Crocs continued to reap the benefits of its efforts to restructure, ending the year with a profit against a loss for the same quarter a year ago. In the fourth quarter ended Dec. 31, it delivered strong direct-to-consumer (DTC) growth and sell-through at the wholesale level, leading revenues to reach an all-time high.
The quarterly net income of $19.9 million compares with a loss of $10.9 million for the last three months of 2018. Meanwhile, revenues reached $263.0 million, soaring by 21.8 percent on a reported basis and by 22.7 percent in constant currencies, coming ahead of the management’s previous guidance.
The number of pairs sold for the quarter progressed by 18 percent to 13.7 million, with the average selling price gaining 3 percent to $18.44. Clog revenues jumped by around 36 percent and made up 69 percent of footwear sales, compared with 62 percent for the year-ago period. Sales of sandals climbed by 7 percent.
By channel, wholesale revenues advanced by 22.4 percent, lifted by strong sell-through and the resulting replenishment orders across all regions. Direct-to-consumer comparable sales, which include e-commerce and brick-and-mortar sales, rose by 22.0 percent, with comparable retail sales up by 16.0 percent. Overall, e-commerce revenues jumped by 34.3 percent.
The group recorded double-digit growth in DTC comparable sales in all the three regions where it operates, led by a 28.1 percent sales increase in the Americas, followed by EMEA with a 11.5 percent growth in constant currencies. Asia-Pacific grew by 5.7 percent in constant currencies.
The gross margin improved by 1.80 percentage points to 48.0 percent. The adjusted gross margin, which excludes expenses primarily related to the relocation of the group’s distribution centers in the U.S. and the Netherlands, reached 49.3 percent. This was driven by a favorable product mix, price increases on certain products, lower levels of promotions and discounts, and greater volumes that helped leverage Crocs’ fixed costs.
For the full year, revenues reached $1,230.6 million, growing by 13.1 percent from 2018, or by 15.6 percent on a constant currency basis. Store closures - the company had 367 stores in December 2019, compared with 383 in December 2018 - reduced revenues by $17.2 million. Wholesale revenues advanced by 13.5 percent and the e-commerce business grew by 24.2 percent, while comparable store sales went up by 12.4 percent.
The gross margin declined by 1.4 percentage points for the year to 50.1 percent. Net earnings jumped by 137.0 percent to $119.5 million and the adjusted operating margin expanded by 3.9 percentage points to 11.6 percent.
For 2020, the group has penciled in a $40 to $60 million negative impact on revenues from the coronavirus. It still expects sales for the full year to go up by between 8 and 12 percent, with the operating margin standing between 11 and 13 percent.
