Shares in Crocs Inc (NASDAQ:CROX) slipped in pre-market trading on Wednesday after the foam shoemaker disappointed with its fourth quarter losses as well as its outlook for 2018.
The Colorado-based manufacturer has been closing stores and cutting costs recently in order to maintain a decent level of profitability and offset the declining popularity of its colorful shoes.
READ: Crocs raises fourth-quarter outlook above estimates, reiterates full-year view
There was a surprise beat on the revenue front, with sales rising to US$199.1mln in the three months ended December 31 (Q4 2016: US$187.4mln) – comfortably ahead of Wall Street estimates of US$195.0mln.
Gross margins jumped 340 basis points to 45.4%, reflecting the cost cutting drives and focus on higher margin products.
But net losses narrowed to US$28.3mln, or 41 US cents per share (Q4 2016: loss of 60 US cents), in the period, whereas analysts had been expecting a loss of 33 US cents.
“We had a strong final quarter of the year, which enabled us to meet or exceed our revenue and gross margin guidance for the fourth consecutive quarter,” said president and chief executive Andrew Rees.
“Throughout 2017, we focused on our strategic objectives: simplifying our business to reduce costs, improving the quality of our revenues, and positioning ourselves to drive sustainable, profitable growth.”
2018 revenue seen relatively flat
As for 2018, revenue is expected to be “relatively flat” compared to the US$7.92bn Crocs generated in 2017, negatively impacted by a US$60mln charge related to business model changes and store closures.
The consensus among Wall Street number crunchers is for sales of US$8.65bn this year.
“Looking at 2018, our Spring/Summer collection is being well received. We expect moderate wholesale and double-digit e-commerce growth to be offset by the loss of retail revenues associated with store reductions,” added Rees.
“We also anticipate delivering continued gross margin gains and completing our SG&A reduction plan. This lays the groundwork for generating top line growth in 2019 and, ultimately, delivering double-digit EBIT margins.”
Crocs shares fell 3.6% to US$13.57.