Crocs reported a decline in sales of 16.1 percent to $262.2 million for the first quarter, but they fell by only 6 percent in local currencies, and Europe outperformed the rest of the world. Wholesale revenues grew in Europe by 18.1 percent on a currency-neutral basis, but they were off by 10.5 percent in North America and by 10.5 percent in Asia-Pacific.
Sales at the company's own stores, many of which are being closed down, went up by 4.1 percent in Europe but declined by 4.8 percent in North America and by 12.1 percent at Asia-Pacific locations. Online sales were down by 4.9 percent globally, with Asia-Pacific recording the biggest drop.
Gregg Ribatt, who became chief executive of Crocs in January, said he was encouraged by an ongoing stabilization of the business around its strengths. Much of the decline was related to the turbulence at U.S. West Coast ports, the brand's exit from non-core categories, a reorganization in China and a focus of its international development on the six most important markets. Sales showed a slight increase excluding China, the store closures and discontinued operations. Sales in China are expected to start growing again in the third quarter.
All these factors led to a drop in the gross margin to 48.6 percent of sales in the quarter from 50.0 percent in the year-ago period. The company suffered an operating loss of $2.36 million against an operating profit $16.82 million, and a net loss of $5.98 million against net earnings of $6.37 million.
These results came after extraordinary charges of $10.7 million, up from $8.1 million in the year-ago period. Excluding them, the company still recorded an attributable net income of $4.7 million in the quarter, down from $14.5 million in the first quarter of 2014
Meanwhile, the company has streamlined its top management. In a move designed to improve communication and speed up decision-making, Crocs has eliminated the position of chief operating officer and restructured the supply chain management function in connection with the departure of its COO, Scott Crutchfield, and of Chap Kistler, senior vice president in charge of the global supply chain.
The company has appointed Phil Blake to the new position of senior VP of global sourcing and promoted Dennis Sheldon to VP of global distribution and logistics. Blake was previously in charge of sourcing or manufacturing at Clarks Americas, the former Performance & Lifestyle Group of Collective Brands, and Timberland. Sheldon has spent eight years at Crocs, supervising distribution and logistics and running most recently the establishment of a new SAP system whose implementation started in January. Both executives will report directly to Ribatt.
The quarterly results were largely expected. Investors responded to the income statement and the management changes by sending up by 6 percent Crocs' price on the stock exchange.