CROX: Shares Plunge to All-Time Low on Q3 Results and Guidance
Submitted By Knobias ClipReport
By Fain Hughes, fhughes@knobias.com
Shares of Crocs, Inc. (CROX) plunged to an all-time low on Thursday after the Company reported a net loss of $148.0 million, or $1.79 per diluted share, compared to net income of $56.5 million, or $0.66 per diluted share, for the three months ended September 30, 2007. The reported net loss of $148.0 million, on a loss before income taxes of $135.7 million, includes approximately $104.1 million in restructuring, impairment and inventory related non-cash charges taken during the three months ended September 30, 2008. Revenues for the third quarter were $174.2 million compared to $256.3 million for the three months ended September 30, 2007.
The Company expects to generate revenues for the fourth quarter of fiscal 2008 of between $100 million and $120 million and diluted loss per share of approximately $0.50 to $0.65, which are both below anaysts estimates. The Company expects to reduce capital expenditures in 2009 by approximately 50% from 2008.
Ronald Snyder, President and Chief Executive Officer of Crocs, commented in a conference call, “After several years of rapid expansion with triple digit sales and earnings growth, we have experienced a slowdown in demand for our products in certain regions. Therefore, as the business maturs to more normalized levels, we are making strategic adjustements in order to right size our operations and cost structure to better align lower projected sales volume.”
John McCarvel, COO of Crocs, added, “We have been actively executing on our factory capacity rationalization plan. We reduced our global manufacturing to levels in line with today’s business. We realigned our operating resources to more variable cost model as we enter 2009. We are planning our 2009 production plan to be 85% subcontracted and 15% internal manufacturing. We will continue to consolidate and cut distribution costs in 2009. We believe that we are making significant and sustained progress in creating a leaner and more efficient company for the future.”
He added, “Demand for our new Fall 2008 and Spring 2009 products continues to generate excitement. Our new product introductions with our major accounts has resulted in strong pre-bookings which are 49% for Q4 and 43% in Q1. While the U.S. and European businesses have been adversely impacted by the economic challenges, Asia grew 14% and our global retail business grew by 52% in Q3. We are introducing new merchandising systems with major retailers in 2009, coupled with enhanced point-of-sale displays and channel specific consumer marketing campaigns. Crocs remains the number one casual brand in the athletic specialty sporting good channel for men, women and children.”
Mr. Snyder concluded, “While the current macro-economic environment is creating challenges beyond our control, we continue to be optimistic about the long term outlook for our Company. Meanwhile, consumers remain loyal to our brand and products. We are confident that the positive attributes of our our proprietary Crocs material will allow us to successfully leverage our position into new categories of footwear.”
