Crocs exceeds all expectations, ups guidance for 2018
Niwot, Colorado-based footwear company Crocs, Inc. reported a strong start to the year on Tuesday, recording higher-than-expected e-commerce-driven growth in both revenue and income for the first quarter, and increasing its full-year guidance.
Overall revenues for the first quarter ended March 31, 2018 were $283.1 million, up 5.7% (0.7% in constant currencies) compared to the same period in the previous year. This growth was achieved despite the loss of some $12 million related to the closure of retail stores and business model changes at the company.
Losses were largely offset by a strong performance in Crocs’ e-commerce channel, which grew 24.1%, while wholesale increased 6.5% and retail comparative store sales rose 7.6%.
The company’s income from operations in the first quarter came to $25.9 million, up 66.4% compared to $15.6 million in Q1 2017, making for a net income attributable to common stockholders of $12.5 million, up from $7.2 million in the prior-year period.
“The year is off to a strong start, with first quarter results exceeding guidance on all metrics,” said Crocs President and CEO Andrew Rees. “Our Spring/Summer 2018 collection is being well-received, and our LiteRide launch surpassed our expectations. We continue to successfully execute against our strategic priorities and are increasing our guidance.”
During the quarter, Crocs also made the decision to close down its manufacturing and distribution facilities in Mexico. Manufacturing in the country has already been stopped and the company’s distribution center is expected to close before the end of the third quarter, a process that Crocs foresees entailing a one-off charge of $5 million in Q2.
Nonetheless, revenues for the second quarter are now expected to total between $315 and $325 million, compared to $313.2 million in Q2 2017.
Croc’s full-year guidance has also been upped: revenues in 2018 are predicted to increase low single digits compared to the $1,023.5 million reported in 2017, with e-commerce and wholesale growth expected to offset lower retail sales, while income from operations is now predicted to be around $50 million, compared to $17.3 million last year.
Crocs has continued to expand and diversify its offer over the last few months, launching its new LiteRide technology with a sporty lightweight collection in March. The brand also released the next instalment of its collaboration with actress Drew Barrymore at the beginning of this month, with the release of the Chevron collection, which aims to channel a more sophisticated vibe while still maintaining Crocs' trademark playfulness.
The company did, however, recently took a blow in Europe after learning that it cannot protect its classic clog design in the EU because it filed its application with the bloc’s intellectual property office too long after it revealed the model on the European market.
When the decision was made in March, Crocs was given two months to appeal at the European Court of Justice.
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