Crocs manages better-than-expected revenues in Q4 2017 thanks to wholesale and e-commerce

By

Robin Driver

Published
Feb 28, 2018

Boulder, Colorado-based footwear manufacturer Crocs, Inc. reported its fourth quarter and full year 2017 results on Wednesday, with e-commerce and wholesale channels offsetting losses related to store closures.

Fourth quarter revenues were $199.1 million, an increase of 6.2% – or 3.8% in constant currencies – compared to the same period in the previous year. Operating loss for the period came to a total of $30.4 million, a 23.7% improvement on Q4 2016’s loss of $39.8 million.
 
Revenue growth was achieved thanks, in large part, to Crocs’ wholesale and e-commerce channels, with the company’s wholesale revenues totalling $93,123 in Q4 2017, a 12.2% increase in constant currencies from the $80,654 achieved in the same period in the prior year. E-commerce revenues grew 9.5% from $33,097 in Q4 2016 to $36,947 in Q4 2017.

Ads

The company therefore managed to ensure top-line growth in the period, despite registering a loss amounting to some $14 million due to strategic store closures and the impact of the sales of its Taiwan and Middle East businesses.
 
Global comparable retail store sales also increased 3.7% during the period, while comparable direct-to-consumer store sales rose 6.2%, showing particular growth in Europe (10.5%).
 
Full year 2017 revenues fell 1.7% in constant currencies compared to 2016, decreasing to $1,023.5 million, while operating profits rose to $17.3 million, compared to a loss of $6.2 million in the previous year.
 
“We had a strong final quarter of the year, which enabled us to meet or exceed our revenue and gross margin guidance for the fourth consecutive quarter. Throughout 2017, we focused on our strategic objectives: simplifying our business to reduce costs, improving the quality of our revenues, and positioning ourselves to drive sustainable, profitable growth”, stated Crocs president and CEO Andrew Rees in a release.
 
Crocs has been involved in some interesting creative partnerships of late, including its unexpected collaboration with Balenciaga, which produced a platform version of its signature plastic clog that debuted in last October’s Paris Fashion Week and sold out in record time when made available for pre-order. The brand also recently collaborated with actress Drew Barrymore to create a clog and sandal collection marketed as a “a fresh, stylish take” on classic Crocs pieces.
 
“Looking at 2018, our Spring/Summer collection is being well received. We expect moderate wholesale and double-digit e-commerce growth to be offset by the loss of retail revenues associated with store reductions”, said Rees.
 
Revenues for the first quarter 2018 are expected to be between $265 and $275 million, compared to $267.9 million in the same period in 2017.
 
The company predicts full-year 2018 revenues to remain fairly flat relative to the prior year, taking into account the negative impact of business model changes and store closures.