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Crocs Inc. Reports Operating Results (10-K)

February 23, 2012 | About:
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10qk

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Crocs Inc. (CROX) filed Annual Report for the period ended 2011-12-31.

Crocs Inc has a market cap of $1.87 billion; its shares were traded at around $20.42 with a P/E ratio of 16.8 and P/S ratio of 2.4.

Highlight of Business Operations:

Selling, General and Administrative Expenses and Foreign Currency Transaction (Gains)/Losses. Selling, general and administrative expenses increased $60.6 million, or 17.7%, during the year ended December 31, 2011 compared to the same period in 2010 primarily due to (i) an increase of $29.3 million in salaries and related costs resulting from higher global headcount, (ii) an increase of $20.0 million in rent and building related costs, both of which resulted from continued growth in the number of company-operated retail stores and (iii) an increase of $6.5 million in contract labor which was primarily attributable to higher internet channel outsourced services, increased costs associated with contracted customer service and sales support, and other costs associated IT support and process improvement. As a percentage of revenues, selling, general and administrative expenses decreased 7.1%, or 310 basis points, to 40.2% in 2011 from 43.3% in 2010. Foreign currency transaction gains increased $2.5 million, or 86.3%, primarily due to a correction related to an error in the classification of certain intercompany receivables and payables balances that should have been deemed permanently invested in certain prior periods. See Note 16 Unaudited Quarterly Consolidated Financial Information for further discussion.

Asia Operating Segment. During the year ended December 31, 2011, revenues from the Asia segment increased $97.0 million, or 34.0%, compared to the same period in 2010 primarily due to a 13.0% increase in average footwear selling price, a 10.6% increase in footwear units sold and a $27.4 million favorable impact from foreign currency fluctuations. Significant sales growth for the segment included an increase of $59.3 million, or 29.7% in wholesale channel revenue and an increase of $34.3 million, or 44.4%, in retail channel revenue. Segment operating income increased $41.8 million, or 51.6%, primarily due to the increase in revenues and a $15.6 million favorable net impact from foreign currency fluctuations which were partially offset by a $16.8 million, or 18.3% increase in selling, general and administrative expenses resulting from the continued expansion of the retail channel as segment gross margin remained relatively flat.

Europe Operating Segment. During the year ended December 31, 2011, revenues from the Europe segment increased $43.3 million, or 33.9%, compared to the same period in 2010 primarily due to a 23.2% increase in footwear units sold, a 4.8% increase in average footwear selling price and a $7.9 million favorable impact from foreign currency fluctuations. Significant sales growth for the segment included an increase of $27.6 million, or 28.2%, in wholesale channel revenue and an increase of $9.3 million, or 56.2%, in internet channel revenue. In addition, segment retail channel revenue grew $6.5 million, or 47.5%. Segment operating income increased $16.0 million, or 65.0%, primarily due to higher revenues, an increase in segment gross margin of approximately 4.7% or 200 basis points, and a $4.8 million favorable net impact from foreign currency fluctuations which were partially offset by a $7.9 million, or 19.6%, increase in selling, general and administrative expenses resulting from the continued expansion of the retail channel.

Asia Reportable Operating Segment. During the year ended December 31, 2010, revenues from the Asia segment increased $47.3 million, or 19.9%, compared to the same period in 2009 primarily due to a 6.0% increase in footwear units sold and an increase of 6.4% in average footwear selling price which were driven by continued strong demand and a net increase of 40 company-operated retail locations which was partially offset by the negative impact of a prolonged cold weather season in parts of the region and a rise in imitation products in Japan. Significant channel growth for the segment included an increase of $33.3 million, or 20.0%, in wholesale channel revenue and an increase of $13.8 million, or 21.7% in retail channel revenue. Changes in foreign currency exchange rates during the year ended December 31, 2010 increased segment revenues by $18.5 million compared to the same period in 2009.

Europe Reportable Operating Segment. During the year ended December 31, 2010, revenues from the Europe segment increased $21.7 million, or 20.5%, compared to the same period in 2009 primarily due to an increase of 127.7% in footwear units sold and an increase of 5.7% in average footwear selling price which were driven by increased demand, the addition of local language internet sites for France, Germany, Spain and Italy and a net increase of 6 company-operated retail locations. Significant sales growth for the segment included an increase of $9.5 million, or 10.8%, in wholesale channel revenue and an increase of $8.8 million, or 115.8% in internet channel revenue. Changes in foreign currency exchange rates during the year ended December 31, 2010 decreased segment revenues by $4.3 million compared to the same period in 2009.

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