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GuruFocus has detected 2 Warning Signs with Crocs Inc $CROX.
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Crocs Inc (NAS:CROX)
Gross Profit
$500 Mil (TTM As of Dec. 2016)

Crocs Inc's gross profit for the three months ended in Dec. 2016 was $79 Mil. Crocs Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $500 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Crocs Inc's gross profit for the three months ended in Dec. 2016 was $79 Mil. Crocs Inc's revenue for the three months ended in Dec. 2016 was $187 Mil. Therefore, Crocs Inc's Gross Margin for the quarter that ended in Dec. 2016 was 42.00%.

Crocs Inc had a gross margin of 42.00% for the quarter that ended in Dec. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Crocs Inc was 58.73%. The lowest was 32.42%. And the median was 50.76%.

Warning Sign:

Crocs Inc gross margin has been in long term decline. The average rate of decline per year is -2.9%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Crocs Inc's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

Gross Profit (A: Dec. 2016 )=Revenue - Cost of Goods Sold
=1036.273 - 536.109
=500

Crocs Inc's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=187.417 - 108.693
=79

Crocs Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 129.366 (Mar. 2016 ) + 169.64 (Jun. 2016 ) + 122.434 (Sep. 2016 ) + 78.724 (Dec. 2016 ) = $500 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Crocs Inc's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

Gross Margin (Q: Dec. 2016 )=Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=79 / 187.417
=42.00 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Crocs Inc had a gross margin of 42.00% for the quarter that ended in Dec. 2016 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Crocs Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 498234301424536608623590511500

Crocs Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 155771271901217312917012279
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