Crocs to close Quebec plant
Slow sales in the first part of this year have prompted Crocs to close a manufacturing plant in Quebec City. The move will cost 600 jobs.
Shares in the vibrant footwear brand Crocs plummeted 43% on 15 April after the company lowered its earnings forecasts for the year. As well as the factory closure, chief executive Ron Snyder said the company would be more careful in its spending in the months ahead, avoiding the use of air freight to deliver product, for example.
Some analysts wondered if consumers were tiring of the manufacturer's colorful plastic clogs.
"The shortfall in our top line was primarily attributable to weaker-than-expected domestic sales due to the challenging retail environment," Mr Snyder told analysts during a conference call. "In addition, colder-than-normal temperatures across much of the U.S. have delayed the start of the spring season, which has impacted sales of sandals and other open-toed footwear throughout the industry."
In a note to clients, Wedbush Morgan Securities analyst Jeff Mintz said: "We believe these sales are at risk of significant decline as
consumers, especially in the US, begin to move away from the style
that defined Crocs."
Crocs last year had difficulty meeting demand, which probably led to stores over-ordering and ending up with high inventory levels, he said.
However, Mr Mintz added that sales in other markets should keep the company's revenue growth in the double digits this year.
JPMorgan analyst Robert Samuels said: "We stick by our belief that there is a place in the current footwear market for Crocs as a brand but would recommend staying on the sidelines until macro pressures, inventory issues and record short interest play out," he told clients.
