Niwot, Colorado-based footwear manufacturer Crocs, Inc. experienced a significant decrease in shares as a result of disappointing first-quarter sales and earnings caused by the ongoing Covid-19 pandemic. The company’s revenues for the quarter, which ended on March 31, amounted to $281.2 million, representing a 5% decline from the previous year. However, when adjusted for currency fluctuations, the decline was only 3.3%. Crocs’ wholesale sales dropped 5.6% and total retail revenues declined by 15% due to temporary store closures caused by the coronavirus crisis. Nevertheless, the company saw a growth of 15.8% in e-commerce revenues.

Crocs’ reported a net income of $11.1 million for the quarter, resulting in $0.16 per diluted share. This is a substantial decrease compared to the same period the previous year, when the company earned $24.7 million, or $0.33 per diluted share. Adjusted earnings per share (EPS) also declined, going from $0.36 to $0.22. Analysts had predicted an adjusted EPS of $0.31 on revenues of $296 million.

In response to the challenging market conditions brought on by the pandemic, Crocs has implemented several measures to safeguard its business. These measures include furloughing store employees, reducing executive pay, cutting operating expenses and capital expenditures, suspending share repurchases, and increasing its revolving credit facility from $450 million to $500 million. Despite these actions, the company’s global distribution centers are still operational in order to provide essential products to healthcare workers. Moreover, the centers have implemented safety precautions, such as temperature checks, social distancing, and the provision of hand sanitizer.

Andrew Rees, President and CEO of Crocs, acknowledged the impact of Covid-19 on the company’s recent performance but expressed confidence in the brand’s resilience. He reassured stakeholders that Crocs remains a strong and well-positioned brand, with no immediate concerns regarding liquidity. Rees emphasized that the company has taken swift action to ensure positive cash flow for the remainder of the year.

Given the uncertainty surrounding the pandemic, Crocs did not provide an outlook for the second quarter or the full fiscal year 2020. The company anticipates significant sales declines in the second quarter, as many of its owned and partner stores may remain closed throughout the period. However, there are indications of recovery in China and Korea, where Crocs stores have started reopening.

Useful links:
Crocs Official Website
Crocs Stock Information on MarketWatch