In line with a previous forecast made by its management, Crocs reported a 7.0 percent sales increase for the fourth quarter of 2015 in terms of local currencies. Translated into dollars, this led to an increase of only 1.1 percent to €208.7 million for the quarter.
However, average selling prices were cut by 6.5 percent to $17.66 as the company sought to get rid of old inventory. The gross margin fell by 2.21 percentage points to 34.9 percent for the quarter, after a loss of 3.00 percentage points from the increased clearance activity and a loss of 2.70 points from the strength of the U.S. dollar. The result was a disappointing 30 percent increase in net losses to $73.9 million for the period.
For the full year, Crocs had to a report a fivefold increase in net losses to $98.0 million on 9 percent lower revenues of $1,090.6 million. Excluding a number of extraordinary items, the core business delivered an adjusted net loss of $40.1 million compared with $50.0 million in 2014. The company remained with net cash of $143.3 million, down from $267.5 million at the end of 2014, due in part also to the repurchase of 6.5 million shares.
On a currency-neutral basis, the quarterly turnover increased by 21.5 percent in Asia-Pacific and by 1.7 percent in the Americas, but fell by 4.3 percent in Europe. Wholesale revenues were flat at $90.3 million in the quarter, with drops of 10.2 percent in the Americas and 19.1 percent in Europe offset by a 27.5 percent increase in Asia-Pacific, largely due to the turnaround in China.
Retail revenues contracted by 76.5percent to $81.7 million. They were down by 4.7 percent in the Americas, by 3.8 percent in Asia-Pacific and by 22.4 percent in Europe.
Crocs closed down 11 stores and opened 13 new ones, ending up with 559 locations, 179 fewer than two years ago. Some more under-performing stores will be closed in the U.S. and Europe, and all the future new openings will be factory outlets.
The accelerated clearance activity caused internet sales to jump by 28.4 percent to $36.7 million, but while they grew by 30.4 percent in the Americas and by 39.4 percent in Asia-Pacific, they were flat at $4.1 million in Europe.
In reported U.S. dollars, total European sales declined by 17.9 percent to $29.6 million, including wholesale revenues of $17.4 million and sales of $8.1 million in Crocs' physical retail stores.
The outlook remains positive. Crocs says it made progress in the realignment of its distribution in China. It rearranged the supply chain to improved deliveries, while offering fewer SKUs and transitioning to an SAP system. Another factor of better profitability will be the sale of its operations in South Africa to a licensee.
Excluding store closures and discontinued product lines, revenues grew by 12.2 percent in constant currencies during the quarter. The sell-in of the spring/summer 2016 collection, the first one to have been developed by a new team, has been positive. It has more color and style than before. Deliveries have been much better.