Business news :Crocs Q3 Earnings Advance on 7.5 Percent Sales Gain

Crocs Inc. reported revenue for the third quarter  increased 7.5 percent to $295.6 million compared with revenue of $274.9 million reported in the third quarter of 2011. Net income reached $45.1 million, or 49 cents per diluted share, compared with net income of $30.2 million, or 33 cents, a year ago, a gain of 49.3 percent.

From a channel perspective, wholesale sales increased 1.5 percent to $156.2 million compared with sales of $154.0 million in the third quarter of 2011. Internet sales increased 6.0 percent to $27.1 million compared with sales of $25.6 million in the third quarter of 2011. Retail sales increased 17.7 percent to $112.2 million compared with sales of $95.3 million in the third quarter of 2011. The company ended the quarter with 499 retail store locations compared with 410 locations a year ago. Global same store sales for the third quarter of 2012 increased 1.0 percent on a currency neutral basis, as the Americas increased 5.5 percent, Europe increased 0.9 percent, and Asia declined 6.3 percent.

Sales growth during the quarter was driven by strength in the Americas and Asia. Geographically, revenue increased 7.4 percent for the Americas, 11.3 percent for Asia and decreased 2.9 percent for Europe. On a constant currency basis, revenue increased 8.6 percent for the Americas, 13.0 percent for Asia, 7.3 percent for Europe, and 10.3 percent globally.

“Our revenue growth during the third quarter reflects the benefit of balanced distribution channels globally. Our direct to consumer channel in the Americas increased 12 percent on year-over-year basis, highlighted by a mid single digit same store sales gain, and our expanded presence in Asia resulted in a direct to consumer sales increase of 17 percent in that region,” said John McCarvel, President and Chief Executive Officer. “Our Americas and Asia performance helped to more than offset weakness in the European market, where challenging macroeconomic conditions and foreign currency exchange rate fluctuations continue to pressure our results. At the same time, we haven’t been fully immune to some of the recent choppiness in Asia, particularly in Japan, where consumer demand slowed as the third quarter progressed. Despite the economic headwinds we faced during quarter, we continued to grow the business and make strategic progress toward our long-term goal of evolving Crocs into a four-season brand. For the spring summer 2013 season our wholesale pre-books have been strong. We are excited about the prospects for 2013 as enthusiasm for our products continues to grow and our opportunities globally expand.”

Margins
Gross profit for the third quarter of 2012 increased 9.2 percent to $160.7 million, or 54.4 percent as a percentage of sales, from $147.2 million, or 53.5 percent as a percentage of sales in the same period last year. Selling, General, & Administrative expenses (SG&A) increased 8.1 percent to $120.7 million versus $111.7 million a year ago. As a percentage of sales, SG&A was 40.8 percent compared with 40.6 percent in the third quarter of 2011.

Balance Sheet
Cash and cash equivalents at September 30, 2012 increased 41.8 percent to $312.6 million compared to $220.4 million at September 30, 2011. Inventories at September 30, 2012 were $187.5 million, up 24.1 percent compared to inventories at September 30, 2011 of $151.1 million. Inventory levels during the third quarter of 2012 were partially driven by the 22 percent increase in retail store locations in the quarter and the need for additional inventory for the 35 to 40 new store openings planned for the fourth quarter of 2012.

Backlog
Backlog at September 30, 2012 increased 33.2 percent to $395.4 million compared with backlog of $296.8 million at September 30, 2011. John McCarvel continued “We saw exceptional growth in third quarter of 2012 pre-books as our wholesale customers accelerated their order books to secure sourcing for spring summer deliveries of our hottest new products for 2013, which include the huarache, molded boat shoes, and our women’s wedge line.”

Income Taxes
For the quarter, the company recorded a non-recurring tax benefit of $11.4 million due to a reversal of certain tax provisions and the release of certain valuation allowances associated with deferred tax assets.

Guidance

For the fourth quarter of 2012, the company expects break-even diluted earnings per share on revenue of $220 million.

( SportsOneSource Media )