Crocodile Tears? Crocs Blames Earnings Drop on the Weather The colorful, rubber footwear company said cold weather contributed to plunging profits in the second quarter.
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Blame it on the rain.
The colorful rubber shoemaker Crocs is the latest in a series of companies to say that their weak earnings results were, at least in part, due to the weather.
In the three months ended in June, Crocs reported net income of $35.4 million, down 42.5 percent from the $61.5 million it posted the same quarter a year earlier. The Niwot, Colo.-based shoemaker reported sales of $363.8 million, up almost 10 percent from the same quarter in 2012, but the slimmer profit margins sent the stock down 20.2 percent on Thursday from the previous day.
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Crocs cited colder than normal temperatures in April and May in the U.S. and Europe as one reason it posted lower profits. It also blamed penny-pinching consumers in the U.S., Europe and Japan, saying bargain hunters hurt corporate margins.
Crocs is not the only company to attribute financial woes to the weather. Recently, Coca-Cola said its sales of soda were dampened by "historically wet and cold weather conditions." Whole Foods said its customers were making fewer grocery trips because the cold weather made them want to stay indoors.
And Clorox, the consumer products group that owns the Kingsford charcoal brand, said that the unusually cold spring meant fewer consumers were lighting up the grill, knocking down its sales of charcoal. "The U.S. had the coldest March weather in more than 10 years, which led to double-digit volume and sales declines in our Charcoal business," said Chairman and CEO Don Knauss in a statement.
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It's unclear whether Crocs's second-quarter performance is a temporary blip or indicates a problem in the company's turnaround efforts. After going public in 2006 at $21 a share, the shoemaker's stock dipped to $1 a share in 2009 in the wake of the recession, as consumers slammed the brakes on their spending. Made fun of as a fashion faux pas due to the shoe's clunky, clog-like design, Crocs expanded its product line to include 300 varieties of flats, wedges, boots and even golf shoes priced at $25 to $60. The company also improved its supply-chain management, revamped its retail strategy and expanded globally. The company's turnaround efforts were largely successful and at one point in 2012, the company was worth over a billion dollars.