Crocs Slips 30% From Its 52-Week High: Will the Stock Rebound?

Crocs, Inc. CROX has experienced a pullback in its share performance, losing nearly 30% from its 52-week high, prompting questions about its potential for a rebound. Currently trading at $111.72, the stock has seen a 30.3% drop from its peak. In the past three months, Crocs shares have plunged 19.8%, underperforming the industry's growth of 21.4% and the S&P 500's 8.3% return. Image Source: Zacks Investment Research The recent decline in share performance is attributed to the challenges stemming from its HEYDUDE brand, which has underperformed amid a subdued consumer environment. Also, the company is grappling with rising expenses, which are putting additional pressure on its margins, further contributing to its underperformance.Moreover, Crocs’ stock has fallen below critical technical thresholds, including its 50-day and 200-day moving averages. This moving average is an important indicator for gauging market trends and momentum. The breach of this threshold heightens investor concerns about the stock’s short-term outlook.What Derailed CROX’s Stock Momentum?Crocs' HEYDUDE brand has struggled, with revenues showing a notable decline compared to the previous year in third-quarter 2024. This drop was driven by weaker performance in both wholesale and direct-to-consumer (DTC) channels. The decline in DTC revenues was partly attributed to a strategic shift from performance marketing to brand marketing, which impacted sales expectations.Although Crocs is actively pursuing initiatives to revitalize the HEYDUDE brand, the company acknowledged that the turnaround is likely to take longer than initially expected due to the current market challenges and brand performance. Due to these factors, management has provided a pessimistic outlook for the fourth quarter. The company anticipates the HEYDUDE brand’s revenues to decline 4-6%.The company anticipates revenues to remain flat or increase slightly year over year in constant currency. For the fourth quarter, management expects the international growth rate to fall below the year-to-date growth rate due to ongoing regulatory pressures in India, which have negatively impacted the company’s ability to meet demand. In North America, the outlook is also negative based on expectations of a more selective consumer and the timing of wholesale shipments across quarters.Looking ahead, Crocs anticipates a relatively subdued consumer environment in the United States until the Black Friday/Cyber Monday holiday period. Per the company, the industry saw heightened promotional activities in China during the mid-season festival, reflecting a more conservative approach by China consumers. As a result, the company expects to see a greater pullback in major Tier 1 cities like Shanghai and Beijing.Crocs has been witnessing rising costs related to continued investment in talent, marketing, digital and retail to support long-term market share gains. Also, distribution and logistics inefficiencies have been acting as headwinds. This has resulted in higher selling, general and administrative expenses for a while now.Does CROX Have the Potential to Turn Things Around?Despite challenges, Crocs is on track with its long-term strategy and key initiatives to deliver sustainable growth, announced in September 2021. Its growth strategy is focused on three key initiatives. First, igniting icons across both brands to enhance awareness and relevance for customers. Second, investing strategically in Tier 1 markets to boost market share gains via talent, marketing, digital and retail. And third, diversifying the product range to attract more consumers.Another key factor that could turn things around for Crocs is remarkable growth in global brand awareness and desirability through collaborations and product innovations. Recent partnerships include a Bath & Body Works collection featuring the Classic Clog and cozy sandal with mystery scent Jibbitz charms, as well as creative collaborations with popular names like Batman, Squishmallow and McDonald’s Happy Meal.The company is focusing on its Echo and in-motion product franchises, with upcoming launches like the Echo Wave, Molded Mule and Echo Search all priced under $100 to appeal to budget-conscious yet fashion-forward consumers. A standout highlight in the third quarter was the debut of Pet Crocs, created in partnership with BARK. These EVA foam booties let dogs and their owners match in the brand's iconic Classic Clogs and are available globally online and in select stores.To address challenges with the HEYDUDE brand and drive profitable growth, Crocs has implemented a multi-faceted strategy. This includes enhancing long-term brand perception, reducing excess inventory, and closing over 50% of retail accounts to focus on a more premium market presence. The company is also raising average selling prices to better reflect the brand’s value and improve margins.What Do Estimates Say About CROX?Reflecting the positive sentiment, the Zacks Consensus Estimate for CROX’s fiscal 2024 and 2025 earnings has been unchanged in the past 30 days at $13.93 and $13.22, respectively. This estimate indicates expected year-over-year growth rates of 7.5% and 2.3%, respectively.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Does CROX’s Stock Look Attractive?Investors might find Crocs appealing due to its relatively low valuation. CROX is currently trading at a discount to its historical and industry benchmarks. The stock has a forward 12-month P/E ratio of 8.46, below the median level of 8.58 scaled in the past year. This compares to the forward 12-month P/E ratio of 14.89 for the industry. Image Source: Zacks Investment Research Final Words on CROCS StockCrocs’ HEYDUDE brand’s underperformance has weighed on its performance lately, but that does not mean the company is devoid of potential. Challenges like HEYDUDE's underperformance, rising operational costs and market headwinds acted as a deterrent. Investors with a long-term horizon may stay invested in the stock. The recent decline in the stock price has made the stock look attractive and provides a better entry point for potential investors. However, with the margin yet to recover in full, Crocs comes with an element of caution. CROX currently carries a Zacks Rank #3 (Hold).Three Stocks to ConsiderSome better-ranked stocks are Wolverine World Wide WWW, Gildan Activewear Inc. GIL and Steven Madden, Ltd. SHOO.Wolverine World Wide designs, manufactures and distributes a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for WWW’s current financial-year sales indicates a decline of almost 23% from the year-ago reported figures. The consensus mark for EPS reflects significant growth to 89 cents from 5 cents reported in the prior year. WWW has a trailing four-quarter earnings surprise of 17.03%, on average.Gildan Activewear manufactures and sells various apparel products in the United States, North America, Europe, the Asia Pacific and Latin America. It carries a Zacks Rank of 2 (Buy) at present. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.The consensus estimate for Gildan Activewear’s current financial year sales and earnings indicates advancements of 1.5% and 15.6%, respectively, from the prior-year figures.Steven Madden designs, sources, markets and sells fashion-forward, name-brand and private-label footwear. It currently has a Zacks Rank #2.The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.6% and 13.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Wolverine World Wide, Inc. (WWW): Free Stock Analysis Report Crocs, Inc. (CROX): Free Stock Analysis Report Gildan Activewear, Inc. (GIL): Free Stock Analysis Report Steven Madden, Ltd. (SHOO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks