Crocs Q3 Reveals More China Troubles

Crocs Inc. has found 2014 a tough year, and declining sales in Asia set the firm up for another challenging quarter.
 
Net income for the third quarter ending Sept. 30 was $15.8 million, or 12 cents per diluted share, below analyst predictions of 14 cents per diluted share, but above net income for the year-ago period of $13 million. The adjusted non-GAAP income was 30 cents per diluted share.
 
Revenue for the quarter looked more positive, hitting $302.4 million, an increase compared with $288.5 million in the year-ago period. Crocs beat analyst expectations of $295.4 million.
 
The firm has struggled in 2014 to find the right footing after sluggish sales. Earlier this year the company announced a turnaround plan focused on streamlining the number of styles and cutting back on retail stores. It also received an infusion of cash from private equity investor Blackstone at the tail end of 2013.
 
In the third quarter, global same-store sales were down again, but global wholesale revenue was up 8 percent, especially on gains in Europe and improvements in the Americas. Sales in China and Japan slipped during the third quarter.
 
“Revenues in the quarter were in line with our expectations in three out of four regions. In the Americas, we saw a 10 percent revenue rise, as U.S. same-store sales trends began to improve in the back half of the quarter. Revenue declined slightly in Asia, where results were substantially impacted by weaker performance in our China wholesale and retail businesses,” said President Andrew Rees.
 
The company hasn’t yet announced a new CEO since former CEO and president John McCarvel left in April. Former Reebok North America president Bob Munroe has joined as GM of the Americas, and Michelle Poole is now heading up merchandising and product development. Scott Yuan was promoted to GM of greater China.

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