Crocs Q1 Profit Slips, Revenues Creep Higher

The combination of the late Easter, adverse currency impacts in Japan and Russia, and a change in product mix hurt Crocs Inc.’s profits in the first quarter. But a lift in sales for the period beat the Street’s expectations.

The Niwot, Colo.-based firm reported net income of 6 cents per diluted share for the first quarter, compared with 33 cents in the prior corresponding period.

Excluding certain restructuring charges, diluted earnings per share were 14 cents, down from 35 cents in the same period last year.

The result fell short of analysts’ consensus forecast of 17 cents.

Revenue for the period increased 0.2 percent to $312.4 million, in line with the firm’s prior guidance for between $305 million and $315 million, and ahead of the Street’s forecast of $311 million.

Crocs President and CEO John McCarvel said the result met company forecasts as it continues its search for a replacement leader. As previously announced, McCarvel will step down as CEO today, with Chairman Thomas Smach serving as interim leader. 

“From a segment perspective, our Asia segment continued to deliver solid quarterly revenue growth across all channels, and our Europe segment remained on the positive trajectory, which started late last year,” McCarvel said.

The firm is forecasting GAAP revenue of between $370 million and $375 million in the second quarter of 2014, slightly below consensus forecasts of $377.4 million.

On a conference call with investors and analysts, Jeff Lasher, Crocs CFO, detailed the company’s restructuring efforts following the closing of its Blackstone investment and the retirement of McCarvel, which marks a period of transition as Crocs focuses on increasing shareholder returns and rejiggering its product mix.

“We believe the investment by Blackstone conveys a strong financial commitment in our brand, together with our strong balance sheet that will enhance our long-term growth strategy and shareholder returns,” Lasher said on the call.

“In 2014, as we intend to increase focus on profitability and retail excellence, we may moderate the pace of our investments in new retail stores, as well as consolidate some existing locations. We’ll provide this in more detail as we move forward during the year,” he added.

Of the company’s merchandise mix, Lasher said, “As we continue to diversify our product line with new footwear brands such as the Stretch Sole and Busy Day and carryover products such as the Huarache and A-Leigh wedge, we are experiencing a reduction in Clog sales as a percentage of revenues.”

Shares of Crocs were 14 cents, or 0.1 percent higher, at $15.27 in morning trading on Thursday.

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