Crocs, Inc. (CROX)

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Crocs, Inc. (CROX)

Q 1 2011 Earnings Call

April 28, 2011 17:00 pm ET


John McCarvel - CEO, President

Jeff Lasher - CFO


Jim Duffy - Stifel Nicolaus

Reed Anderson - D. A. Davidson

Jeffrey Klinefelter - of Piper Jaffray

Jim Chartier - Monness, Crespi, Hardt

Sam Poser - Sterne Agee



Welcome to the Crocs, Incorporated Fiscal 2011 first quarter earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. (Operator Instructions)

Earlier this afternoon, Crocs announced its first quarter 2011 financial results. A copy of the press release can be found on the company's website at The company would like to remind everyone that some of the information provided on this call will be forward-looking and accordingly are subject to the Safe Harbor provisions of the federal securities laws.

The statement concern, plans, beliefs, forecasts, guidance, projections, expectations, and estimates for future operations. Crocs cautions you that these statements are subject to a number of risks and uncertainties described in the Risk Factor section of the company's 2010 annual report on Form 10-K, filed on February 25, 2011 with the Securities and Exchange Commission.

Accordingly, actual results could differ materially from those described on the call. Those listening to the call are advised to refer to Crocs’ Annual Report on Form 10-K, as well as other documents filed with the SEC for additional discussion of these risk factors.

Crocs intends that all its forward-looking statements in this call will be protected by the Safe Harbor provisions of the Securities and Exchange Act of 1934. Crocs is not obligated to update its forward-looking statements to reflect the impact of future events.

Now at this time, I would like to turn the conference over to Mr. John McCarvel, Chief Executive Officer of Crocs. Please go ahead, sir.

John McCarvel

Thank you and thank you for joining us on today's earnings call. Before I begin with comments I am pleased to announce that Jeff Lasher has been appointed Crocs' new Chief Financial Officer and he is with me again on the call today.

After an exhaustive search and lengthy interview process, Jeff emerged as the most qualified candidate to fill this critical role. Our business continues to expand both in size and complexity and I'm very confident that Jeff's financial expertise, deep understanding of our global multi-channel business will service well into the future.

Now to our results, we are very pleased with our first quarter performance which was highlighted by record revenues and earnings that were significantly better than a year ago. The momentum that we created during the past 12 to 18 months with our compelling new products and effective marketing programs has carried over into 2011 and is driving important market share gain in the Americas, Europe and Asia which were up 35%, 42% and 33% respectively in Q1.

Last year, the spring 2010 season started off well with the launch of the Crocband collection and we followed up with other new collections and products throughout the year that built on the aspects of the brand’s original DNA. Crocs continue to evolve from an iconic product to a lifestyle brand that appeals to a wider audience and consumers today.

This year for Spring 2011, we launched fresh new ideas and collections like our Translucent and own take on sneakers and (inaudible).Our backlog at yearend and at March 31st underscore the confidence retailers have in Crocs and they are now being rewarded as early sell-through rates in Q1 have been solid.

Where many companies today aspire to be global and grow their international presence we continue to execute our plan on an already global business platform. Our non-domestic US international revenue was 65% for up total revenue for Q1. In the Americas, we experienced solid growth across our diverse customer base of department stores, sporting goods, specialty retailers, independent shops and family footwear chains..

Shoppers are being presented with a much boarder assortment of products than a year ago and in a much more appealing environment. Thanks to our investments in new visual merchandizing and point of sales fixtures. With a significant number of new different styles spread across multiple collection, we now have the ability to segment our product within our distribution network.

This has created scarcity for select new products, something we weren’t doing a couple of years ago which I believe is good for the long-term health of our business. In the first quarter we are also launched our newest foot wear collection, Jibbitz by Crocs. We rolled out Jibbitz by Crocs initially in 550 doors and are now sold in many target locations. The initial consumer response has been very encouraging. We’re currently in the process of increasing sales count for holiday 11 and for spring summer 12 for the comfortable fund in affordable line of footwear.

The strength of the spring line is also driving growth in our retail location throughout the United States. Our translucent, sneaker, sandals and core CROCS sales are all selling well while the reaction to tuning products has been mixed in the US. As we discussed on last year’s Q1 call, when we had delayed the launch our new product into our direct-to-consumer channel, this year we transitioned our retail stores to the new spring summer 2011 line earlier in the season. This has provided a lift in revenue growth and our customers have reacted favorably. We’re seeing similar results in Europe with the exception of toning which has been well received in several markets.

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