Crocs, Inc. Raises Growth Targets for 2007…

Continuing to prove its doubters – including many short-sellers – wrong, Crocs Inc. reported fourth quarter earnings that easily beat prior projections, and hiked its fiscal 2007 revenue and earnings growth targets to more than 45% over fiscal year 2006. That’s up from previous guidance of roughly 30% sales growth.

In the fourth quarter, revenues jumped 236% to $112.9 million from $33.6 million. Gross margins in the quarter improved to 57.7% from 53% a year ago. Net income catapulted 395% to $20.8 million, or 51 cents a share, from $4.2 million, or 12 cents, a year ago.

Domestic sales in the quarter climbed 139.1% to $69 million as Crocs expanded to 10,000 doors while increasing shelf space at existing accounts with the aid of new introductions. International sales skyrocketed to $34.9 million from only $4.7 million a year ago, driven by successful introductions across Europe and Asia.

In a conference call with analysts, Ron Snyder, president and CEO, said the better-than-expected performance was fueled by ongoing sell-through of its classic footwear, the Beach and Cayman. For the full year, Crocs’ ‘classics’ grew 145%. But the revenue gains also reflect growing demand for new models introduced during the second half of 2006. Crocs ended the year with 27 styles versus 12 at the close of 2005. Top selling newcomers include the Athens flip flop, the Mary Jane, Offroad and Scutes. This is helping Crocs to diversify its mix. Classics represented 85% of its mix at the close of 2005; but only 24% of its website sales this January came from ‘classics.’

Snyder said the company’s licensed collegiate and Disney footwear collections are “off to a tremendous start with sales exceeding our initial forecasts.” Among other newer licenses, NHL product will begin shipping in time for the playoffs while NFL product under all 32 teams will reach shelves this summer. Crocs also announced the signing of a licensing agreement with many of the top drivers in NASCAR.

The recently acquired Jibbitz accessory company has increased its SKU count to 930 currently from 600 at the close of the year with the addition of many licensed characters. Snyder said many retailers are reporting a “dramatic spike” in Crocs sales when Jibbitz are offered in the same location.

Snyder also has high hopes for the recently acquired Ocean Minded business, which gave Crocs an entry into the surf and skate market. “We are confident that with our global marketing, manufacturing, and distribution platform, we can significantly expand the Ocean Minded brand in the U.S. and around the globe,” said Snyder.

Snyder called spring books for classics and new product introductions “very encouraging.” He noted that the good early spring response to newer styles was particularly “promising” because several of these models were designed by its new subsidiary, EXO Italia, and represent “a significant departure from the normal Crocs look and carry slightly higher price points.”

To support its ravenous growth, Crocs continues to invest in its manufacturing infrastructure. It finished the year with the ability to manufacture 3.6 million pairs per month, and is currently upgrading again to reach a 4.2 million monthly rate for the spring.

For Q1, revenues are projected to range from $113 million to $117 million and earnings between 47 cents and 49 cents a share. In the year-ago period, it earned 17 cents a share on sales of $44.8 million.