Crocs' new focus on fewer products, fewer stores and fewer geographical markets is not expected to bear its best fruits until the first half of 2016. Gregg Ribatt, the company's new chief executive, sees the business continuing to stabilize around the globe, and sales declined by 8 percent in the second quarter to $345.7 million, in line with expectations. They were off by 1.1 percent in constant currencies.
One bright spot was a jump of 22 percent in dollars and 29 percent in local currency for the company's online business, up to a level of $37.7 million, led by increases of 84 percent in China and 30 percent in the Americas. Sales at the company's retail stores were down by 14 percent to $118.7 million, with a drop of 7 percent in constant currencies and of 5.1 percent on a comparable store basis. Wholesale revenues declined by 9 percent to $189.2 million, and they were 2 percent lower in local currencies.
So far this year, Crocs has opened 18 new stores while closing 44, ending up with 559 locations. The brand should have fewer than 550 stores by the end of this year.
Geographically, Europe fared the worst in the quarter, declining by 28 percent to $52.7 million, down by 7 percent on a currency-neutral basis. In local currencies, the Americas were up by 3 percent and Asia-Pacific was off by 2 percent.
The gross margin expanded by one full percentage point to 55.2 percent thanks to a better product mix, offset by currency headwinds. However, the operating profit declined to $16.3 million from €41.9 million in the same quarter a year ago, in spite of lower restructuring and asset impairment charges, partly because of a $15 million boost in marketing expenses.
At $13.4 million, the quarterly net earnings were half as high as a year ago. Excluding non-recurring charges, they would have declined to $27.3 million from $36.3 million.