Crocs, Inc. (CROX)
Q2 2011 Earnings Conference Call
July 27, 2011 1700 hours
John McCarvel – CEO and President
Jeff Lasher - CFO
Jeffrey Klinefelter - Piper Jaffray
Reed Anderson - D. A. Davidson
Jim Chartier with Monness, Crespi & Hardt
Mitch Kummetz - Robert W. Baird & Co.
Jim Duffy - Stifel Nicolaus
Robert Samuels - WJB Capital
Sam Poser - Sterne Agee
Previous Statements by CROX
» Crocs' CEO Discusses Q1 2011 Results - Earnings Call Transcript
» Crocs CEO Discusses Q4 2010 Results - Earnings Call Transcript
» Crocs CEO Discusses Q3 2010 Results – Earnings Call Transcript
» Crocs, Inc. Q2 2010 Earnings Call Transcript
Earlier this afternoon, Crocs announced its second quarter 2011 financial results. A copy of the press release can be found at the company's website at www.crocs.com. The company would like to remind everyone that some of the information provided in this call will be forward-looking and accordingly are subject to the Safe Harbor provisions of the federal securities laws.
The statement includes, but is not limited to statements regarding future revenue and earnings, backlog and future orders, prospects and product pipeline. 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.
Croc 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 call over to Mr. John McCarvel, Chief Executive Officer of Crocs. Please go ahead.
Welcome and thank you for joining us today. With me on the call Jeff Lasher, Chief Financial Officer. Today’s strong results demonstrate the growing power of our global operating platform. We grew all regions of our business to achieve our highest quarterly sales and unit volumes in the company’s history. There are several notable achievements from the second quarter that underscore how much the company has evolved in terms of product, distribution and reinforced how our global business has become the past few years.
Sales increased 30% to a record $296 million of which $198 million own 67% came from our international market. Asia had a terrific quarter and surpassed the Americas as our largest region for the first time ever. Consumer adoption of our new products to outer Asian markets has been faster than other areas of the world and this has fuelled our growth in the region over the past several quarters. The diversity of second quarter sales in Asia was robust with more that half coming from the spring 2011 line. The wholesale business in the region was a strong element for their performance.
From a country perspective our business in Japan rebounded nicely following a slowdown in the first several weeks of the quarter after the earthquake and tsunami. We were able to get goods out to the wholesale account and to our retail stores in time for golden week which turned out to be a better selling period than I think most everyone expected.
We are also excited by the performance of several emerging markets that have been growing rapidly and become more meaningful to our overall results. This includes China where between our company owned stores and our distributor partner stores, we have significantly increased our retail presence in the past twelve months and have extended the brand's reach to tier two and tier three cities in China. We are also seeing solid growth in many other countries especially around the equator like the South East Asian countries Korea, Taiwan and the Middle East where the year round climate is ideal for our type of casual lightweight footwear.
In Europe, our business continued to rebound from 2009, 2010 level. The resurgence was led by our largest direct market the UK, France and Germany. Working more closely with key wholesale accounts we have been successful in obtaining more shelf space for new styles which have been critical to educating consumers on the evolution of the product line particularly since we have so few of our own stores in the region. There is still lot of opportunity here as many retailers continue to heavily rely on our core collection and not taking advantage of our larger portfolio of great products for spring, summer seasons.
Obviously there are some differences between all our global markets but there is no reason that we shouldn’t be able to bridge the gap given our past success in Europe and the fact that this is the second largest footwear market in the world behind the US. We are seeing good growth at some of our newer markets such as Russia, the CIS countries in the Nordic region. However we are focusing growing our direct business in the region and this includes opening more retail locations, selectively adding new wholesale distributions and more effectively marketing to our target customers.
In the Americas we delivered another stellar of performance. Since our last summer we have expanded our relationships with majority of our wholesale partners. This includes increasing skew counts and adding doors, converting kiosks to stores, introducing various compelling new products into the marketplace. Our distribution in the US is well balanced between wholesale and consumer direct and within wholesale there is diversified amongst chain stores and independents.