Crocs Slashes Guidance Amid Sales Decline

Image source: Crocs.

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Footwear company Crocs (NASDAQ: CROX) reported its second-quarter results before the market opened on Aug. 3. The company fell well short of its own guidance, selling far less than it had previously expected, leading adjusted profits to tumble. A difficult retail environment prompted it to slash its guidance for the full year, raising questions about Crocs' ongoing turnaround. Here's what investors need to know about the second-quarter results.

Crocs results: The raw numbers


Q2 2016

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Q2 2015

Growth (YOY)


$323.8 million

$345.7 million






Non-GAAP net income

$12.0 million

$27.3 million


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    YOY = year over year. Data source: Crocs Q2 2016 earnings report.

    What happened with Crocs this quarter?

    Crocs badly missed its own guidance for revenue, prompting the company to slash its outlook for the full year.

    Crocs no longer expects to grow revenue this year.

    What management had to say

    CEO Gregg Ribatt remained confident in the company's turnaround efforts despite a weak second quarter:

    Despite a decline in our revenue,I am encouraged by our strategic progress which has enabled us to help mitigate the top-line pressure on profitability by delivering better than expected gross margins and managing expenses while reducing inventories. The global retail environment became more challenging as the second quarter progressed. This impacted our wholesale reorder opportunities and contributed to our sales shortfall relative to expectations. These headwinds were partially offset by a 2.9% increase in global direct-to-consumer comparable store sales, which is a positive indication that consumers are responding favorably to our new product line and enhanced marketing efforts. We remain confident that we have successfully repositioned the business and built the platform to provide sustained growth and profitability over the long-term.

    Looking forward

    Crocs' second quarter was about as bad as they come. Revenue came in well short of expectations, and the momentum that the company displayed during the first quarter seemed to evaporate. Previous guidance calling for a revenue increase this year turned out to be overly optimistic, forcing the company to slash its outlook.

    The turnaround at Crocs was never going to be easy. It faces the challenge of turning itself around in a difficult retail environment, a combination that's guaranteed to produce choppy and volatile results. Shares of Crocs tumbled following its earnings announcement, and the company will need to prove that its turnaround is still on track to win back investors.

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