Crocs Continues Turnaround Effort, Fourth-Quarter Results Mixed

Crocs is getting back to the basics.

Under new CEO Gregg Ribatt, who was a top executive at Collective Brands Inc., the company has been eliminating non-core product categories, closing stores, reducing headcount and overhauling its international business.

Some of those efforts began to pay off in the fourth quarter, though there is still a long road ahead.

“We delivered fourth-quarter sales in line with expectations. Our business was essentially flat last year on a constant-currency basis across all regions, including the Americas, Europe, Japan and Asia, with the exception of Latin America and China,” Ribatt said in a statement. “We believe the strategy the company outlined last July will position Crocs for sustained success in the future.”

Analysts were pleased to see progress in the fourth quarter, and they — like the company — noted that 2015 will be a transition year.

“Crocs is making headway,” said Sterne Agee analyst Sam Poser in a research note. “Revenue in almost all global geographies is turning the corner. The company turnaround plan is proceeding well. A strong management team is in place, the product mix is becoming more focused and compelling, and systems and processes are improving.” China is one area in which it could take longer for the company to get back on track, Poser said.

During the fourth quarter, Crocs reported a net loss of $56.9 million, or 70 cents a share, compared with $66.9 million, or 76 cents, during the year-ago period. Excluding charges and other restructuring costs, the loss was $30 million. For the three-month period, revenue was $206.5 million, a decline of 9.7 percent compared with the year-ago period.

Looking ahead, the company expects first-quarter revenues to be down 10 percent to 12 percent on a currency-neutral basis, to a range of $260 million to $265 million. “We expect the declines to moderate substantially in Q2 and growth to return in the second half of 2015 as many of the strategic changes we implemented in late 2014 positively impact the business,” Ribatt said in the statement.

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