Crocs (CROX, Financial) is one the leading footwear brands and is engaged in the selling of casual lifestyle footwear. Its bright and colorful clogs had taken over the market. However, with change in the taste and preferences of customers, the company witnessed a decline in demand. This resulted in falling sales for the company.
However, the retailer is making a number of efforts to get back to its earlier charm. Its recently reported fourth quarter numbers were slightly better. The results were ahead of the Street’s estimates. Crocs’ performance has been mixed in the past year, with two quarters of great performance and the other two quarters registered lower than expected results. This is probably the reason why its shares fell 24.6% in the last year. Nonetheless, the company is getting better, as evident in its fourth quarter results. Let’s take a closer look.
The details of the quarter
Although revenue for the quarter dropped to $206.5 million from $228.7 million in the previous year, it was ahead of the estimates. Analysts were expecting a top line of $203.2 million. The decline in revenue was mainly due to the closure of 25 underperforming stores in the Asia Pacific region. Further, the company also opened 5 new stores during the period.
Crocs made a number of efforts to turnaround the business. It appointed a new CEO last year and has eliminated non-core product categories from its business. It plans to remain focussed on its core products and close down underperforming stores. It has also reduced its headcount in order to reduce costs. Moreover, it has been revamping its international operations and plans to expand it in the future.
Thus, the retailer managed to reduce its loss for the quarter, despite challenges in the China market and the impact of slowdown in West Coast dock. The bottom line of the company stood at a loss of $0.70 per share, compared to a loss of $0.76 per share in the prior year.
Some more efforts
The footwear company has undergone a transformation since last year. It has undertaken initiatives to strengthen relations with the wholesale partners and improve direct-to-consumer capabilities.
Moreover, it plans to change is product assortment to attract more customers and has opened a new Global Commercial Centre in Boston. These efforts should help the company grow.
Moreover, the shoe retailer is expected to grow at a CAGR of 10% for the next five years, according to the analysts’ estimates. This is quite close to the CAGR of 11%, registered by the company in the last five years.
Final word
Crocs has had a tough year, but its efforts make investors hopeful about its future. Its measures to control costs and boost sales have helped in reducing the loss for this quarter. However, the company’s outlook for the first quarter was below expectations. It expects sales to be in the range of $260 million to $265 million, whereas the estimate was at $292.2b million. Although the shoe retailer had a difficult time, its future seems to be better. But investors should wait for the right time to invest.
