While it was not a complete surprise to investors — since the company downward-adjusted its fiscal outlook in September — Crocs Inc.’s declining revenues and net loss in the third quarter still drove the company’s stock down on Thursday.
At press time, Crocs’ stock had slipped a little more than 5 percent after the company posted a 9.4 percent decline in revenues in Q3.
Crocs CEO Gregg Ribatt said the slumping sales and profit were influenced by three “critical items” — currency, which reduced revenue by $26 million; China, where Crocs withheld distributorship of $4 million in the quarter; and adjusted gross margins, which were down 760 basis points from the prior year, primarily due to currency and inventory liquidation.
“We’re making significant progress on positioning our business for long-term sustained success beginning in the first half of 2016 and remain committed to making the right long-term strategic decisions for the company that will benefit our shareholders in the future,” Ribatt said during the conference call. “As we laid out in early 2015, this year remains a significant transition year for the company, with associated volatility in our short-term financial results due to economic headwinds and operational issues, which we have been discussing throughout the year.”
Crocs also announced Thursday that it has named longtime retail executive Carrie Teffner CFO of the company. Teffner was appointed to the board in June and will take over as CFO in December.
Net Income: The company posted a net loss of $24 million for the third quarter, ending Sept. 30, 2015, compared with net income of $15.8 million in the comparable quarter.
EPS: Crocs posted a diluted loss per share of 37 cents, compared with diluted EPS of 12 cents in the comparable quarter.
Net Revenue: Reported revenues declined 9.4 percent, to $274 million.
Adjustments: Adjusted net loss available to common shareholders was $19.2 million. Revenue on a constant-currency basis and adjusted for business-model changes was up 3.7 percent. Revenue, adjusted for currency only, declined 0.8 percent.
Executive Insights: “Despite the volatility in our current-year financial results, we are extremely pleased with the meaningful progress we’ve made on our strategic priorities, which we laid out in detail at our Investor Day Conference, including strengthening the Crocs brand, elevating our product stories, exiting noncore categories and businesses, evolving our international business model to focus on our six most important markets, strengthening our relationships with key wholesale partners, improving our direct-to-consumer capabilities and performance, simplifying our operations and processes, enhancing our supply chain and building a best-in-class team.” –Ribatt during Q3 conference call.
Ribatt On Inventory: “We aggressively cleared out aged and excess inventory, which impacted margins in the quarter but positions us for improved results in 2016.”
Looking Ahead: The company expects Q4 revenue in the $200 million-to-$210 million range, compared with $206.5 million last year.