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Crocs posts deep loss, shares plummet
SAN FRANCISCO |
SAN FRANCISCO (Reuters) - Crocs Inc (CROX.O) posted a deep quarterly loss on Wednesday as sales of its colorful plastic shoes plunged and it racked up high restructuring costs, sending its shares down 37 percent in extended trade.
The former Wall Street darling also outlined several new measures to slash costs, including shutting a Brazilian manufacturing plant and reducing capital expenditures for next year by 50 percent from 2008 levels.
Launched in 2002, Crocs' quirky, bright and comfortable shoes were an immediate hit, but their novelty has since waned, and the weak U.S. economy has further crimped demand and hampered investor interest in the stock.
Since hitting a lifetime high of $75.21 in October of last year, Crocs shares have shed more than 97 percent of their value, closing at $1.90 Wednesday on Nasdaq.
Crocs had a net loss of $148.0 million, or $1.79 per share, in its third quarter ended Sept 30, compared with a net profit of $56.5 million, or 66 cents per share, in the year-ago period.
It was not immediately clear whether that was comparable to the 2 cents per share in profit expected, on average, by analysts polled by Reuters Estimates.
Sales fell 32 percent to $174.2 million, below the $201.7 million expected, on average, by Wall Street.
In August, Niwot, Colorado-based Crocs estimated third-quarter earnings of 1 cent to 5 cents per share on revenue of $195 million to $205 million.
"Based on current trends we have lowered our projected sales volumes and made the strategic decision to further right-size our operations to better align with our lower volumes and revenues," Chief Executive Ron Snyder said in a statement.
Snyder added that the company would close a manufacturing facility in Brazil in the fourth quarter. It has already closed a Canadian plant this year.
Capital spending next year will be about half what it was this year, Snyder added.
Gross profit margins tumbled to 1.4 percent of revenues from 60.6 percent a year earlier.
The company has been trying to scale back its infrastructure to be more in line with its future growth prospects. Its inventories, while declining, have been out of line with sales in recent months.
In addition to crumbling U.S. consumer spending, news that Crocs can get caught in escalators and cause injuries has also hurt the company, together with the plethora of knock-off shoes in the marketplace, and a recent European Union ruling that a Crocs patent is invalid.
Crocs estimated a fourth-quarter loss of 50 cents to 65 cents a share on revenue of $100 million to $120 million.
Crocs shares dropped 37 percent to $1.20 in after-hours trade. The stock ended down 11.6 percent at $1.90 on Nasdaq, the lowest since May 2003.
(Reporting by Alexandria Sage, editing by Richard Chang)
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