rose to 32.8 percent from 20.8 percent.
