Crocs Q2 Profit Dips 42% Hit by Cool Temperatures

CrocsNiwot, CO–Shares of Crocs Inc. fell as much as 23% in after hours trading Wednesday after the footwear brand reported its second quarter profit fell 42%.

For the quarter ended June 30, Crocs posted net income of $35.4 million, or 40 cents a share, compared to $61.5 million, or 68 cents a share a year ago. Excluding charges related to a tax audit in Brazil and other items, adjusted earnings were 48 cents.

Net revenue was up 9.9% to $363.8 million and—excluding currency impacts—was up 13%. Global comparable store sales were up 1%, also excluding currency fluctuations, as a steep decline in Japan was offset by growth in its other geographic markets.

The second quarter figure misses analysts’ average estimate for earnings of 64 cents on revenue of $365.1 million.

Gross margin narrowed to 55.2% from 59.3%. Overhead costs were up 21%.

“Challenges during the quarter included continued weakness in consumer spending in the U.S., Europe and Japan, compounded by colder than normal temperatures during April and May in the U.S. and Europe,” Crocs CEO John McCarvel said.

For its third quarter, Crocs forecast earnings of 20 cents to 23 cents a share on revenue of $300 million to $310 million.

“We expect gross margins in the third quarter to be consistent with the prior year as discounting in the second quarter was primarily the result of late spring and weather conditions,” noted Jeff Lasher, chief financial officer, in a post-earnings call with analysts.

Analysts’ consensus expected 39 cents on sales of $325 million for third quarter.

 

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