Why Crocs Stock Gained 17% in July

What happened

Crocs (NASDAQ:CROX) shareholders outpaced a booming market last month, with shares jumping 17% compared to the 2.3% increase in the broader market, according to data provided by S&P Global Market Intelligence.

The boost was powered by a well-received earnings report and contributed to huge short-term gains for investors. The stock is up more than 100% so far in 2021.

A pair of rubber molded shoes.

Image source: Getty Images.

So what

Crocs said on July 22 that sales soared 93% to $641 million in the fiscal period that ended in late June. That result was better than Wall Street expected thanks to surprisingly strong demand across key markets like the U.S., China, and Europe.

The footwear giant also posted impressive profit margins thanks to rising prices and a tilt in demand toward more premium products. “We continue to see strong consumer demand for the Crocs brand globally,” CEO Andrew Rees said in a press release.

Now what

The stock’s rally mainly came from upgraded sales and profit outlooks for the rest of 2021. But shareholders’ long-term returns will depend on how well management can capitalize on the excitement that the brand has won among consumers. If Crocs can use that buzz to push into complementary product lines and new demographics and geographies, then its annual sales could rise much higher than the current 2021 target of $1.4 billion.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/08/03/why-crocs-stock-gained-17-in-july/

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