In the second quarter ended June 30, Crocs recorded a 15 percent increase in turnover to $228.0 million, with increases in all channels. Wholesale revenues were up by 12 percent to $140.0 million, retail grew by 20 percent to $66.4 million, and e-commerce did very well, up by 24 percent to $21.6 million. Excluding $23.7 million from previously impaired product sales that Crocs calls non-recurring, the sales jump would have been 31 percent.
Net income ended up at $32.3 million, compared with a loss of $30.3 million for the same period last year. The gross profit margin climbed by 6.7 percentage points to 57.8 percent on cost-cutting efforts, a more efficient supply chain, and better consumer-direct sales. The operating margin reached 16.9 percent.
By region, European revenues rose by 7 percent to $34.6 million (more in terms of local currencies) and Asian sales increased by 11 percent to $88.6 million. Sales in the Americas jumped by 23 percent to $104.8 million.
Retail sales showed an 8 percent comparable store sales gain in the U.S. Overall, Crocs opened 30 new stores in the quarter, mostly in Asia and the U.S., for a total of 363 at quarter's end.
The company said that core products still make up 21 percent of total sales, but continues to introduce new merchandise at higher price points. In the second quarter, these new products made up 24 percent of all sales, with another 12 percent coming from classic styles. The average selling price in the second quarter rose by 12 percent to $17.76, as a result of higher prices for the new products. Products noted for doing well were the Croc Band, the women's flat and kids' footwear.
Orders as of June 30 were up by 41 percent, and Crocs says that about 70 percent of its wholesale business for the second half is pre-booked. For the third quarter, Crocs says its sales should increase by another 24 percent to about $205 million. The gross margins going forward will be affected by increases in prices of products at the factory and of logistic services, but the recent reorganization of the company's supply chain should help mitigate these cost increases.