US: Crocs shifts strategy and cuts jobs as Q2 profit slumps
- Four-pronged plan aims to revitalise business
- Q2 net profit down 34% to US$23.3m
- Revenue up 3.6% to $376.9m
Footwear business Crocs has unveiled a strategic plan aimed at bringing long-term growth to the company after second quarter profits slumped by 34%, including more than 180 global job cuts.
The US company, which is currently searching for a new CEO, said revenue had increased 3.6% in the three months to 30 June, which Crocs president Andrew Rees said “demonstrates the underlying potential of our global brand and business”.
The four key initiatives in the company’s revamp involve a streamlining of its product and marketing portfolio; a stronger focus on key international markets, accompanied by reduced investment in smaller ones; the creation of a more efficient structure; and the closure or conversion of 75-100 Crocs stores globally.
A total of 183 global job cuts, most of them enacted immediately as part of the third strand of the strategy, should save Crocs $4m in 2014 and $10m in 2015, the company said.
It is also planning to open a new Global Commercial Center to house key merchandising, marketing and retail functions in the Boston area in late 2014.
Under the plan, Crocs will focus on its core moulded footwear product range alongside “innovative casual footwear platforms”, increasing working marketing spend by 50%.
Some 18 stores had already been closed or converted by the end of the second quarter, with the total store closures cutting revenue by $35-50m and saving $17-25m in SG&A expenses, Crocs said.
“We have identified the key strategic and structural improvements that we expect will allow the company to achieve its potential,” Rees said.
“Our objective is to create a more efficient organisation that can sustain profitable growth in a multi-channel global business model.”
Company chairman Thomas Smach said the search for a new CEO “continues to progress”.
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