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Crocs Inc. (



Q4 2011 Earnings Call

February 23, 2012 5:00 p.m. ET


John McCarvel - CEO & President

Jeff Lasher - CFO


Jeff Klinefelter - Piper Jaffray

Jim Chartier - Monness, Crespi, Hardt

Reed Anderson - Northland

Kelly - BB&T Capital Markets

Sam Poser - Sterne Agee


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Welcome to the Crocs Incorporated fiscal 2011 fourth quarter and full year earnings conference call. [Operator instructions.]

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Earlier this afternoon, Crocs announced its fourth quarter and full year 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 in this call will be forward-looking, and accordingly are subject to the Safe Harbor Provisions of the Federal securities laws.

The statement include, but are not limited to statements regarding future revenue and earnings, backlog and future orders, prospects, and product pipeline. Crocs cautions you at these statements and are subject to a number of risks and uncertainties described in the risk factors 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 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 discussions 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 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, sir.

John McCarvel

Thank you, and thanks for joining us today for Crocs’ fourth quarter conference call. With me today is Jeff Lasher, our chief financial officer.

In early January, we announced that the fourth quarter sales would be toward the high end of the guidance range, putting our annual sales above the $1 billion mark for the first time ever. This is a tremendous milestone for Crocs, and one that we take great pride in achieving, particularly given the fact that the company is just 10 years old and that we’ve only been selling shoes in a meaningful way for the past seven years.

I think what really stands out about the $1 billion in sales is how diverse the contributions were this year. Amazingly, we had been on a similar path just a few years ago. However, back then our business was extremely concentrated in terms of products, namely our Classics and Core; regions, primarily the US; and channels, almost entirely wholesale.

Today, we sell more than 300 different styles, and only two styles represent more than 5% of sales. In 2011, approximately 65% of our sales came from outside the United States, and broken down by channel, wholesale represented 61%, retail 30%, and internet 9%.

Over the past few years, we’ve made very good progress shedding the image that Crocs is a one-dimensional company. We have successfully transformed our global operations to development what has been a very strong brand. We’ve added strong leadership to several key areas of the business. We’ve upgraded our systems, and improved our processes to better support a global company of our size and implemented sound long term strategies that we believe can continue to drive growth forward at a solid pace off our strong $1 billion foundation.

We know there are still areas that need more work, and that greater efficiencies can be driven throughout the entire organization in order to increase our profit margin. We are focused on enhancing all aspects of the business and expect our efforts will yield positive results again in 2012 and over the years ahead.

Jeff will now go through detailed financials from the fourth quarter and outline our guidance. Then I’ll provide color on the key growth drivers for 2012, after which we’ll be happy to take questions. Jeff?

Jeff Lasher

Thank you John. Hello everyone, and thanks for joining us. This afternoon, I’ll be discussing fourth quarter and full year 2011 results. Revenue for the quarter increased by $25 million, or 14%, to $204 million. This is against a 32% top line increase from a year ago.

As John said, for the year, we were able to exceed $1 billion in revenues, with strong growth [unintelligible]. We also executed on our eighth consecutive quarter of revenue growth in each of our geographic regions.

As we have discussed on prior calls, in the fourth quarter stronger growth in the Americas and Asia were tempered by slower growth out of Europe. Sales in the Americas increased 10% to $104 million, Asia increased 22% to $76 million, and Europe increased 6% to $24 million. For the year, sales in the Americas increased 19% to $448 million, Asia increased 34%to $382 million, and Europe increased 34% to $171 million.

Turning to the Americas region, our direct-to-consumer channel drove Q4 revenues as our internet sales grew 21% during Q4. While sales from wholesale were relatively flat, retail sales in the Americas region increased 17%, while store count was flat at the end of the quarter at 197 locations.

The 17% increase in retail sales in the Americas was from a combination of larger locations, product breadth, and higher average footwear selling prices. In the USA, revenue was up 10% for the quarter, and represented 41% of total global sales. For the year, revenues in the USA represented 35% of total global sales.

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