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Crocs Inc. Reports Operating Results (10-Q)

October 30, 2012 | About:
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10qk

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Crocs Inc. (CROX) filed Quarterly Report for the period ended 2012-09-30.

Crocs, Inc. has a market cap of $1.15 billion; its shares were traded at around $12.73 with a P/E ratio of 8.3 and P/S ratio of 1.2.

Highlight of Business Operations:

Americas Operating Segment. Revenues from the Americas segment increased $9.1 million, or 7.4%, during the three months ended September 30, 2012 compared to the same period in 2011, primarily due to a 5.3% increase in footwear average selling price and a 2.6% increase in footwear units sold, which was partially offset by an unfavorable impact of $1.5 million from foreign currency fluctuations. Revenue growth for the region was realized primarily in the retail channel which increased $6.4 million, or 12.2%, and in the internet channel which increased $1.7 million, or 11.3%. We continue to focus on disciplined expansion of our retail channel, by growing our full price and outlet stores, partially offset by closing underperforming kiosk locations. Segment operating income increased $7.1 million, or 34.6%, driven mainly by the increase in revenues, which resulted from the continued expansion of the retail channel, and a slight increase in gross margin. Foreign currency fluctuations had a net negative impact on the Americas gross profit of $0.5 million and a net positive impact on operating income of $0.2 million.

Europe Operating Segment. Revenues from the Europe segment decreased $1.2 million, or 2.9%, during the three months ended September 30, 2012 compared to the same period in 2011, primarily due to a 4.4% decrease in footwear units sold and a $4.2 million unfavorable impact from foreign currency fluctuations which were partially offset by a 3.4% increase in footwear average selling price. A decrease of $4.7 million, or 17.1%, in wholesale channel revenues drove the decline in total segment revenues which was primarily due to challenging macroeconomic conditions in Europe. This wholesale revenue decrease, in addition to a revenue decrease of $1.4 million, or 20.2%, in the internet channel, was partially offset by a revenue increase of $4.9 million, or 73.7% in the retail channel. Segment operating income decreased by $3.6 million, or 72.9%, driven mainly by the decrease in revenues and an increase of $3.1 million, or 21.9%, in SG&A which resulted from the continued expansion of the retail channel. Foreign currency fluctuations had a net negative impact of $1.9 million and $0.5 million on the Europe gross profit and operating income, respectively.

Americas Operating Segment. Revenues from the Americas segment increased $39.4 million, or 11.4%, during the nine months ended September 30, 2012 compared to the same period in 2011, primarily due to a 4.3% increase in footwear units sold and a 6.5% increase in footwear average selling price, which were partially offset by an unfavorable impact of $4.1 million from foreign currency fluctuations. Revenue growth for the region was realized primarily in the retail channel which increased $17.9 million, or 13.6%, and in the wholesale channel which increased $15 million, or 8.7%. We continue to focus on disciplined expansion of our retail channel, by growing our full price and outlet stores, partially offset by closing underperforming kiosk locations. Segment operating income increased by $16.7 million, or 27.5%, driven mainly by the increase in revenues, partially offset by an increase of $9.6 million, or 8.4%, in SG&A which resulted from the continued expansion of the retail channel. Foreign currency fluctuations had a net negative impact on the Americas gross profit of $1.4 million and a net positive impact on operating income of $0.2 million.

Asia Operating Segment. Revenues from the Asia segment increased $66.9 million, or 21.9%, during the nine months ended September 30, 2012 compared to the same period in 2011, primarily due to a 15.0% increase in footwear units sold and a 6.4% increase in footwear average selling price, which were partially offset by an unfavorable impact of $1.1 million from foreign currency fluctuations. Revenue growth for the region was realized primarily in the wholesale channel which increased $37.8 million, or 17.8%, and in the retail channel which increased $25.5 million, or 29.9%, and was primarily driven by new stores and same store sales growth. Within the retail channel we continue to focus on store growth with full priced, store in store, and outlet locations. Segment operating income increased by $20.1 million, or 18.8%, which was driven mainly by the increase in revenues, partially offset by an increase of $20.9 million, or 23.9% in SG&A which resulted from the continued expansion of the retail channel. Foreign currency fluctuations had a net negative impact on the Asia gross profit of $0.5 million and a net positive impact of $0.3 million on the operating income.

Europe Operating Segment. Revenues from the Europe segment decreased $5.4 million, or 3.7%, during the nine months ended September 30, 2012 compared to the same period in 2011, primarily due to a 12.9% decrease in footwear units sold and a $12.1 million unfavorable impact from foreign currency fluctuations, which were partially offset by an 12.8% increase in footwear average selling prices. A decrease of $11.8 million, or 10.8%, in wholesale channel revenues drove the decline in total segment revenues which was primarily due to challenging macroeconomic conditions in Europe. This revenue decrease, in addition to a revenue decrease of $2.9 million, or 13.4%, in the internet channel, was offset by a revenue increase of $9.3 million, or 58.9%, in the retail channel. Segment operating income decreased by $10.8 million, or 28.0%, driven mainly by the decrease in revenues and an increase of $6.8 million, or 17.7%, in SG&A which resulted from the continued expansion of the retail channel. Foreign currency fluctuations had a net negative impact of $6.2 million and $2.8 million on the Europe gross profit and operating income, respectively.

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