Earnings Preview: Crocs

Nov. 4.09 | About: Crocs, Inc. (CROX)

Crocs (NASDAQ:CROX) is expected to report Q3 earnings after the market close on Thursday, November 5 with a conference call scheduled for 5 pm ET.

Guidance

Analysts are looking for a loss of (8c) on revenue of $156.41M. The consensus range is (12c)-(6c) for EPS, and revenue of $150.3M-$160.01M, according to First Call. In August, Crocs guided Q3 EPS (16c)-(14c) on revenue of $150M-$160M. Though Barron's in August said Crocs' long-term growth story is "problematic," CEO John Duerden said he is looking to turn the company into a "financially stable company and brand." The company has reduced its workforce by 32% since 2007 and has also cut inventory and closed factories. In addition, Crocs, which is aiming for positive earnings in 2010, is expanding its product line. During the quarter, Crocs amended its credit agreement with PNC Bank to decrease its tangible net worth requirement to $205M from $266M.

Analyst Views

Thomas Weisel believes Crocs has made progress toward "repairing relationships with key retailers," and expects optimistic commentary about Spring 2010 orders, which may lend confidence to revenue growth in 2010. Analysts and investors will listen for comments on the company's expense and margin outlook. Thomas Weisel sees the opportunity for gross margin to improve to the mid-to-high 40%'s.