Crocs posted revenues for the second quarter that came up short of its own guidance for sales in the range of $340 million to $350 million. They dipped by 6.3 percent over the year-ago quarter to $323.8 million, or by 6.2 percent on a constant-currency basis.
The company blamed the challenging global retail environment for this performance, claiming that it impacted its wholesale reorder opportunities. These headwinds were partially offset by a 2.9 percent increase in global direct-to-consumer (DTC) comparable store sales, which Crocs said is a positive indication that consumers are responding favorably to its new product line.
Despite the decline in revenues, the company's management said it is encouraged by Crocs' strategic progress, which has enabled it to deliver better than expected gross margins while reducing inventories.
In the wholesale segment, revenues decreased by 12.4 percent to $165,7 million, or by 12.9 percent in constant currencies. The Americas region saw sales dip by 16.3 percent to $54.6 million, while revenues in the Asia-Pacific region were down by 19.6 percent to $74.6 million. Other businesses' sales tumbled by 31.2 percent to $225,000. However, European sales gained 17.2 percent to $36.2 million.
In the retail segment, sales were down by 4.8 percent to $113.1 million. The Americas recorded a 0.9 percent decrease, while Asia-Pacific dipped by 10.0 percent and Europe decreased by 3.9 percent. Crocs closed down 23 stores and opened 31 new ones, ending up with 558 locations - 180 fewer than two years ago.
The e-commerce segment saw revenues jump by 23.4 percent in the latest quarter to $67.9 million, or by 24.6 percent in constant currencies. The Asia-Pacific region performed best, with an increase of 33.5 percent, while the Americas grew by 25.0 percent and Europe gained 5.0 percent.
The company's gross margin dipped by 2.5 percentage points to 52.4 percent, while the operating margin gained 1.7 percentage points to 6.4 percent, with Crocs turning around to a net profit of $11.7 million - up by 21.1 percent on the year-ago quarter. The profit increase was largely due to the fact that the company recorded net charges of $0.3 million unrelated to its core business in the latest quarter, compared with $17.6 million in the three months ended June 30, 2015.
The company expects revenues for the full-year to be down by low single digits compared with 2015 as a result of a more cautious retail environment and a slow turnaround in China.