NIWOT, Colo.—Crocs Inc. on Monday lowered its first-quarter forecast, blaming fewer sales of its colorful funky footwear and costs related to the closure of a plant. Its stock fell sharply in after-hours trading.
“Retailers in general are planning more cautiously,” Chief Executive Officer Ron Snyder said in a statement, adding that Crocs did not have the level of business it originally expected. “In addition, because of our current expense structure, a shortfall in sales versus our expectations disproportionately impacts our earnings results.”
He said Crocs will close its Canadian manufacturing plant to consolidate production at lower-cost facilities, which will result in a one-time pretax charge of about $16 million.
The company released the announcement after the market closed. In after-hours trading, Crocs’ shares fell $4.79, or 26.9 percent, to $13 a share. The stock closed Monday at $17.79 a share.
Crocs expects results ranging from a loss of 5 cents to break-even, sharply lower than its previous guidance of 46 cents per share. Excluding a charge related to closing its Canadian manufacturing operations, it predicts net income of 8 cents to 13 cents.
Analysts polled by Thomson Financial had predicted a profit of 45 cents per share.
Crocs cuts its first-quarter revenue estimate to $195 million to $200 million, from its previous guidance of $225 million. Analysts had predicted revenue of $223.3 million.
The revised forecast will translate into an increase of 37 percent to 41 percent in revenue over the previous first quarter, with domestic sales up 13 percent, European sales rising about 90 percent and Asian sales 75 percent higher, the company said.
For the fiscal second quarter, Crocs expects diluted earnings per share between 42 cents and 47 cents, or 45 cents to 50 cents, excluding a 3-cent charge for closing the Canadian plant. Analysts expected a profit of 79 cents per share.
For fiscal 2008, Crocs expects a profit of $1.54 to $1.64 per share, or $1.70 to $1.80 excluding one-time charges. Analysts had predicted a profit of $2.63 per share.
Crocs also authorized a share buyback program of 5 million shares, effective on or about May 7.
“In light of the current marketplace, we believe it is prudent to adopt a more conservative outlook for the year and this is reflected in our updated guidance,” Snyder said.
Based about 30 miles north of Denver, Crocs was founded in 2002 by three Boulder businessman who wanted to market an unusual resin shoe developed and manufactured by Foam Creations Inc.
The shoes—made of a proprietary closed-cell resin material that comes in multiple colors—feature holes scattered across the top and around the toes. The company went public in February 2006.
———
On the Net:
