Yahoo Finance Crocs CEO explains its major turnaround
Plain and simple: Crocs CEO Andrew Rees has flat out gotten it done in 2019.
Reese — CEO at Crocs (CROX) since 2017 —has the inked buzz-building collaborations with PizzaSlime and Takashi Murakami necessary to stick out in a sneaker game dominated by behemoths Nike and Adidas. The company has cleaned up its inventory — a one-time issue for Crocs — and gained a good bit of new distribution at department stores. Traffic at Crocs retail stores are up (no small achievement in this digital age) and sales are soaring online.
“There has been a major turnaround,” Rees said on Yahoo Finance’s The Final Round.
All in all, Rees has made the often-ridiculed footwear cool again and is being rewarded accordingly.
The stock has skyrocketed 68% over the past year in the face of train-wreck selloffs in mall-based retailers such as Macy’s.
Meanwhile, third quarter sales surged 19.8% from the prior year to $312.8 million. Adjusted gross profit margins rose 30 basis points on the back of strength in core clog shoes and lower overall promotions.
Adjusted operating profits exploded 126.9% from a year ago. Sales in the Americas division spiked 35.8%, powered by gains online, at Crocs retail stores and wholesale customers. Sales in Europe rose 12.3%.
“We are creating pull with our consumers, we are making this product relevant with our consumers. And if you make it desirable and our wholesale accounts are getting sell-through, then they want more,” Reese said of the surprising strength at department stores.
The lone weak spot was Asia, where sales dropped 1.2% as Crocs works to improve its distribution and product offerings in the country. Reese doesn’t expect the Asia business to show meaningful improvement until 2021.
Crocs sees its momentum continuing into 2020. Revenues are projected to rise 12% to 14% next year, according to Crocs.
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi
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