Crocs, the creator of molded plastic clogs, and most recently sleeker collections of wedge sandals, pumps and ballet flats, is cutting 183 jobs and plans to close 75 to 100 of its 624 retail stores. The decision was announced Tuesday when the company announced disappointing second-quarter earnings. Net income for the quarter sank to $19.5 million from $35.35 million the year before.
Crocs reported that the layoffs are expected to result in an annual cost savings of $4 million this year and $10 million next year, however, the store closings will reduce yearly revenue by approximately $35 to $50 million.
Andrew Rees, Crocs president, said, “We have identified the key strategic and structural improvements that we expect will allow the company to achieve its potential.” He added, “We have a clear, well-defined strategy for addressing these issues and improving performance. Work is underway already to drive significant change throughout our company in four key areas.”
Overall, the company is hoping that less is more. In addition to the store closures and layoffs, Crocs plans to reduce investments in smaller geographic markets in order to increase engagement with larger markets and its wholesalers, including Brazil and Taiwan. The brand will also trim its roster of underperforming SKUs by 30 to 40 percent in order to simplify its supply chain and reduce inventory and product line costs.
Moving forward Crocs reported plans to key in on its signature molded footwear styles that earned the brand $847 million at its peak in 2007. A refreshed and more cohesive brand image, padded by almost a 50 percent increase in marketing expenses, will support the company’s new direction.