5 Footwear Stocks: Earnings Preview

Crocs

This won't be an overly important quarter for Crocs, as analysts look to the footwear makers strategy for 2011.

"Crocs is still working to reengage retailers that disengaged last year," Poser says.

The company is attempting to break its pigeon-hole of plastic clogs, introducing new styles like toning and tennis shoes, at higher price points.

Sterne Agee initiated coverage on Crocs earlier in the month with a buy rating, sending the stock to a new high.

"We are confident that the company has turned the corner and broadened its assortment well beyond the original Beach and Cayman clogs," Poser wrote in a note at the time of initiation. "There were nine styles when the company went public in '05, now there are over 250, with many styles directed to specific markets."

The company wholesale business is expected to be a major source of growth. Wholesale currently makes up 63% of total revenue, and Sterne Agee predicts it will expand at a double-digit percentage rate for at least the next two year.

Crocs aggressive push into direct-to-consumer sales could also help grow margins. "In '11, CROX will be focusing on U.S. wholesale rather than retail as old relationships are mended and new wholesale relationships are forged," Poser wrote. "We also expect meaningful acceleration in wholesale revenue and margins in Brazil, France, Germany, and the U.K., all of which just have been brought in-house and should greatly benefit from the company's expertise and financial wherewithal."

Analysts are expecting Crocs to report third-quart earnings of 24 cents a share on revenue of $205.8 million on Nov. 5. This compared with a profit of $22.1 million, or 25 cents a share, on revenue of $177.1 million, in the third quarter last year. Excluding a one-time tax benefit and other items, the company actually earned a penny a share.

Crocs reiterated its third-quarter outlook on Sept. 10, predicting earnings in the range of 22 cents to 24 cents a share, and revenue of $205 million. The company has surpassed Wall Street's expectations for earnings in the past three quarters.