In a Nutshell: Crocs’ repositioning plan for long-term success, coupled with new investments in technology and media buzz generated from celebrity and designer collaborations, is paying off for the Niwot, Colo.-based brand.
Crocs trimmed the fat in order to focus time and investments in major areas. The company reduced its SKU count by 50 percent, closed 160 stores and shut down its Mexico manufacturing and distribution facilities. In return, the brand kicked off the year with the successful launch of LiteRide, an athleisure collection powered by new LiteRide foam insoles that are 40 percent softer and 25 percent lighter than Classic Croslite foam, the original Crocs comfort material.
While sport-inspired silhouettes resonate with consumers on the go, don’t count the classic Crocs clog out just yet. Revenue for the polarizing shoe increased 12 percent in the first quarter, boosted by collaborations with Drew Barrymore and Christopher Kane and the social media engagement and press opportunities that followed.
Clogs represent half of Crocs’ revenue, but the brand said it plans to seize a large sandal opportunity in the coming months by building sandals into every franchise to cover key wearing occasions.
Sales: Revenues increased 5.7% to $283.1 million over the first quarter of 2017, or 0.7% on a constant currency basis. Top-line growth was achieved despite the loss of approximately $12 million due to fewer stores and business-model changes, Crocs said. Bolstered by sophisticated analytics and personalization, Crocs-operated e-commerce sites have proven to be the company’s fastest-growing distribution channel with revenues increasing 24.1% in Q1. The company said it is benefiting from “global deployment of best practices.” Meanwhile, Crocs’ wholesale business grew 6.5%. The retail channel delivered positive comparable-store sales of 7.6%.
Earnings: Income from operations of $25.9 million increased 66.4% from $15.6 million in last year’s first quarter. Net income attributable to common stockholders was $12.5 million, or $0.15 per diluted share, compared with $7.2 million, or $0.08 per diluted share, in last year’s first quarter.
CEO’s Take: “The year is off to a strong start, with first-quarter results exceeding guidance on all metrics. Our Spring/Summer 2018 collection is being well-received, and our LiteRide launch surpassed our expectations,” Crocs president and CEO Andrew Rees said. “We continue to successfully execute against our strategic priorities and are increasing our guidance. We now expect full-year revenues to be up low single digits, as double-digit e-commerce growth and moderate wholesale growth more than offset the decline in retail revenues associated with our store closure plan.”