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$CROX: Crocs beats by $0.05, beats on revs; guides Q3 revs in-line; announces strategic changes (14.84)
Reports Q2 (Jun) earnings of $0.36 per share, $0.05 better than the Capital IQ Consensus Estimate of $0.31; revenues rose 3.6% year/year to $376.9 mln vs the $372.76 mln consensus. Co issues in-line guidance for Q3, sees Q3 revs of ~$300-305 mln vs. $300.54 mln Capital IQ Consensus Estimate.
Gross profit for the second quarter of 2014 increased 0.8% to $202.6 million, or 53.7% as a percentage of sales, compared with $200.9 million, or 55.2% as a percentage of sales in the prior year period. The year-over-year decrease in gross margin was primarily related to increased shipping costs globally offset by a decrease in promotional and clearance activity.
During the quarter, the company repurchased ~2.3 million shares of common stock bringing the total repurchases to 3.2 million shares under its previously announced $350 million stock repurchase program. The company intends to continue to be patient, methodical and opportunistic in the execution of this buyback plan.
Co also announced strategic plans for long-term improvement and growth of the business. These plans comprise four key initiatives, including: (1) streamlining the global product and marketing portfolio, (2) reducing direct investment in smaller geographic markets, (3) creating a more efficient organizational structure including reducing duplicative and excess overhead which will also enhance the decision making process, and (4) closing or converting ~75 to 100 Crocs branded retail stores around the world. The company expects cost savings associated with the reduction in force of $4.0 million in 2014 and $10.0 million in 2015. Further, the company expects store closings will reduce revenue by ~ $35.0 to $50.0 million and reduce SG&A expense by ~$17.0 to $25.0 million with an insignificant impact on future operating income.
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