Shares in Crocs, Inc (NASDAQ:CROX) slipped in pre-market trade this morning after the foam shoemaker disappointed with its outlook for the rest of the year.
The Colorado-based manufacturer is targeting third quarter sales of between US$230mln and US$240mln, below the US$247.5mln analysts had initially pencilled in.
As for the rest of the year, Crocs expects full-year revenues to be down “low single digits” compared to 2016, which it said reflects the “various business model changes taking place throughout the year, and an accelerated pace of store closings”.
To deal with the declining popularity and sales of its colourful shoes, Crocs has been cutting down on costs to maintain a decent level of profitability.
The company – which was only founded 15 years ago – expects selling, general and administrative (SG&A) expenses to be between US$490mln and US$495mln this year, lower than previously forecast.
Gross margins for 2017 should come in at around 50%, it added.
Better-than-expected second quarter
The business performed better than expected in the quarter just gone, though.
Revenues for the three months ended June 30 came in at US$313.2mln. That’s at the higher end of guidance, Crocs said, but below the US$323.8mln it posted for the same period in 2016.
Second quarter net income smashed Street expectations however, rising 54% to US$18.1mln or US$0.20 per share (Q2 2016: US$11.7mln, US$0.13 a share). Analysts had forecast earnings per share of US$0.14.
‘Challenging’ retail environment
“During the second quarter, we continued to revitalize the Crocs brand and drive improvement in the quality of our revenues,” said president and chief executive Andrew Rees.
“A focus on our core moulded products and effective inventory management enabled us to deliver gross margins which exceeded guidance, while our intense focus on expense management kept SG&A below projected levels.
“We are optimistic about the early response to our Fall/Holiday 2017 collection, and anticipate that the positive sentiment seen to date will continue throughout the second half of the year, despite the challenging retail environment.”
That optimism and second quarter performance weren’t enough to offset the third quarter and full-year concerns though, with shares down 3% in pre-market trade to US$7.85.