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Highlights from Crocs Q413 Earnings Conference Call

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Below are some highlights from Crocs' (NASDAQ: CROX) fourth-quarter earnings conference call:

  • Crocs aim will be a sharper focus on earnings growth with less emphasis on top-line growth.
  • Moderated the pace of investments in new retail stores as well as consolidating some existing locations.
  • Given the transition that the company will be going through, they will not be providing earnings guidance in 2014.
    • Crocs is in the process of recruiting a new Chief Executive Officer
  • Global retail comp store sales were down 4% in the fourth quarter and down 3% for the full year.
  • Internet sales in the quarter were up 10% and wholesale revenues for the quarter were up 4%.
  • Full-year revenues increased primarily due to a 42% increase in footwear unit sales, driven by wholesale doors, expansion, and market recovery.
    • The traditional clog continues to generate the majority of footwear sales in Europe, making up approximately 70% of total footwear unit sales.
  • Gross margin decreased year over year by 180 basis points to 52.3%.
    • The decline in gross margin is primarily driven by rising product costs, the evolution of our changing product assortment, and the continual impact of unfavorable currency trends.
  • In the full year of 2013, selling, general, and administrative expenses increased $89 million, or 19%, to $549 million compared with the full year 2012.
    • About $20 million of this increase was associated with the nonrecurring, unusual, or infrequent items in Q4.
    • Retail asset impairments of $11 million for 59 stores, of which 35 are in Europe and 22 are in Americas.
    • Expenses and accelerated depreciation associated with our new ERP system of $2 million.
    • Contingency accruals and other changes of $7 million related to certain legal matters.
  • Excluding nonrecurring, unusual, or infrequent items, non-GAAP gross profit for the year was up $15 million.
  • A total of $27 million for certain unusual tax related items impacted the quarter
    • Repatriation efforts and valuation allowances for deferred tax assets in the United States.
  • Despite conservative at-once ordering and inventory levels from wholesale partners, for the year Crocs experienced a 7% increase in wholesale revenue on a constant currency basis.
 

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