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Published
Jul 23, 2014
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Crocs undergoes restructuring

Published
Jul 23, 2014

Crocs has initiated restructuring plans. The American footwear company, which saw its heyday with the introduction of its colorful plastic clogs, announced that it is about to close stores while refocusing on its key markets and core products.

Crocs


Broadly, the group says that it will close - or appoint distributors in minor markets such as Brazil and Korea - between 75 and 100 of its 624 stores worldwide. The brand will also dismiss 180 employees, including some from its Colorado headquarters.

Finally, Crocs will reduce its product range. No longer, for example, will it market leather boots and dress shoes from its brand Elite. The measures should represent savings of 3 million euros in 2014 and 7.4 million in 2015. However, sales could be trimmed by 26 to 37 million euros annually.

Crocs has also announced a “Global Commercial Center” to open in Boston by the end of the year that would house 50 to 75 employees (some from the seat of Niwot) performing key merchandising, marketing and retail functions. One of the aims of establishing the office in Boston is to attract employees with more specialized profiles. Meanwhile, its headquarters in Niwot, Colorado will focus particularly on design.

Described as “strategic performance improvement initiatives”, the announcement comes in the wake of the publication of Croc’s quarterly results.

For its second quarter ending on June 30, the American company’s turnover grew by 3.6% to 279.8 million euros (376.9 million dollars).

However, over the period, the group's net income amounted to 17.2 million euros as opposed to 26 million for the same period last year. For the first six months of its fiscal year, it fell by close to 50%.

The disappointing results were partly due to the poor performance of Japan and the Americas (respectively - 3.2% and - 9.4%), while Europe saw a rise in sales of 20.9% to 54 million euros (+17.3% at constant exchange rates).

But according to Andrew Rees, President of Crocs, the company is not yet through a crisis, and the measures that have been taken are “key strategic and structural improvements that we expect will allow the company to achieve its potential."

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