Crocs Guidance Cut: How Worried Should Investors Be?
Crocs (NASDAQ: CROX) has a profitability challenge. Yes, the casual footwear specialist recently reported solid sales growth for the selling period that ended in late June. Demand held up despite new pressures like accelerating inflation, and the company is still winning market share. But investors weren't thrilled to see sharp declines in Crocs' profitability, especially when combined with surging inventory levels.
While these factors are potential warning flags, they might not mean it is time to abandon the stock. Let's take a closer look.
Crocs' reported sales figure contained lots of noise thanks to its recent acquisitions and the strengthening U.S. dollar. Strip out those factors and growth still looked strong, however. Revenue for the core Crocs brand was up 19% in Q2, reflecting likely market-share gains in a choppy industry. That's roughly even with the 20% rate that Wall Street was hoping to see.
Source Fool.com
