Crocs shares slide after 2Q profit shrinks
NIWOT, Colo. (AP) — Crocs Inc., maker of colorful plastic shoes, said Wednesday that its net income dropped 43 percent as discounting increased late in the second quarter.
The company's results and its outlook for the current quarter both fell far short of expectations and its shares tumbled more than 20 percent in aftermarket trading.
Crocs, which is based in Niwot, Colo., has been trying hard to expand beyond plastic clogs, from everything to wedges, sandals and even golf shoes. It's also been expanding overseas. Sales were weaker than expected late in the season in the U.S. and Europe, but overall jumped 22 percent in Asia. The region is a "fundamental driver" of Crocs' growth strategy, said CEO John McCarvel.
For the three months ended June 30, profit came to $35.4 million, or 40 cents per share. That compares with net income of $61.5 million, or 68 cents per share, in the same period last year. Excluding costs for a tax audit in Brazil and other one-time items, per-share profit dropped to 48 cents from 68 cents. Analysts expected 63 cents per share, according to FactSet.
In the U.S. and Europe the company had lower-than-expected late-season revenue and marked down items late in the quarter, which hurt gross margins, or the amount of each dollar in revenue a company actually keeps. The company blamed colder than usual weather in April and May in the U.S. and Europe.
New products accounted for more than half of sales during the quarter, and the company said it was "comfortable" that new models were "connecting" with shoppers.
Revenue rose 10 percent, to $363.8 million from $330.9 million. Analysts expected $365.5 million. Revenue rose 9 percent to $146.3 million in the Americas, rose 22 percent to $111.8 million in the Asia Pacific region, rose 22 percent to $60.2 million in Europe and fell 18 percent to $45.5 million in Japan.
Revenue in stores open at least one year rose 1 percent globally. The measure is a key gauge of a retailer's financial health because it excludes stores that open or close during the year. The company said the metric picked up when weather improved, and it grew 8 percent in the Asia Pacific region with "limited" discounting.
In the current quarter, Crocs expects earnings between 20 cents and 23 cents per share on revenue of $300 to $310 million. Analysts expect 36 cents per share on $325.3 million.
Shares fell $3.69, or 22 percent, to $13.29 in aftermarket trading, after ending the day down 33 cents at $16.98. The stock has risen 18 percent this year.