Turnover at Crocs fell by 11.3 percent to $197.7 million in its seasonally biggest period. For the quarter ended June 30, the net loss was $30.3 million compared with income of $2.1 million in the same period of 2008.
The results far exceeded its earlier guidance and Wall Street expectations because of continued strength in its direct-to-consumer channels, strength in Asia and much better than expected sales of previously impaired products. Quarter-over-quarter, sales grew by 47 percent.
The reported loss for the latest quarter included many charges: $34.8 million in impairment and restructuring charges, $16.3 million in stock-based compensation charges and $3.1 million in charitable donations.
Excluding these charges and with the benefit of $25.3 million from impaired shoe sales and $3.6 million in foreign exchange gains, Crocs would have posted a pre-tax profit of $2.6 million in the quarter. The gross margin jumped by 10.6 percentage points to 51.1 percent.
By channel, retail sales rose by 58.9 percent to $55.3 million, and internet sales rose by 24.8 percent to $17.4 million, but wholesale sales fell by 28.2 percent to $125.0 million. Sales in Europe decreased by 41.8 percent to $32.2 million and in the Americas they were down by 19.4 percent to $85.5 million. However, revenues in Asia rose by 30.5 percent to $80.0 million.
For the short term, Crocs said it would continue to invest against growth in Asia and in direct sales but also predicted that wholesale revenues for spring 2010 would be up with its major accounts.
Revenue figures included $23.7 million from previously impaired footwear; sales of non-impaired shoes were $174.0 million, up from the previous guidance of $135-160 million.
Among the more notable achievements was some balance sheet management, which saw the company lift its cash level to $77.5 million, even after paying down a short-term $17.3 million credit facility.rocs said it is negotiating a new loan that should be in place by the end of the third quarter.
Meanwhile, inventories have been reduced by 22 percent since December. Crocs said it has already reached its goal of turning inventories three times annually.
Crocs’ sales got a big lift when The Washington Post printed a story saying the company was a fad and scared its consumer base into thinking it was going to disappear. Its site sold a record 16,000 pairs that day, and the story drew four times the number of comments as that day’s coverage of the hearings to decide on a new member of the U.S. Supreme Court. For the third quarter, Crocs expects turnover of $150 million to $160 million.