Crocs announced that it was closing the last of its manufacturing stores on Tuesday, but the footwear company asserted that it was not going out of business.
"In connection with ongoing efforts to simplify the business and improve profitability, during the second quarter, the company closed its manufacturing facility in Mexico and moved ahead with plans to close its last manufacturing facility, which is located in Italy," the company said in a statement Tuesday.
The company did not offer explanations as to how it would continue to manufacture shoes, sending fans into a Twitter frenzy. Still, the company asserted that it was not going out of business.
Crocs did not respond immediately to CNBC's request for further comment.
Shares closed down 2.65 percent at $17.64 Tuesday after the announcement was made as part of the company's second quarter earnings release. The stock rose more than 3 percent in Thursday afternoon trading.
Crocs reported earnings of 35 cents per share, beating the 31-cent consensus estimate of analysts as tracked by Thomson Reuters. Revenue for the quarter came in at $328 million, beating a FactSet consensus estimate of $321 million.
The company still expects expects revenue between $240 million and $250 million for the third quarter, in line with consensus estimates, despite the closures.
The company also announced that Carrie Teffner, executive vice president and CFO of the casual footwear brand, would be leaving the company next April. Teffner will be succeeded as CFO by Anne Mehlman, a former vice president of corporate finance for the shoemaker and the current CFO of Zappos.
CLOSE Fans of the comfy, colorful shoes feared Crocs was going out of business. USA TODAY
Crocs said it would shutter all of its manufacturing operations. What it did not say is where its products will be made in the future. Is trade friction between the United States and other nations to blame? (Photo: Wikimedia Commons)
Crocs announced that it was closing the last of its manufacturing stores on Tuesday, but the footwear company asserted that it was not going out of business.
"In connection with ongoing efforts to simplify the business and improve profitability, during the second quarter, the company closed its manufacturing facility in Mexico and moved ahead with plans to close its last manufacturing facility, which is located in Italy," the company said in a statement Tuesday.
The company did not offer explanations as to how it would continue to manufacture shoes, sending fans into a Twitter frenzy. Still, the company asserted that it was not going out of business.
FALSE ALARM: We aren't going anywhere 😎 — Crocs Shoes (@Crocs) August 8, 2018
Crocs did not respond immediately to CNBC's request for further comment.
Shares closed down 2.65 percent at $17.64 Tuesday after the announcement was made as part of the company's second quarter earnings release. The stock rose more than 3 percent in Thursday afternoon trading.
Crocs reported earnings of 35 cents per share, beating the 31-cent consensus estimate of analysts as tracked by Thomson Reuters. Revenue for the quarter came in at $328 million, beating a FactSet consensus estimate of $321 million.
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The company still expects expects revenue between $240 million and $250 million for the third quarter, in line with consensus estimates, despite the closures.
The company also announced that Carrie Teffner, executive vice president and CFO of the casual footwear brand, would be leaving the company next April. Teffner will be succeeded as CFO by Anne Mehlman, a former vice president of corporate finance for the shoemaker and the current CFO of Zappos.
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CLOSE The Crocs brand has gone back to its roots with colorful clogs, and it's saving the company. Buzz60
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Love them or hate them, Crocs were an iconic design that combined comfort with efficient manufacturing. The foam clog was ubiquitous when it emerged 16 years ago in 2002.
Related | Balenciaga Got Twisted and Made Crocs Cool in Spring 2018 Show
Crocs announced today that it would be shuttering all of its manufacturing plants and it's chief financial officer will resign. The announcement comes on the heels of the closure of 28 retail locations after declining sales numbers.
The shoe was polarizing, many decried its "ugly" design while other championed its versatility and ergonomic shape. They were publicly worn by former President George W. Bush and former First Lady Michelle Obama, and were a favorite of hospital employees, restaurant workers, and other professionals who spent all day on their feet. Peak mid-2000s aesthetic, who can forget trading Jibbitz around the playground with friends while simultaneously trying to out shine them your far superior flare. The fashion industry was initially repulsed by Crocs for its clunky shape and plebeian appeal, Tim Gunn was a vocal opponent of the shoe and Crocs managed to end up on Time's 2010 list of "Worst Inventions." However, in the decade since they first rose to infamy, the fashion world has slowly come around on the rubbery slippers appreciating them for their growing nostalgic charm. Notably the luxury fashion house Balenciaga put their spin on the shoe turning it into a full platform shoe with added spikes and logos elevating it to the level of couture.
Its is truly the end of an era as we say farewell to our beloved, misunderstood friend. Goodbye Crocs.
Photo via Getty Images
Crocs sparked a minor panic among fans of its colorful plastic clogs by announcing on Wednesday that the company is closing the last of its manufacturing facilities. But mule-lovers can rest easy -- the footwear maker isn't going of business. Rather, Crocs -- which is profitable -- is closing factories and shutting some stores in a move to cut costs and boost earnings.
Wall Street is pleased. Crocs shares, which have risen 49 percent this year, nosed up further on Thursday.
Most Crocs are already made in factories not owned by the shoe maker. Closing the last of its company-owned facilities, in Mexico and Italy, is part of a plan to completely outsource Crocs' production, a spokesperson for the company said.
The company issued a statement Thursday afternoon rebutting rumors that it was shutting down.
"[T]here have been multiple media reports that Crocs is winding down production in our owned manufacturing facilities," the statement said, in part. "While accurate, some people have interpreted that to mean that Crocs will no longer be making and selling shoes. Quite the contrary, Crocs will continue to innovate, design and produce the most comfortable shoes on the planet. As we streamline our business to meet growing demand for Crocs, we're simply shifting production to third parties to increase our manufacturing capacity."
FALSE ALARM: We aren't going anywhere 😎 — Crocs Shoes (@Crocs) August 8, 2018
The closing factories manufactured less than 10 percent of Crocs' proucts, said Steven Marotta, an analyst at CL King & Associates.
"Their supply chain is very strong," he said. "That itty-bitty amount of [shoes] can be easily absorbed through the supply chain."
Outsourcing production has been a common business strategy for apparel companies since the 1980s. Today, companies from Apple to the Trump Organization contract with others to supply their goods, often to criticism from pro-labor forces.
For Crocs, outsourcing can make it easier to change product lines and respond to customer demand, said Sam Poser, analyst for Susquehanna Financial Group.
"Let's say you own a factory that only makes Crocs," he said. "Even when it's not working, you're still paying rent and you're still paying people. Nike, I don't think, owns one factory. None of these companies own factories. It's not what they do."
Crocs' turnaround plan, which started in 2014, also involves closing some stores and focusing more on online sales. The company closed about 160 stores over the last year, it said in a recent presentation to investors, and has about 400 today.
"Closing their stores is a bit of a challenge," said Marshal Cohen, chief retail analyst at the NPD Group. That said, "I would rather be more profitable and smaller," he added.
So far, Wall Street is a fan of the turnaround plan. Shares of the company, which bottomed out in April 2017 at $6.23, have since tripled in price.
