Update Q2 2012

Crocs announced its Q2 2012 results and FY2012 Guidance. The full report is not available yet but it's important to be quick to analyse the main value driver of the business with the information available.


This was a mixed quarter as the company reported revenue growth lower than expected but higher profitability. It's important to notice that about $7.8 million in revenues were lost due to translation expenditures (especially from Euro). This means, growth in revenues with a constant currency basis would have been around 15% instead of 11%. Remember the company has a policy to reinvest the cash-flows in the place where it originated, so this is important.

The company continued to expand its presence in Asia and Europe, but comparable stores sales growth was also positive, meaning the company is selling more even without new stores.

Although I was still unable to analyse the cash-flow statement, Cash & Cash Equivalents increased about $72 million and that's always good!

Q3 and FY2012 Guidance was above analysts expectations.

Overall, growth in revenues is increasing at a double-digit rate, but it has been decreasing. Still, i'm buying this story as the company has a great track record in terms of earnings and cash-flow generation. Also the company is priced at 52-week lows and is trading at very cheap levels. 


Q2 2012

  • Growth in revenues was lower than forecasted by the company (12% vs 14%).
  • Gross and Operating Profit increased about 15% as both margins widened about 3%.

  • Revenues increased 11% and 21% in Americas and Asia respectively, and decreased 5,2% in Europe. 
  • Foreign currency negatively impacted all revenues, but it had a stronger impact on Europe, as revenues at a constant currency rate actually increased 5,4%.

  • The company continues to expand its presence in Asia and Europe. 
  • This quarter alone Crocs has 45 new stores, 22 of them in Asia and 16 in Europe.
  • Comparable Store Sales growth is being penalized by the decrease in Americas.

  • Continuation of the trend: expanding retail and outlet stores as a way to better merchandise the full breath and depth of its products.
  • It opened 22 and 15 new retail and outlet stores, repectively.

  • EPS Growth Q-o-Q was about 11%
  • For the full year the company expects EPS to be around $1,50 to $1,54, compared to analysts expectations of 1,47. This means a EPS Growth for 2012 of 21%.
  • The company also expects Revenue for the year to grow about 14% compared to 2011, so this means the company expects a better profitability.
  • In terms of relative valuation this implies a forward PE Ratio bellow 10.


Q3 2012 Guidance

  • Revenues are expected to be $300 million (bellow the $319 million expected) and EPS between $0,42 and $0,44 compared to 0.42 expected by analysts.
  • These numbers represent an increase of 9% in Revenues and unchanged EPS Q-o-Q.



  • No significant investments were made.
  • Inventories were up about 6% compared to the same period last year.
  • Cash and Cash equivalents increased 35% or $72million inthe last 3 months.