Crocs Inc.’s shares have been booming in early morning trading — up more than 16 percent, to $7.23, as of 10:30 a.m. — after the firm released first-quarter financials that topped estimates across the board.
Amid its store closures — part of an aggressive and ongoing turnaround plan — the lightweight-clog maker pulled off Q1 revenues of $267.9 million, a 4.4 percent year-over-year decline but well above analysts’ expectations for revenues of $258.1 million.
Reported profits were $7.2 million, or 8 cents per diluted share, a 12.5 percent improvement over the prior year. Adjusted profits fared even better, gaining 45.3 percent year-over-year, to $9.3 million. Analysts had predicted that earnings per share would land at 3 cents during the period.
Crocs CEO Gregg Ribatt — who will step aside in June, passing the torch to Crocs president Andrew Rees — attributed the better-than-expected Q1 performance to fresh product as well as new marketing and operational initiatives. (Crocs announced in December 2016 that it had tapped Drew Barrymore to serve as a brand ambassador, and laid out a new SG&A reduction plan in March 2017.)
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“We turned in solid first-quarter results by delivering improved product, launching a new and engaging marketing campaign and realizing early benefits from the operational improvements that we’ve been focused on,” Ribatt said during the brand’s conference call. “Our spring/summer 2017 line has been well received by consumers. We’ll continue to keep our clogs fresh and exciting and grow our business in the sandal, flip and slide category. Each of these categories represents a significant opportunity for growth for us.”
Ribatt said the firm is moving “rapidly” to implement the SG&A reduction plan, which includes 158 store closures.
“We closed a net 16 company-operated stores during the first quarter of 2017 and signed agreements to transfer 24 company-operated stores to distributors during the second quarter of 2017,” Ribatt noted.
Although investors generally cheered the firm’s Q1 performance, it wasn’t all good news today. Crocs also announced that it had adjusted its revenue forecast for the fiscal year downward. The company now expects 2017 revenues to be down low single digits compared to 2016, whereas prior guidance predicted flat revenues. The adjustment, according to the company, reflects further reduction in discount-channel sales as well as Crocs’ new agreements to transfer certain company-operated stores in the Middle East and China to distributors. The company also said it now expects SG&A for 2017 to be between $495 million and $500 million, down from the $500 million to $505 million range previously provided, also due to the new Middle East and China agreements.
“We’re continuing to focus on each of those areas, and I am confident that further improvements will be realized,” Ribatt said. “I’m confident in and excited about Crocs’ future. We’ve elevated our product in marketing capabilities, improved our finance and operating functions and built a very talented team, all in support of the strategy that we’re confident will deliver shareholder value.”