Thanks to a strong performance in America and globally from the wholesale channel, e-commerce and comparable store sales, Crocs' revenues for the third quarter jumped by 19.8 percent to $312.8 million, or by 21.0 percent on a constant-currency basis. This came despite the negative impact of store closures, which reduced revenues by around $4 million, the company said. Overall, the group sold just under 16 million pairs of shoes in the quarter, an increase of 19.3 percent over last year's third quarter.
The gross margin declined by 0.9 percentage points to 53.3 percent. However, the adjusted gross margin, which excludes non-recurring expenditures related to the relocation of the group's U.S. distribution center from Los Angeles to Dayton, was up by 0.3 percentage points to 53.6 percent. This was due to lower promotions and higher clog sales in the Americas, as well as savings from closing the last of the group's own manufacturing facilities last year. The adjusted operating margin improved by 6.7 percentage points to 14.2 percent, and the adjusted net income reached $40.2 million, up from $14.8 million for the third quarter of 2018.
By category, sales of clogs soared by around 36 percent, to represent 63 percent of footwear sales, up from 55 percent for the year-ago quarter. Clogs sales grew in every region, especially North America. Meanwhile, sandal revenues rose by 9 percent, representing 19 percent of footwear revenues. In the quarter, Crocs added kids' sizes to its LiteRide line, and is now introducing the Jibbitz charm line to wholesale accounts in key markets.
Wholesale revenues improved by 25.4 percent, driven by a successful back-to-school season. E-commerce went up by 28.2 percent, and retail sales improved by 9.0 percent, with an increase on a comparable store basis of 12.5 percent.
By region, the Americas rose by 35.2 percent to $185.2 million, with robust growth across every channel, driven by continued demand for clogs. In Asia, revenues inched up by 0.2 percent in constant currencies to $74.2 million, led by e-commerce.
In Europe, the Middle East and Africa (EMEA), sales increased by 8.8 percent to $70 million in reported terms, but were up by 16.1 percent in constant currencies. The management said business in Europe is benefiting from a steadily growing brand “hotness” and continued focus on digital commerce. Online sales in the region jumped by 33.2 percent in constant currencies.
As of Sept. 30, Crocs was operating 368 stores compared with 370 last June 30. The number of stores in the EMEA region was down to 57 from 59.
Crocs has raised its guidance for the full year, and now expects revenues to grow by 11 to 12 percent, instead of the previously forecast 9 to 11 percent. The company continues to expect 2019 revenues to be negatively impacted by around $28 million of currency changes and about $20 million resulting from store closures. The adjusted gross margin is expected to be around 51 percent, compared with prior guidance of 50.5 percent, reflecting the increased strength of the Americas business. The adjusted operating margin should stand at about 11 percent.