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NIWOT, COLORADO—Crocs, Inc. has reported better-than-expected financial results for the third quarter ended September 30, 2009, with revenues mostly in the positive category and growth in the Asian and European markets.


Third quarter 2009 revenues increased 1.7% to $177.1 million compared to revenues of $174.2 million in the year ago period, ahead of the company’s guidance for revenues between $150 and $160 million. The company’s third quarter 2009 revenue included $11.5 million in planned sales of previously impaired footwear.

“Our third quarter results were driven by the continuing strength of our consumer-direct businesses and the favorable effects of our cost reduction programs,” said president and CEO John Duerden. “While we are encouraged by our top-line growth and return to profitability in the quarter, the normal seasonality of our business will make it difficult to maintain profitability in the fourth quarter. However, future wholesale bookings for the spring 2010 line are strong in all regions.

"When coupled with the launch of our new, targeted marketing programs, this provides us with increased confidence that we will return to profitability during 2010. In the meantime, we will continue to invest in the products, systems, processes and customer relationships necessary to deliver the best long-term results.”

The company reported net income of $22.1 million in the third quarter of 2009 with diluted earnings per share of $0.25, compared to a third quarter 2008 net loss of $148.0 million, or ($1.79) per diluted share. Third quarter 2009 net income includes the effects of the following:

$9.6 million gross margin impact related to sales of product that had been previously impaired, $1.0 million gain from foreign currency exchange rate fluctuations during the 2009 third quarter, and $14.4 million one-time tax benefit related to a change in the company’s corporate tax structure. These positive effects on net income were partially offset by the unfavorable impacts of $3.6 million in impairment and restructuring charges and net charitable donations.

Year-over-year third quarter changes were mostly positive. Retail sales increased 39.6 percent to $53.9 million, Internet sales increased 61.0% to $16.1 million and wholesale sales decreased 14.7% to $107.1 million.

Regional revenue streams were also mostly in the plus category. Asia increased 7.4 percent to $68.0 million, Europe increased 1.7 percent to $29.9 million and the Americas decreased 2.8 percent to $79.3 million.

Inventory of $113.7 million at September 30, 2009 was 20.6 percent lower than at December 31, 2008 resulting in a trailing twelve month inventory turnover of 3 times.

The company ended the third quarter of 2009 with accounts receivable of $65.8 million compared to $35.3 million at December 31, 2008 as a result of higher sales in the quarter. Days sales outstanding decreased from 37.5 days for the three months ended September 30, 2008 to 34.2 days for the three months ended September 30, 2009.

Net capital expenditures in the third quarter of 2009 were $6.1 million compared to $18.3 million the third quarter of 2008.

The company expects to generate between $110 million and $115 million in revenue during its fiscal fourth quarter, with a loss per diluted share between ($0.20) and ($0.15). This guidance excludes the effect of fluctuations in foreign currency, charitable contributions and one-time and non-recurring charges. Guidance includes the effect of impaired inventory sales and will on a go-forward basis.

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