Crocs, Inc. (CROX)
Q3 2012 Earnings Call
October 24, 2012 5:00 pm ET
William I. Kent – Investor Relations
John P. McCarvel – President and Chief Executive Officer
Jeffrey J. Lasher – Chief Financial Officer
Erinn E. Murphy – Piper Jaffray, Inc.
Sam Poser – Sterne, Agee & Leach
Jim Duffy – Stifel Nicolaus & Company, Inc.
Corinna Freedman – Wedbush Securities
Reed A. Anderson – Northland Securities, Inc.
Mitch Kummetz – Robert W. Baird & Co., Inc.
Scott D. Krasik – BB&T Capital Markets
Steven L. Marotta – C.L. King & Associates, Inc.
Mike Schwartz – SunTrust
Jim Chartier – Monness, Crespi, Hardt & Co., Inc.
Previous Statements by CROX
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It is my pleasure to turn the conference over to William Kent, Senior Director of Investor Relations. Mr. Kent, please go ahead.
William I. Kent
Thank you and thank you all for joining us for our third quarter 2012 earnings conference call. Participants from the Company include John McCarvel, President and Chief Executive Officer and Jeff Lasher, Senior Vice President and Chief Financial Officer.
During today's call John McCarvel share some opening remarks, cover third quarter highlights and talked briefly on Crocs corporate strategy. Jeff Lasher will review our third quarter financial results in detail and cover guidance. John McCarvel will then wrap up our prepared remarks with a few closing comments.
Earlier this afternoon, we announced our third quarter fiscal 2012 financial results. A copy of the press release can be found on our website at crocs.com. We 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 Security laws. These statements include, but are not limited to, statements regarding future revenue and earnings, backlog and future orders, prospects and product pipeline.
We caution you that these statements are subject to a number of risks and uncertainties described in the risk factor section of the Company's 2011 report on Form 10-K filed on February 29, 2012 with the Securities and Exchange Commission. Accordingly, actual results could differ materially from those described on this 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 of 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 these forward-looking statements to reflect the impact of future events. The Company may refer to certain non-GAAP metrics regarding currency on this call. Explanation of those metrics can be found on the earnings release filed earlier today.
I will now turn the call over to John McCarvel.
John P. McCarvel
Thanks Will. And thanks for joining us this afternoon as we discuss our third quarter results. The third quarter demonstrates how diversified Crocs is today. We are operating in a global marketplace with balance distribution channels, which benefit Crocs and our shareholders. Revenue for the quarter increased 7.5% to $296 million, and our sales on a constant currency basis, grew 10.3% globally. Our gross margins increased 80 basis points in Q3 2011. Average global same-store sales grew by 1% for the quarter, $0.49 per diluted share on a net income of $45 million inclusive of a one-time tax benefit that was recognized in the quarter. Our global multi-channel strategy continues to provide a platform to engage consumers wherever they shop. As we saw growth in all three channels wholesale, retail, and Internet.
On a constant currency basis, our direct-to-consumer business grew 12.7% in the Americas and 17.6% in Asia. The consumers have to pay for the brand and constantly speaking out our products in all three channels is extremely encouraging to all of us at Crocs.
Revenue for the quarter increased slightly less than we had expected. I would like to discuss two key factors that affected our quarterly results. There were macroeconomic challenges in Japan and in the European market that we are not immune to in the quarter. In Japan, we experienced a drop-off in our own retail stores primarily from an overall consumer spending slowdown and partly, from a comparison against significant gain in our same-store sales in last year’s results.
In Europe, at-once demand for our wholesale accounts and distribution partners for our products was significantly down as most retailers experienced a cooler summer season and managed their inventory level lower during the quarter. Before I talk about business factors, I would like to take this opportunity to talk about our Crocs Cares program.
This is an important initiative at Crocs that gives to local and global share view and it’s a very important part of our culture. In July, there was a terrible tragedy in our Colorado community. the shootings at the movie theatres in Aurora, Colorado not far from Boulder, not far from where many of us live in the Greater Denver area. We felt that it was imperative that we do something to the people that were affected by this tragedy. We donated $5 from every per shoes that we sold online and in our Colorado stores for one week in August, we were honored to present check to the Aurora Fund for $559,000. We’ve done some listings after other tragedies in Europe, tsunami in Japan, and here in the United States last year in Tuscaloosa, Alabama, as well as Joplin, Missouri.