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Crocs, Inc. (CROX Quick QuoteCROX - Free Report) has been gaining from sturdy consumer demand, brand strength and solid online show. This led to an impressive first-quarter 2022 performance.

The companys top and bottom lines surpassed the Zacks Consensus Estimate for the eighth straight quarter in the first quarter. Also, sales and earnings improved year over year. The top line witnessed growth across all regions and channels.

The companys latest buyout of HEYDUDE, which sells lightweight, casual shoes and sandals for men, women and children, is likely to add value to its fast-growing footwear business. This is the second high-growth, highly profitable brand added to the Crocs portfolio.

Crocs believes that HEYDUDEs consumer-insight-driven casual, comfortable and lightweight products perfectly fit its existing portfolio. The acquisition is likely to diversify Crocs brand portfolio and add to its digital penetration, as HEYDUDE has a strong online presence.

The acquisition is expected to be immediately accretive to Crocs revenues, operating margins and earnings. It expects HEYDUDE to deliver revenues of $620-$670 million on a reported basis, beginning Feb 17, 2022. Management expects the HEYDUDE brand to reach $1 billion in revenues by 2024.

Speaking of its online unit, the company has been witnessing significant progress in expanding digital and omnichannel capabilities. Digital sales advanced 20.3% year over year and accounted for 32.8% of revenues in the first quarter. Increased focus on the Crocs mobile app and global social platforms aided digital sales.

Within digital, India, South Korea and Australia regions witnessed double-digit increases from the year-ago period. Gains from strategic collaborations, influencer campaigns, and digital and social marketing efforts remained upsides.

Driven by these factors, management updated the guidance for 2022 and issued a second-quarter view. For 2022, revenues related to the HEYDUDE buyout are likely to be $750-$800 million on a reported basis, up from $620-$670 stated earlier. The company expects revenue growth (excluding HEYDUDE) of more than 20% for 2022. Consolidated revenues are projected to be $3.5 billion, suggesting year-over-year growth of 52-55%.

Adjusted earnings are envisioned to be $10.05-$10.65, up from the prior stated $9.7-$10.25. The adjusted operating margin is anticipated to be 26-27% compared with the aforementioned 26%.

For second-quarter 2022, revenues are projected to grow 43-49% to $918-$957 million. In the prior-year quarter, it reported revenues of $641 million. The adjusted operating margin is estimated to be 26%, including air freight expenses of $50 million.

However, Crocs is reeling under operational headwinds related to the ongoing supply-chain challenges, high inflation, rising interest rates, adverse impacts of the war in Ukraine and current shutdowns stemming from the zero-COVID policy in China. Supply-chain disruptions have been challenging for manufacturers and have significantly hampered the mobility of products across the globe.

The company notes that global inflation, contributing to incremental freight costs, particularly air freight, will continue in 2022. It expects air freight costs of $75 million to hurt gross margins in the first half of 2022.

Image Source: Zacks Investment Research

We note that shares of CROX have lost 19.8% in the past three months compared with the industrys decline of 7.5%.

Despite supply-chain headwinds and rising inflation, this Zacks Rank #3 (Hold) stock remains well-poised on the back of solid demand, brand strength and robust digital business. Also, the Zacks Consensus Estimate for the companys current financial years sales and earnings suggests growth of 53% and 26.6%, respectively, from the year-ago periods reported numbers. Topping it, earnings estimates for 2022 have moved up 3.6% in the past 60 days.

Some better-ranked stocks from the same industry are Delta Apparel (DLA Quick QuoteDLA - Free Report) , Steven Madden (SHOO Quick QuoteSHOO - Free Report) and GIII Apparel Group (GIII Quick QuoteGIII - Free Report) .

Steven Madden is involved in designing, sourcing, marketing and selling private label footwear, handbags and accessories for women, men, and children. It currently flaunts a Zacks Rank #1 (Strong Buy). SHOO has a trailing four-quarter earnings surprise of 44%, on average. You can see the complete list of todays Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Steven Maddens current financial years sales and earnings suggests growth of 15.2% and 19.6%, respectively, from the year-ago period's reported numbers.

Delta Apparel, a manufacturer of knitwear products, currently sports a Zacks Rank #1. DLA has a trailing four-quarter earnings surprise of 95.5%, on average.

The Zacks Consensus Estimate for Delta Apparel's current financial years sales and earnings per share suggests growth of 11.9% and 10.1%, respectively, from the year-ago period's reported numbers.

GIII Apparel, a manufacturer, designer and distributor of apparel and accessories, presently has a Zacks Rank #2 (Buy). GIL has a trailing four-quarter earnings surprise of 160.6%, on average.

The Zacks Consensus Estimate for GIII Apparels current financial-year sales and earnings suggests growth of 8.7% and 5.2% from the year-ago periods reported numbers, respectively.

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Here's Why You Should Hold on to Crocs (CROX) Stock Now - Zacks Investment Research