Crocs, Inc. (NASDAQ: CROX) today reported financial results for the
quarter ended June 30, 2008. Revenues for the quarter ended June
30, 2008 were $222.8 million compared to $224.3 million for the
quarter ended June 30, 2007. For the quarter ended June 30, 2008
international sales rose approximately 20% to $130.1 million
compared to $108.9 million for the same period a year ago, and
domestic sales decreased 20% to $92.6 million versus $115.4 million
for the quarter ended June 30, 2007. The Company reported net
income of $2.1 million, or $0.03 per diluted share compared to net
income of $48.5 million, or $0.58 per diluted share, for the
quarter ended June 30, 2007. Reported diluted earnings per share of
$0.03 for the quarter ended June 30, 2008 includes an aggregate
$0.03 for charges related to the impairment of certain fixed assets
equaling $2.9 million and a portion of the previously announced
pre-tax charge associated with the shutdown of the Company�s
Canadian manufacturing operations of approximately $1.4 million.
Gross profit for the second quarter of 2008 was $90.3 million, or
41% of revenues, compared to $131.9 million, or 59% of revenues,
for the second quarter of 2007. Selling, general and administrative
expenses for the quarter ended June 30, 2008 were $89.9 million, or
40% of revenues, compared to $63.5 million, or 28% of revenues, in
the quarter ended June 30, 2007. Ron Snyder, President and Chief
Executive Officer of Crocs, Inc. commented: �The first half of 2008
was a challenging period for our Company as we dealt with a
difficult macro-economic environment and lower than expected demand
in certain markets. Despite our recent financial results, we
continue to be confident about the strength of the Crocs brand and
we remain optimistic about the future potential of this business.
Over the near-term, we are focused on further reducing our expenses
in order to exit this year with a leaner infrastructure while at
the same time strategically increasing the retail presence and
consumer awareness of our more recent product introductions.
Longer-term, we are developing more comprehensive lines of footwear
under specific category segments and implementing a more
disciplined distribution strategy in order to reinvigorate our
top-line. We are committed to improving our execution across the
board and returning this company to growth and profitability.�
Balance Sheet As of June 30, 2008, inventories decreased 17% to
$220.2 million compared to $265.5 million as of March 31, 2008. In
addition, the Company ended the second quarter with cash and cash
equivalents of $51.2 million, an increase of $21.6 million compared
to cash and cash equivalents of $29.6 million at the end of the
first quarter in 2008. Additionally, the Company recognized
impairment charges on certain fixed assets, primarily related to
molds, in the amount of $2.9 million. These charges were recorded
as the molds relate to styles that Crocs no longer intends to
manufacture or styles for which the Company has more molds on hand
than necessary to meet projected demand. Guidance For the year
ending December 31, 2008, Crocs reiterated that it expects revenues
to be down modestly compared to 2007 levels with diluted earnings
per share of approximately break-even, including the total pre-tax
charge of approximately $20.0 million, or $0.16 per diluted share,
associated with the shutdown of the Company�s Canadian
manufacturing operations. For the quarter ending September 30,
2008, the Company reiterates that it expects revenues to be in the
range of $195.0 million to $205.0 million and diluted earnings per
share of approximately $0.01 to $0.05. Conference Call Information
A conference call to discuss second quarter fiscal 2008 financial
results is scheduled for today (August 7, 2008) at 4:45 PM Eastern
Time. A webcast of the call will take place simultaneously and can
be accessed by clicking the �Investor Relations� link under the
Company section on www.crocs.com or at www.earnings.com. To listen
to the broadcast, your computer must have Windows Media Player
installed. If you do not have Windows Media Player, go to the
latter site prior to the call, where you can download the software
for free. About Crocs, Inc: Crocs, Inc. is a designer, manufacturer
and retailer of footwear for men, women and children under the
Crocs� brand. All Crocs� brand shoes feature Crocs� proprietary
closed-cell resin, Croslite�, which represents a substantial
innovation in footwear. The Croslite� material enables us to
produce soft, comfortable, lightweight, superior-gripping,
non-marking and odor-resistant shoes. These unique elements make
Crocs� footwear ideal for casual wear, as well as for professional
and recreational uses such as boating, hiking, hospitality and
gardening. The versatile use of the material has enabled us to
successfully market our products to a broad range of consumers. In
2006, the company acquired Jibbitz LLC, a unique accessory brand
with colorful snap-on products specifically suited for Crocs shoes.
Today, more than 1,600 Jibbitz designs are available to consumers
for personalizing and customizing their Crocs� footwear. Please
visit www.crocs.com for additional information. Forward Looking
Statements The matters regarding the future discussed in this news
release include forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995, including
statements related to our future prospects, inventory and strategic
advances and our expectations regarding our growth, revenues,
brand, expense reductions, distribution strategy, future sales and
earnings, international expansion and product development. These
statements involve known and unknown risks, uncertainties and other
factors which may cause our actual results, performance or
achievements to be materially different from any future results,
performances or achievements expressed or implied by the
forward-looking statements. These risks and uncertainties include,
but are not limited to, the following: our limited operating
history; our significant recent expansion; changing fashion trends;
our reliance on market acceptance of the small number of products
we sell; our ability to develop and sell new products; our limited
manufacturing capacity and distribution channels; our reliance on
third party manufacturing and logistics providers for the
production and distribution of our products; our reliance on a
single-source supply for certain raw materials; our management and
information systems infrastructure; our ability to obtain and
protect intellectual property rights; the effect of competition in
our industry; the effects of seasonality on our sales; our ability
to attract, assimilate and retain management talent; and other
factors described in our annual report on Form 10-K under the
heading �Risk Factors,� and our subsequent filings with the
Securities and Exchange Commission. Readers are encouraged to
review that section and all other disclosures appearing in our
filings with the Securities and Exchange Commission. We do not
undertake any obligation to update publicly any forward-looking
statement, including, without limitation, any estimate regarding
revenues or earnings, whether as a result of the receipt of new
information, future events, or otherwise. Crocs, Inc. Consolidated
Statements of Operations (In thousands, except share and per share
data) (unaudited) � � � � THREE MONTHS ENDED SIX MONTHS ENDED June
30, June 30, 2008 2007 2008 2007 � Revenues $ 222,770 $ 224,273 $
421,310 $ 366,275 Cost of sales 132,482 92,329 245,788 149,845
Gross profit 90,288 131,944 175,522 216,430 � � Selling, general
and administrative expenses 89,857 63,472 166,833 110,799
Restructuring Charges 470 - 4,319 - Impairment Charges 2,903 -
13,716 - � Income (loss) from operations (2,942 ) 68,472 (9,346 )
105,631 � Interest expense 598 51 971 115 Other expense (income),
net 314 (399 ) (47 ) (915 ) Income (loss) before income taxes
(3,854 ) 68,820 (10,270 ) 106,431 � Income tax expense (benefit)
(5,986 ) 20,369 (7,875 ) 33,035 � Net income (loss) 2,132 48,451
(2,395 ) 73,396 � Net income (loss) per share: Basic $ 0.03 $ 0.60
$ (0.03 ) $ 0.92 Diluted $ 0.03 $ 0.58 $ (0.03 ) $ 0.88 � Weighted
average common shares: Basic 82,718,731 80,253,555 82,603,666
79,761,491 Diluted 83,740,782 83,686,108 82,603,666 83,066,178
Crocs, Inc. Consolidated Balance Sheets (In thousands, except share
and per share data) (unaudited) � � � June 30, December 31, 2008
2007 ASSETS Current assets: Cash and cash equivalents $ 51,230 $
36,335 Restricted cash 3,930 300 Accounts receivable, net 128,110
152,919 Inventories, net 220,174 248,391 Deferred tax assets, net
13,695 12,140 Income tax receivable 5,985 - Prepaid expenses and
other current assets 20,792 17,865 Assets held for sale 1,051 - �
Total current assets 444,967 467,950 � Property and equipment, net
96,862 88,184 Restricted cash 1,120 1,014 Goodwill 23,050 23,759
Other intangibles, net 40,017 31,634 Deferred tax assets, net
22,002 8,051 Other assets 11,359 6,833 � Total assets $ 639,377 $
627,425 � LIABILITIES AND STOCKHOLDERS' EQUITY � Current
liabilities: Accounts payable $ 45,743 $ 82,979 Accrued expenses
and other liabilities 55,373 57,246 Accrued Restructuring Charges
867 - Deferred tax liabilities, net 661 265 Income taxes payable
10,643 19,851 Notes payable and current installments of long-term
debt 36,963 7,107 � Total current liabilities 150,250 167,448 �
Long-term debt - 9 Deferred tax liabilities, net 6,198 1,858 Other
liabilities 23,131 13,997 � Total liabilities $ 179,579 $ 183,312 �
� Stockholders' equity: Common shares, par value $0.001 per share;
250,000,000 authorized, 83,332,493 and 82,808,493 shares issued and
outstanding in 2008 and 82,722,426 and 82,198,426 issued and
outstanding in 2007 83 83 Treasury Stock, 524,000 shares, at cost
(25,022 ) (25,022 ) Additional paid-in-capital 227,056 211,936
Deferred compensation (1,130 ) (2,402 ) Retained earnings 246,914
249,309 Accumulated other comprehensive income 11,897 10,209 Total
stockholders' equity 459,798 444,113 � Total liabilities and
stockholders' equity $ 639,377 $ 627,425
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