Crocs saw its revenues increase by 3.6 percent to $376.9 million in the second quarter ended June 30, in line with the company's expectations. On a constant currency basis, they went up by 3.5 percent. For the three months, the company posted a net income of $19.5 million, down from $35.4 million a year earlier.
The positive sales results in the second quarter were due to the strength of the company's European business, where revenues went up by 20.9 percent to $72.6 million, or by 17.3 percent in local currencies. The growth was coupled with a renewed focus on profitability above revenue growth, the company said.
In Europe, the company had a 32.2 percent boost in wholesale revenues to $44.6 million. Retail sales went up by 8.6 percent to $19.6 million in the region, while sales over the internet rose by 2.6 percent to $8.6 million.
The Asia-Pacific business was weaker than expected due to lower retail sales in China and Korea on a comparable store basis, but the region, which does not include Japan, nevertheless posted a revenue increase of 8.6 percent in the quarter, or 7.9 percent in constant currencies. Sales in Japan were down by 9.4 percent in the quarter, or 5.9 percent in yen.
Crocs continued to show weakness in the Americas, where same-store sales were off by 6.2 percent. The region registered an overall 3.2 percent sales decline, with a drop of 2.4 percent on a currency-neutral basis.
The gross profit amounted to 53.7 percent of sales, down from 55.2 percent in the second quarter of last year. Increased shipping costs more than offset by a decrease in promotional and clearance activity. The impact of the restructuring expenses, retail store impairments and spending on the company's Enterprise Resource Planning (ERP) project boosted operating costs by three percentage points as a percentage of sales.
Operating income of $41.9 million in the quarter compared with $50.4 million in the second quarter of 2013 but it exceeded last year's level excluding special charges of $16.8 million. At 11.1 percent of sales, the operating margin was well below the minimum 12 percent target set by the management.
The order backlog was up by $45 million at the end of the quarter following action to move more of its business in Europe and Japan from at-once orders to pre-bookings. The company expects revenues of around $300 to $305 million in the third quarter of 2014. The new measures should lead to a drop in the overall turnover in 2015, followed by growth in the subsequent year.
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