Crocs CEO stepping down; Q4 loss narrows
SAN FRANCISCO (Reuters) - Shoe maker Crocs Inc (CROX.O) reported a narrower fourth-quarter loss and shocked Wall Street with the sudden departure of its chief executive who has served for a year, sending its shares down 14 percent.
Chief Executive John Duerden, 69, who was appointed a year ago, said he would be retiring effective March 1 and would be replaced by Chief Operating Officer John McCarvel.
The seller of once-trendy colorful plastic shoes has spent the last year trying to right its business, which has seen plummeting sales and suffered the attendant losses.
"The primary focus in 2010 will be restoring profitability," McCarvel told analysts during a call. "We're positioned for top line growth and full year profitability."
Crocs said it expects to break even in the first quarter on revenue of between $155 million and $160 million.
Shares of the company, which at one point last year had shed nearly 98 percent of its value, have rebounded this year and are up 35 percent since January and over 500 percent since January 2009.
For the fourth quarter ended December 31, Crocs posted a net loss of $11.5 million, or 13 cents a share, down from a loss of $34.7 million, or 42 cents a share, a year earlier.
Excluding items, it reported a loss of 4 cents a share.
Analysts, on average, were looking for a loss of 13 cents a share, on revenue of $117.2 million, according to Thomson Reuters I/B/E/S.
Revenue at the Niwot, Colorado-based company rose 8 percent to $136 million, boosted by a 26 percent rise in retail sales.
Crocs' vibrant resin shoes were the rage midway through the decade. But the company found its operations out of line with reduced sales volume due to the economic downturn and shoppers' waning interest as the brand's novelty wore off.
McCarvel called 2008, when the United States sank into a financial crisis, "a perfect storm, in the negative sense," for Crocs.
The highly-distributed company had beefed up inventory to meet demand, but consumers cut back on spending as job losses mounted and the recession deepened.
"Lo and behold, the recession starts to set in and we got caught," he said, adding that the company had "effectively worked ourselves out of that situation."
On Wednesday, the shoe maker won a major legal victory with a federal appeals court ruling over a disputed patent covering the design of its shoes.
Duerden, who described Crocs as "an iconic" brand when he arrived at the company from consulting group Chrysallis, managed to narrow the steep losses that had dogged the company by stabilizing its operations and cash position.
Soon after his arrival, the company avoided a cash crunch with an extension of its credit facility and Duerden began to focus on increasing the company's cash position.
On Thursday, Crocs said it ended the year with $77.3 million in cash, up from $51.7 million a year earlier.
The company has also tried to reinvigorate its product designs and better integrate them with marketing and packaging while opening retail stores to stem weakness in the wholesale division.
It plans in 2010 to open between 40 and 50 retail stores around the globe, in addition to more than 300 stores it has now. Through partners and franchisees, the company also has opened between 500 and 600 retail doors, McCarvel said.
"As the market conditions change we believe we have to have brand control ... and show the wide portfolio of products," he said.
Croc's shares fell 14.4 percent to $6.67 after the bell after closing at $7.79, up 2.3 percent, on the Nasdaq.
(Additional reporting by Shradhha Sharma in Bangalore; Editing by Anthony Kurian)