Economic Analysis

SUMMARY: 

Revenues are growing at a fast pace and it looks like it has a sustainable basis. Units sold have been increasing since 2008 and since 2009 the average selling price has been higher. Both are at superior levels when compared to pre-crisis values.

Retail business has been gaining weight on revenue structure, mostly because of the great investment the company is doing in company-operated retail stores in Asia.

Since 2009, revenues have increased 59% as a consequence of growth in all geographic segments and all sales channels.

REVENUES:

(Revenues are in thousands of $; Footwear unit sales are in millions)

• Revenues decreased until 2009 as a consequence of the 2008 crisis that largely impacted the company.

• In 2010, revenues started increasing due to the recovery of the economic environment, which was reflected in a higher number of shoes sold and at a higher price.

• Acessories, specially the ones traded under Jibbitz brand account for about 4% of total revenue.

• Despite the double-digit growth in sales for Jibbitz acessories for the last couple of years, it still has a long way to go to achieve pre-crisis levels. 

• Wholesale: Increase in 2011 due to a global increase in demand.
• Retail: Increase due to present strategy to expand company-operated retail locations.
• Internet: Increase manly due to Europe and Americas.

• The contribution of the wholesale channel for the total revenues is decreasing, while the retail and internet contribution is increasing.

• In 2011 wholesale, retail and internet revenues accounted for 60%, 30%, 10% of the total revenues, respectively.

• Retail and Internet revenues in $ have been ever increasing in the last five years, while the wholesale revenues took a dip until 2009 and are now recovering. 

• Average growth rate of revenues from retail and internet channels are 43%/year and 30%/year respectively, while in 2011 these rates were 31% and 28% comparing to 2010. 

Reflects Company strategy to expand the retail stores in order to better expose the full extension of products and the intend to increase Internet sales, which have a higher operating margin.

• Americas and Europe are losing weight in total revenues, in favor of Asia. 

• In 2011 Americas accounted for 45% of total revenues, Europe 17% and Asia 38%. 

• Revenues in $ in Americas and Europe have followed the global trend, decreasing until 2009 and then recovering again at double digit growth rates.

• Revenues from Asia have been ever increasing for the last five years at an annual average growth rate of 23%, 34% just last year.

• Revenues from Asia include $27.4 million and $18.5 million of exchange rate gains in 2011 and 2010, respectively. Excluding these amounts growth in 2011 was 33%.

Reflects Asian segment is driving growth in revenues. Despite the other segments are growing in volume, Asia is acquiring a bigger slice of total revenues. This means that Crocs is getting results from emerging markets exposure.

• US Revenues are increasing since 2009, although its weight for total revenues has been decreasing.

• Cross border revenues have been increasing (AAGR = 13%; 2011 = 29%)

• Japan accounts for 15% of total revenues.

These two graphs allow us to understand better the information about the revenues on different locations. First, we can conclude that despite the 2% drop in average selling price in Americas, the company is achieving growth in both price and units sold. Second, we see that this is happening everywhere, which makes this growth more stable. Only in Europe the company seems to have a bit more difficulty in raising prices, although it is making up with higher increases in units sold.

It is also important to notice that both retail and wholesale businesses are growing very fast in all regions. 

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