Shares of shoemaker Crocs rallied 27 percent Thursday after CEO Andrew Rees said strong clog sales helped the company post a surprise profit in the third quarter.
“Clogs grew in every region. Our North American results were particularly strong as interest in our Classic Clog continued to climb,” Rees said Thursday. “It’s a staple for every day and on top of that, it was embraced by high school and college-aged students for back-to-school wear. This growing demand, which exceeded our expectations, gives us confidence going into spring summer of 2019.”
Clog revenue, which represents about half of the company’s total, grew by 12.7 percent, exceeding the expectations of company executives and Wall Street analysts. Crocs posted earnings per share of 7 cents against expectations of a loss per share of 2 cents, according to analysts polled by Refinitiv.
Third-quarter revenue topped $261.1 million versus estimates of $246.4 million.
“We’re driving clog relevance by delivering our new seasonally appropriate colors, prints and embellishments and new styles like our platform clog,” Rees added. “Given the importance of personalization, we have continued to enlarge our Jibbitz Charm Collection,” the segment that produces the myriad figures that can be attached to the shoes.
The company also trumpeted its new partnership with popular rapper Post Malone, a longtime fan of the shoes. The musician’s most recent album broke 45 streaming records on its first day of release, said Rees, adding to the company’s forward momentum.
“What’s particularly exciting to us is that we didn’t choose Post Malone, he chose us,” the CEO said. “He’s been a fan of Crocs regularly wearing our clogs and posting about them on social media long before we ever reached out to him.”
But management wasn’t alone in its optimism behind the new partnership, as some of Wall Street’s top analysts expressed their approval.
“Like a facial tattoo, the third quarter draws attention,” wrote Stifel analyst Jim Duffy, referring to Post Malone’s many visible tattoos. “Crocs is reinvesting selling, general and administrative savings from restructuring including investments in ambassador relationships, such as Post Malone, that appear to be successfully raising the profile of the brand.”