Crocs Inc. is capping off a two-year transformation effort by closing some 160 of its 558 retail stores — roughly 28% of its fleet — by the end of 2018.
The footwear retailer is also consolidating its president and CEO positions. Andrew Rees, who joined the company in June 2014 as president, will be promoted to president and Chief Executive Officer effective June 1. Current CEO Gregg Ribatt will remain on the company’s board, according to a press release.
The announcements came with an earnings report for the company’s fourth quarter and full fiscal 2016 year: Q4 net losses were $44.5 million, and Q4 revenue fell 10.5% in line with guidance at $187.4 million. Fiscal year net losses were $31.7 million, and fiscal year revenue was $1.04 billion. The company expects 2017 revenue to be flat, in part reflecting the impact of store closings, and gross margin to be about 50%.
More than decade ago, Crocs shoes were all the rage among people of every age, and in those next ten years the company expanded not only its global reach, but also its products' styling. By 2014, though, the company found that to be too much, and scaled back its ambitions in order to regain profitability. It probably didn’t help that the iconic sandal, the rival Birkenstock, staged a comeback in the meantime, upending Crocs' popularity among the comfort-shoe crowd. That year Crocs announced the closure of some 100 stores worldwide and an effort to pare down its number of styles.
On a conference call with analysts this week, Ribatt said that two-year process was well underway, and bearing fruit. In addition to trimming its offering, the company has brought in new executive talent, tackled its brand marketing, and cleaned up its supply chain and inventory management operations, he said. The company is focusing more on its original molded shoes and is cutting costs, with hopes to boost margins by paring back sales from discount channels, executives said.
“[O]ver the past two years, we established critical capabilities and added key talent across the organization,” he said, according to a transcript from Seeking Alpha. “We created an effective and stable operating platform and our work to establish best practices with respect to our wholesale, retail and eCommerce platforms has been substantially advanced. I’m proud of the organization now in place and extremely grateful for the hard work and dedication shown by the Crocs team across the globe.”
Rees also told analysts that the company may close more than the 160 now slated to shutter. “I think the one thing that we all know is that the retail environment globally is shifting very rapidly,” he said. “That’s that our current estimate of the stores that we need to exit. But, it’s something that we’re going to have to reevaluate on a constant basis. The consumer is shifting out of retail to eCommerce in this marketplace and many other marketplaces across the globe.”
In addition to the CEO shuffle, the company said several executive changes are effective immediately: Michelle Poole, SVP of Global Product and Merchandising, is assuming responsibility for Marketing; Ann Chan, SVP and GM of Europe, is transitioning to SVP and General Manager of Americas; David Thompson, SVP of AMEA is also taking on responsibility for Europe; and a new Global eCommerce role is now led by Adam Michael, who has been promoted to SVP of Global eCommerce.