Crocs closed its financial year on Dec. 31 again with fantastic results, indicating a continued momentum. Fourth-quarter revenues grew by 99.1 percent to $224.8 million, as compared to the year-ago period, and the company claims now to have resolved its recent logistics issues by increasing the number of distribution centers. It has 15 new centers and will soon be bringing Japanese distribution in-house.
Working against general retail currents, domestic sales in the USA increased by a sound 47 percent to $115.8 million in the period, while sales in the rest of the world jumped by 221 percent to $109 million. Net income for the quarter rose by 84.1 percent to $38.3 million.
Gross profit was an inch lower than the previous year at 56 percent of revenues, or $65 million. Margins were affected because Fall sales had been stronger than expected and the company had to freight out footwear supplies by air.
Over the full year, Crocs' sales outside the USA grew by 264 percent to $408 million. The company highlighted Europe as its strongest source of growth, and Asia was not far behind. While European revenues rocketed by 480 percent to $174 million over the year, Asian sales grew at a considerably high rate of 202 percent to $163 million.
Gross profit for the full year was 58.7 percent of sales, up from 56.5 percent the previous year. Net income increased sharply to $168.2 million, compared with $64.4 million in 2006.
By the end of 2008, Crocs expects to be selling between 55 and 60 percent of its products outside the USA. The distribution of the group’s revenues among the different regions is currently the following: 52 percent in the USA, 21 percent in Europe, 20 percent in Asia and 7 percent to other markets.
In a conference call to comment its results, the company singled out Germany as a prime destination, where the number of doors carrying its products grew from 200 to 2,000 during the 2007 financial year. Counting in all the regions, Crocs traded from 11,000 more doors over this period, compared with the previous year.
To anticipate its future expansion, the company has invested $10 million in a factory that will produce footwear only for Crocs in China, while expanding production capacities in Vietnam and Bosnia. The total production capacity is up by 80 percent and now totals 7.2 million pairs per month, compared with 4 million one year ago.
As for future projects, the group is preparing to distribute its core products in large markets such as Brazil, India, China and Russia, where some store openings are also planned. With net cash of $150 million at the end of 2007, it may consider acquiring another small brand.
The company has diversified its offer over the past year, although 90 percent of its revenues still come from footwear. A limited launch of men’s and children’s apparel is planned for the Spring, and this year it will start to orient Bite footwear toward the outdoor sports segment.
Crocs plans to open about 90 new single-brand stores this year for its expanding product range. At the end of the financial year, Crocs had 40 brand stores in Europe and Asia. It also had 200 company-owned stores worldwide, including three in Europe.
Separately, Crocs has signed a deal with the U.S. National Basketball Association (NBA) to license the logos for all the 30 NBA teams and related NBA properties. Crocs has similar deals with the National Hockey League (NHL), the National Football League (NFL), Major League Baseball (MLB) and over 75 major U.S. colleges and universities.