Crocs, Inc. continued to rock the market in the first quarter, posting another quarter of triple-digit growth for the period on sustained growth of its core classic styles, expansion of its licensed product business, and rapid development of the international business. The strong results reported for the period, accompanied by increased earnings guidance and an announcement that the company would execute a two-for-one stock split at the end of May, sent CROX shares up nearly 26% for the week to close at $68.85 of Friday.
Management said that international sales outpaced expectations, increasing 441% to $59.5 million from $11.0 million in the year-ago period. Canada made up $9.1 million of the total, while Asia represented $20.7 million and Europe added another $28.6 million to the mix. International sales represented 42% of sales for the quarter, up from 39% in the 2006 fourth quarter. Europe was described as the companys “strongest international market.” Japan is the strongest market in Asia and the company continues to invest in infrastructure in China and India. They will begin selling in Brazil later this quarter and manufacturing starts up there toward the end of the quarter.
Domestic sales were up 144% to $82.5 million for the first quarter.
CROX is also getting a lift in the U.S. from its licensed product sales, with the Disney product selling through existing retailers as well as over 50 Disney stores. Crocs has added 100 colleges to its licensing program and they will be adding their Athens flip-flop to this program in Q2. NHL product is currently in stores in Canada for the playoffs and will be on shelves in the U.S. next fall. The NFL product is expected to be in stores prior to the season opener. The company is currently in the middle of rolling out Macys and is starting to get more traction in California, its least penetrated market in the U.S.
Looking ahead, CROX sees second quarter net income per diluted share in the range of 80 cents to 85 cents per share on sales between $180 million and $190 million for the period. Full year earnings guidance has been increased to a range of $2.90 to $2.95 per diluted share on sales between $670 million and $680 million for the year.
| Crocs Inc. | |||
| First Quarter Results | |||
| ($ millions) | 2007 | 2006 | Change |
| Total Sales | $142.0 | $44.8 | +217% |
| GM % | 59.5% | 52.8% | +670 bps |
| SG&A % | 33.3% | 30.5% | +280 bps |
| Net Income | $24.9 | $6.4 | +287% |
| Diluted EPS | 61¢ | 17¢ | +259% |
| Inventory* | $94.4 | $86.2 | +9.5% |
| Accts Rec* | $97.8 | $65.6 | +49.2% |
| *at quarter-end | |||
