Crocs Turnaround ‘Right on Track,’ As Brand Tops Q2 Forecasts

Crocs
A style by Crocs.
Crocs

Crocs Inc.’s efforts to revitalize a sluggish business are, once again, evidencing results.

For the second time in a row, the lightweight clog maker reported sales and profit that were better than expected — this time for Q2.

Crocs said its revenues, landing at the high end of its guidance, were $313.2 million. While, on a constant currency basis, those results represented a decline of 2.7 percent, they topped Wall Street’s forecast for sales of $311.3 million.

Profits, meanwhile, soared 55 percent year-over-year, to $18.1 million, or 20 cents per diluted share, besting market watchers’ predictions for EPS of 14 cents.

During the second quarter, we continued to revitalize the Crocs brand and drive improvement in the quality of our revenues,” said president and CEO Andrew Rees. “A favorable response to our spring/summer 2017 collection, particularly as it relates to clogs and sandals, drove solid growth in these silhouettes.  A focus on our core molded products and effective inventory management enabled us to deliver gross margins which exceeded guidance, while our intense focus on expense management kept SG&A below projected levels.”

Crocs, which announced last week that brand ambassador Drew Barrymore will be elevating her role by designing shoes for the label, has been in the midst of a major turnaround effort which included store closures and streamlining of upper management.

We are right on track,” Rees told investors during the brand’s conference call. “The actions we have taken and additional actions to be taken through the balance of the year are transforming Crocs into a more nimble and stronger company capable of prospering in the face of a challenging retail environment.”

For the year ahead, the company maintained its guidance but its third-quarter predictions may have missed the mark for investors, who sold off the stock briefly following the firm’s conference call. Crocs said it expects Q3 revenues between $230 and $240 million.

As of 2:30 p.m. ET, Crocs’ shares were back in the green, up 4.6 percent, to $8.46.

We are optimistic about the early response to our fall/holiday 2017 collection, and anticipate that the positive sentiment seen to date will continue throughout the second half of the year, despite the challenging retail environment,” Rees said.