During its investor day Wednesday, Crocs Inc. lowered its guidance for revenues in the third quarter to $270 million to $280 million, from the prior range of $280 million to $290 million.
And the result was a stock sell-off.
At press time, the Niwot, Colo.-based firm’s share price was down nearly 9 percent, although management attempted to assure investors during the meeting that the turnaround plans for the brand were still on track.
CEO Gregg Ribatt said that while he is proud of what the firm has accomplished to date, “there is significant work to be done.”
“Our initial priority [was] to strengthen the management team; the transition and implementation of the SAP system to drive cost savings; and elevating our consumer connections,” Ribatt said.
The full impact of the firm’s efforts, Ribatt added, would surface in the shipment and sell-throughs for the spring and summer ‘16 line — the first developed by Crocs’ new team.
In Q1, the firm announced a series of senior level organizational changes including the elimination of the COO role — most recently held by Scott Crutchfield — and the SVP of global supply chain role as well as the addition of the SVP of global sourcing, Phil Blake, and the promotion of Dennis Sheldon to SVP of global distribution and logistics. Then, in mid-September, Crocs promoted Terence Reilly to SVP and CMO. Before that, on Sept. 8, Jeff Lasher, SVP and CFO since 2011, resigned to accept the CFO role at West Marine Inc.
Among its other major investor-day announcements, Crocs said it expects approximately $6 million of shipment holds in China in the third quarter.
The company said the country remains one of its ongoing challenges along with the strength of the U.S. dollar against other major currencies — Crocs said it expects “$4 million in currency erosion” within the quarter.
When its turnaround efforts are complete, the company said it expects to return to a 10 percent to 12 percent EBIT-margin business in the mid-term.
In its most recent quarter, Q2, the firm’s revenues and profits continued to decline. Profits sank 43 percent year-over-year to $13.4 million, while revenues decreased 8.2 percent (reported) to $346 million.
Other mid-term goals include 8 percent revenue gains driven by wholesale and e-commerce; stronger business in Asia and the Americas; boosting its China business; and stabilizing margins.