Nike Outperforms Among Dow Jones Stocks In October; Crocs Stock Dives On Outlook

In a tough month overall for Dow Jones stocks, a rebounding Nike (NKE) ran nearly at the top of the index. Footwear stocks in general had a strong month, outpacing nearly all other industry groups, despite steep losses for the month from former leader On Holding’s (ONON). Meanwhile, Crocs (CROX) stock tumbled after slashing its outlook in its Q3 report early Thursday.

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Crocs Earnings

The clog and casual footwear maker’s earnings growth slowed for the second consecutive quarter, increasing 9.4% to $3.25 per share adjusted. Total revenue increased 6.2% to $1.045 billion, marking the third straight quarter of decelerating gains.

Analysts polled by FactSet expected Crocs to report earnings of $3.10 per share adjusted on $1.03 billion in revenue.

Crocs brand revenue increased 11.6% to $798.8 million while HEYDUDE brand fell 8.3% to $246.9 million.

For the fourth quarter, Crocs guided adjusted earnings between $2.05 and $2.35 per share on a 1% to 4% decline in revenue, ranging between $903 million and $938 million.

The outlook was well below FactSet forecasts of $2.78 per share on $1.02 billion in sales.

Crocs guided full-year earnings ranging from $11.55 to $11.85 per share adjusted, down from the prior outlook between $11.83 and $12.22 per share. Crocs reported earnings of $10.92 per share for fiscal 2022. The company expects FY2023 revenue increasing 10% to 11%, ranging from $3.9 billion to $3.94 billion. Crocs previously guided revenue between $4 billion and $4.065 billion.

Wall Street sees full-year earnings of $12.08 per share on $4.08 billion in revenue.

Raymond James upgraded CROX stock to outperform from market perform on Oct. 20 with a 110 price target. Crocs surprised its potential upside in the first half of the year, analyst Rick Patel wrote in a research note. Raymond James sees further momentum based on Google Trends and mobile app data checks, as well as an “attractive” overseas opportunity.

CROX stock marked its high for the year in April. It tumbled in late July after its second-quarter earnings included a Q3 outlook below the Wall Street consensus.

CROX Stock

Crocs stock plunged 17.2% premarket Thursday, which would push shares well below short-term technical support at the stock’s 21-day exponential moving average at the open. Crocs shares have been trading tight as they sketch out a possible bottom to the six-month pullback. Shares have been testing resistance at their 50-day moving average prior to the report.

October Performance

The Dow Jones Industrial Average booked its third straight monthly decline, although losses slowed to 1.4% in October. The blue chip benchmark is now down 2.8% year to date, and 7.8% below its Aug. 1 high in the correcting market. Caterpillar (CAT) and Chevron (CVX) posted some of the heaviest losses among Dow Jones stocks in October, down 17.2% an 13.6%, respectively.

Shoemakers, however, saw one of the strongest gains among industry groups tracked by IBD. The 11-stock group rallied 11.2% for the month, a clear sign of strength heading into the holiday shopping season.

Deckers Outdoor (DECK), Weyco Group (WEYS) and Nike were the group leaders in October. Crocs managed a 1.2% gain on the month, halting a three-month slide. The stock is down almost 20% year to date through Wednesday.

Shoe Surge

Meanwhile, footwear stocks picked up their pace in October, ahead of a very uncertain holiday shopping season. Shoe sales typically start climbing in October and peak in December, according to St. Louis Federal Reserve data.

Of the 197 industry groups tracked by IBD, the Apparel-Shoes group posted the second best gain in October. Discount retailers posted a 4.4% gain, marking the third best-performing group.

Hoka maker Deckers Outdoor rallied about 16% last month followed by a 14% advance from Weyco. Nike rallied 7.5% during the month, outrunning nearly all other Dow Jones stocks, as well as most of its footwear and apparel peers.

Deckers Outdoor and Skechers (SKX) topped forecasts for their earnings reports last week.

DECK stock broke out of a flat base on Friday after Goleta, Calif.-based company reported a fifth quarter of accelerating gains.

Skechers shares eased after its earnings, as its 2023 revenue forecast was below the Wall Street consensus.

Elsewhere, Nike’s rebound shows clear support at its 50-day line for the first time since its breakdown below that line of support in May.

Foot Locker (FL) is a key distributor for Nike, Adidas and other major apparel brands. The stock, which often trades in tandem with Nike, also bounced off its 10-week line in late October..

On Holding Trips

Meanwhile, Swiss shoemaker On Holding (ONON) unraveled nearly 8% in October and is trading below its 50-day and 200-day lines.

ONON stock continues to trend lower after the Roger Federer-backed performance shoemaker missed earnings expectations in mid-August and signaled further sales deceleration in the second half of the year. ONON stock doubled this year, prior to the report. Shares are up about 21% so far this year.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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