May 10, 2017 / 5:10 PM / 3 years ago

Wall Street steps into Crocs, kicks stock up 17 percent

SAN FRANCISCO (Reuters) - Shares of Crocs Inc (CROX.O) surged over 17 percent on Wednesday in their biggest leap in a year after the maker of colorful clogs posted quarterly results that suggest an effort to revive the once-popular brand may be gaining traction.

The sign outside the corporate headquarters of Crocs in Niwot, Colorado May 10, 2017. REUTERS/Rick Wilking

A refreshed product lineup as well as a marketing campaign featuring actress Drew Barrymore and professional wrestler John Cena contributed to the strong March-quarter results, Chief Executive Gregg Ribatt told analysts on a conference call.

Cutting costs, Crocs also closed 16 stores in the quarter and agreed to transfer 24 company-operated stores to distributors in China and the Middle East.

Crocs’ slip-on plastic shoes became wildly popular a decade ago, sending its stock up over 500 percent in under two years after its 2006 initial public offer.

But after expanding quickly, the company and its footwear fell out of favor, with annual revenue shrinking in the past two years. Like other retailers, it has also been hurt by falling mall traffic and changes in consumer spending trends.

Crocs’ stock is down 20 percent over the past 12 months, even after Wednesday’s surge.

In its report, the company said full-year revenue would fall by a low-single-digit percentage due to the transfer of its stores in the Middle East and China as well as an effort to reduce sales in discount channels.

Citing the same factors, Crocs gave a revenue projection for the current quarter that was short of the average of analysts’ projections.

For the March quarter, Crocs reported revenue of $268 million, down 4.4 percent on a constant currency basis, and adjusted earnings per share of 8 cents. Both were better than Wall Street expected.

The stock was up 17.24 percent at $7.28.

Reporting by Noel Randewich; Editing by Phil Berlowitz

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