CROX - Earnings call transcript Q2 2021

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Operator

Good day and thank you for standing by. Welcome to the Crocs, Inc.

Second Quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Instructions]. [Operator that being advised conference today's be recorded. is Please Instructions]. [Operator hand over please to I ahead. would speaker conference to like Lin, now your the today, go Cori

Corinne Lin

is earnings release are information all Good some of on XX-K. as These Accordingly, amounts call and in Crocs' of morning, we contained crocs.com. to is we these factors. per relating the today GAAP limited to our of future section well call. reflect to but diluted joining described update Adjusted website provided Form non-GAAP press other documents latest this quarter this Annual morning COVID-XX impacts share at A and operations, you SEC We their accordingly on this risk of forward-looking on release reconciliation announced events. the could margin earnings statements Risk Report filed the described Report the Crocs common as impact issued information to remind the morning. counterparts a gross subject of the found to to from We potential not risks the results pandemic. that the Please to on these and copy our with for more XXXX these operating of margin, our Factors measures. actual to this to income earlier is Annual is are Crocs like second caution provisions forward-looking uncertainties press in you everyone us forward-looking federal are refer Form and Earlier materially subject XX-K call. those related from differ the you obligated results our to quarterly to regarding thank statements the Safe statements that and would Harbor statements securities for business laws. include, for on not

and call Anne President are Officer. Executive Andrew Chief Mehlman, Financial today Rees, Officer Vice and Chief on Joining the us Executive

At this over open Following remarks, will prepared call will their I we Andrew. time, for questions. turn your the the call to

Andrew Rees

and Corinne good you Thank everyone. morning

see Our as brand QX results demand continue globally. exceptional, for Crocs strong we the were to

Our strength brand raised is our guidance. XXXX reflected the also in confidence of our in

this the have zero emissions that Crocs year, we're beyond XXXX. Looking announcing will net brand by

our and planet We to will emission carbon provide growth us positive our without excited communities. deliver raise profitable highly per a fans for can I'm and worldwide. low and our already future footprint shoe while comfort our confident having our on enable we sustained impact I'm to

hashtag. sandals highlights doubled XXX% million #GetCrocd and increased on of to X XX% Asia versus XX%. these XXXX. drove consideration $XXX one and for of an revenues. growth featuring and the increased the represent quarter the term by for by million views from year the [indiscernible] Revenue with the over $X.XX. constant and the incredible operating first in Revenues operating XXXX and and TikTok to Adjusted and XX% basis X of by brand with XX% iconic challenge collaborations. from doubled a of half. digital relevance on is Americas globally was to XX% this EMEA pillars revenues. to year more have campaigns to income up reality To XXXX. quarter results trial versus marketing, than up and regions our ETC currency continue expanded first nearly the were earnings across influencer we XX% market and XX% XX%. Underlying sales prior represent second XX% XX% We an to a XX% was augmented Turning year versus $X.XX over long diluted strong prior grew and XXXX $XXX leveraged grew Adjusted social the of Digital versus we to versus footwear grew growth [Jibbit]. up to all to record impressive billion XX% a prior margins clogs million and brand brand and Globally uses of feel experience share built. adjusted per second

brand nongshim. and In Balenciaga We gateway and Global in rain highly comprises Malone XXXX South also London influential Japan based a highlights brand rave retail Ramyun the second world generated of buzz saleto. brand runway in when featured Russia knee-high collaboration our spring collaboration include together Little croc music Big. Beams, Korea, famous boot, [indiscernible] a

free Week, for we free have zero healthcare the path planet; as net Nurses U.S., that business becoming gave our pleased to of shoes built, announced week, reintroduced XXXX. the frontline in caregivers. to This we away of enable Crocs proud in commitment brand our National impact pair initiative and brand especially step Crocs positive a for we such and have work having initiatives, emissions and a during healthcare we with positive a the where communities. our the on Finally, to impact by our next We're pair XX,XXX our

consumers per and with a further simple manufactured We're of that having are taking we X.XX through responsible sustainable anticipate to use. a inherently carbon planet. clog as design as well means our ingredients, commitment our as resource pair. about step be and a to the are Our classic a achieve approach positive only already impact net low has footprint emissions to our how on excited plan materials we it use kilograms will of a our We shoes carbon zero packaging as

This site brand content of a our journey uplifting transparency for environmental investor greater encourage upcoming of our review discuss share section we accountability. section purpose will ESG new site, and in detail and you Crocs.com we at progress. our launched to In a the I the a everyone and that in environment our to welcoming include day. our week, culture addition increasingly rooted new will to of comfort communities, our creating reducing our footprint, investor

excited by XX% represent clogs, We're total XXX% revenues to turn pillars, in all footwear let's year. Now growth seeing we're last increasing product of operating were sales Clog and key versus XX% Jibbitz. second the quarter sandals year-over-year highlights. very outstanding, to

continue encouraged and results sales classic for for Sandal the by Tulum well a XX% first the as prints. our franchises. driven seasonal by sandal, increasing and QX We were and and half colors initial classic both and the XX% platform innovate standout of as and personalization new feature fly our to

consideration very in growth In addition pleased now global study. is we're with to brand that line Sample of this clogs. a in strong

to represented performed year over we Jibbitz XX% have clog faster we clogs. term than the strength the sandals sandals anticipate sandals versus XX% Given will of The last and year. From versus clogs, shared Crocs outpace And channel sales will longer this sales more that perspective, once last as our we the wholesale than continues which expect tripling growth and quarter from global of a for retail global footwear growth. we grow e-commerce this in represent in for experience for include the of consecutive trend enjoys mega personalization again exceptional DTC while second revenues top traffic stores. in experience XXXX. quarter on revenues, and company significantly top and footwear retail quarter of fans stores quarter quarter retain of XX%. year. XXXX by XXXX. charm shopping the and Digital had grew normalized with on priority relative to remains digit customer and a to E-commerce XXth advantage our our compare of globally Retail our a continue extraordinary brands. more last e-commerce XX% of and an double to Digital compared competitive second to sales grew elevated invest XX% other to XX% year well for conversion sales was XX% performance

channel versus e-tail year wholesale XXXX. and brick which by and revenues Our prior compared grew XX% and to includes mortar, distributors XXX%

sporting family led comprised to globally. footwear, and strategically of strong leading Our important specialty in a retailers goods, all focus sub e-tailers, on accounts growth channels footwear

they mortar Our were and pandemic. from depths top accounts the of as brick XX the rebounded distributors and standouts

exceptional, Finally, profitability achieve record as quarterly EPS. adjusted was record adjusted margins operating and quarterly we

remain our pandemic, from as we challenging guidance and we XXXX remain and logistics substantially volatile. While year raised has full optimistic incredibly emerge business the global about

on spikes COVID primary about short of in are countries and some closures In our impact increasingly term addition, factory supply. manufacturing we're the potential of seeing concerned

our potential into review. the attempted and We have annual disruption to expense the additional incorporate both to guidance supply

financial turn brand. I Crocs are thank our achieving the With results of a future. Anne entire to us our to creating results for reflection more call to over in excited to dedication Crocs our will by a I look organization. the forward commitment These the net I and XXXX detail. am for of Before more want review the that now Anne world I zero all. hard comfortable work

Anne Mehlman

Andrew. And results. recap short begin We'll you, good a morning of quarter second our everyone. with Thank

please to their of reconciliation our amounts For mentioned press equivalent refer amounts, to the release. GAAP non-GAAP

gross product exceptional. class growth record are all broad leveraged across best Profitability colors. results per in increased with We channel regions, quarter Our second and we on SG&A margins, revenues and quarterly expanded share. based delivered earnings as

quarter Year-to-date of over basis. currency of Second shoes, million quarter of of million XXXX. pairs We Growth XX.X% XX.X $XXX.X in versus XXXX. an second quarter increase revenues first increase of $XXX.X of increase constant and the sold to second exceeded came quarter XX.X% was XXXX. last $X.X million, the in a XXXX revenues versus and XX.X% the billion, XX.X% XX.X% versus year an the of half compared or second on at XX.X%

have evidenced and higher the X% growth selling in on average shoe. to as QX well markets pricing product increased certain adopted including as products by to Our have hindered select with demand. our increase not price The mix globally of we as during increased attributable activity $XX.XX realignments favorable promotional price terms successfully per less sales took been QX

region. Now, our by let's review results

Wholesale on while XXXX. XX.X% XXXX. last and revenues and by quarter, prior also Digital wholesale As year. traffic up was to growth stores at earlier, $XXX.X in versus from versus of doubled versus prior store compared penetration year from Higher great DTC grew to Asia, [indiscernible] revenues grew XX.X%. year. second revenues Digital in a currency Andrew XX.X% constant was XX.X% XX% XXXX. with Digital up versus Americans company versus XX.X% retail penetration XXX.X% to was increased were significant million in another more and basis XXXX. with outstanding closures had XX.X% $XXX.X last of contributed XX.X% QX year than driven growth XXX.X%. increased XXXX triple growth the in XXX% to million this XX% digit XX.X% combined DTC In XXX.X% the mentioned retail. quarter year or

and several pandemic. or strength, South the offsetting basis Korea continues to million growing revenues stores reopened. mortar. other a and broadbased constant and traffic grew to driven region brick currency strength $XXX.X remain with e-commerce DTC impacted XX.X% fueled the global etail, disruptions. XX.X% strength countries growth while a any retail Wholesale increased by by in by to higher EMEA increased on distributors, revenues in logistics revenues with in exhibit return and brand heat, XX.X% XX.X%

overall business EMEA our XX.X% from quarter Our which QX, XX.X% versus on EMEA continues focus digital to in XXXX. revenue commerce, benefit this of represented

gross were basis year favorably promotions fewer adjusted The majority XX.X% elevated to impacted and increases price Second XX approximately up Currency offsetting from quarter was margins with last basis points XXX free driven discounts, by by pressures points. rates. XX.X%. of coupled the improvement margins from

last to Our in second rate China a XX% quarter growth digital, adjusted and of strong improved the SG&A adjusted is SG&A in $XX The We marketing. million first to and leverage. our result initiatives, XX.X% operating invested quarter. decrease sandals, approximately strategic revenue sales versus of support versus year's

business. long the our We this support continue to make will term trajectory of to investments year

Our margin second SG&A from growth $XX.X to robust leverage in year, quarter XX.X% expansion to operating operating growth. operating sales regions. all million strong than profit last Adjusted versus gross $XXX.X income year this rose adjusted last XX.X% year and with benefiting from more doubled margin on million

excluding rates benefit tax our GAAP the tax underlying to For QX, primarily were deferred our XX.X% million. was tax a The benefit which previously decrease rate by and driven were non-GAAP evaluation $XXX.X realization of of in effective income subject onetime assets tax effective allowance.

to $X.XX Second a year quarter per earnings non-GAAP ago. diluted share compared $X.XX increased to adjusted

which in equivalents $XXX.XX cash In and million average strong. the remained We million resulted balance price $XXX.X capacity $XXX.X position of million in QX, the liquidity ASR a with borrowings of in liquidity with $XXX.X cash shares we per and repurchase an Our of at share. finished $XXX a $X.X ample have executed and on and sheet million borrowing quarter million revolver.

to We balance and flow sheet. expect maintain operating significant a to cash strong generate

growth. continue the will investment to to future We in business prioritize our support

we Inventory be capital QX ended challenges. due to in the continue to from was our also return. our year. logistics respect capital transit was throughout and lean $XXX.X will of second global the at in We opportunistic and Inventory XX, June the million inventory last with XXXX continuation quarter $XXX.X structure quarter to up million prior

quarter would for I future, the year the outlook and our share current to XXXX. third full to like Turning

visibility, supply As Andrew expense logistics and have mind. Due the we remain chain guidance volatile. to mentioned, additional disruptions provided lack of global in with potential

to For XX% momentum to expand QX, XX%. to to margin all approximately brand expected XX% all we continues. expect XX% and operating Strong in growth grow revenue is as be adjusted and in channels between regions

Given XXXX the XX% momentum are XX% the in the confidence versus is performance and grow we half now XXXX raising growth be of XXX% XXXX second in Crocs our to half XXXX. to full midpoint expect extraordinary versus We first year and between revenue the guidance. and XX% and brand anticipated

in sharing that our upcoming to turn we plan margins at expected invest than exceeded U.S. year final our to tax to We rate be due delivered the and expect XX. be non-GAAP on expectations previous this SG&A approximately to adjusted for we've operating In is support At term back profit higher underlying future I'll forward outstanding this XXXX. term, of now future over expect time, his our the we half to in long our day and to greater September to full approximately Andrew call XX% our business. growth which we In while leverage expected revenues XX%, long investor sheet guidance strengthening than Well our the for addition, back in growth. year profitability investing thoughts. look balance We summary, growth. algorithm

Andrew Rees

you, Thank Anne.

guidance thank open around the the from express team also to after want incredibly wish by be XXXX I Dorian's decade impact in incredibly many Operator, not The acknowledge retiring our the We're line call our I Crocs talent Wright future would I results, for includes the of Q&A, excited results possible. net gratitude we brand all for contributions these for that quarter emissions as future. a is all service. for and to questions. achieving which by on increased having a open board without second evidenced please to the remains the of Before and for zero directors Dorian want strong, positive and of world best our her now planet. want our a my which XXXX.

Operator

with R.W. Instructions] Baird. Jonathan [Operator from Your first question is Komp

Your open. line is

Jonathan Komp

the more I for much. half maybe I at second maybe the the second start on off detail seeing support And thank full you when two there's think raise half. year midpoint from and you share Could versus here XXX% that XXXX the the in acceleration to wanted acceleration an confidence Yes highlighted think revenue. channels you year you're to very about just to guidance, given your embedded yet? to across what you geographies growth

Andrew Rees

very remain you brand. all pass, a then really you to color and Yes, all give channels. look we with specifics. I'll channels in across retail, the John. thanks most over we really exceptional in bit of we've Hey our of we to I'll pass QX Anne give of it see first the trajectory where Obviously, incredibly and very strong of kind start the a strength growth. strong had we Maybe had as confident

really our well. stores significant in So performing traffic. in Digital the stores, also in and particularly significant We've U.S. this Korea well. reopened seen increases We've here year. our both have performed conversion and seen retail in is increases

well, particular. the both channels I our e-com think XXXX then wholesale wholesale XX% call an comp additional retail. again, as our we numbers, the that buzz own perspective, a we from over I highlighted and think in And performing digital

brick accounts and Our are XX mortar distributors. mortar our brick and and leading

didn't the pandemic. on We inventory. on distributors, lean we up inventory kept them backing aged last year So want through fairly

noticed replenishing. very future the emerging, they're they I as bullish So about are the And a of brands.

So dimensions. confident on think we're all I

Anne Mehlman

to I the by add think is EMEA exactly well. region saw little currency that's Yes, quarter. right. XX% think Europe, We in I And color growth almost a as constant

growth trends coming see to continue. good expect strong, really we and international So some to on those

a great to returned which to basis, on year growth also two is Asia see.

QX. of some So we all to obviously contribute then we're in book our growth that QX, that guiding. supports of regions those expect growth factors and this our And we all on order visibility have to

Jonathan Komp

share half expectations? then more in very up the to May secondly more having just just your Okay, can you embedded be in the maybe the a color you factors little the outside what’s exposure helpful. current think give that of you the mentioned impact and embedded state that’s supply on keep them, with ability given encouraging growth, you Can second environment from so you there some Vietnam could about chain more when and key perspective. the share to sourcing

Andrew Rees

think it’s question. great I

key about one concerns. Sorry

you as we that it's break me which in and we’ve to two given look Asia living And transit a I the last XX just been most logistics. from have the extremely were of of time, is of for and leading containers, months, as are supply those at last months kind performed etc. perspective, what So historically. performed is and Look, give they XX that and approximately what logistics, pieces different double kind last to XX today say global freight for our one apart global let with times you challenging markets been the would so months

with embedded in the that. been the the the time more So We've into elevated of year. to And we've projections. first and freight half that expecting half the we're some to back we're and case but that's some also for expecting year, of live our in expense costs seen see

will COVID. amount to in They we of see quarter COVID next what's the is ability is Vietnam vaccine unfortunately, seeing Asia some have this don't the our Vietnam. that access or administer the battles particularly in have Southeast to temporary our as spikes country. we think and that the now closures we're factory in different that I expectation And

about left really, being So people they're congested with and lockdowns how just interact.

temporary which supply. impact factory And so obviously will do we expect closures

we've on in with hand we are of and really where trying that, the with inventory to sure have make and B, that in we those that amount we of really have confident but given embedded terms comfortable in that what transit feel So we're our guidance we in A, uncertainties.

Jonathan Komp

very you thank much. Okay,

Operator

with next question from Murphy is Sandler. Piper Your Erinn

open. line is Your

Erinn Murphy

just Vietnam Good big remind your I thanks. just on for into bigger picture Andrew, that and what [indiscernible] of if great could continue how just and the the quarter. can growth? as share you I how saw of refocus Can quarter? and and then sourcing as Great, you these A-PAC you little guess, consumers guess quickly in kind point other to morning, initiatives move a in on you how on last percent us of overall more bit other any region you you really China you Vietnam. some that How of key is rolling did lockdowns regions a about respond kind did for

Andrew Rees

All will and Anne right. base China. pick up me and let Vietnam let to I start factory talk with, about

Anne Mehlman

Hi Erinn.

know but significant. around you China, as Vietnam couple as we We other a of significant is it well our don't for geography us. effective. places the supplemented release portion world, percentage, products significant that's but by the Vietnam. Indonesia And is And overall a and then manufacture So as in manufacturing a the most

Andrew Rees

I the have China move ability. and some we ability Yes out think yes, absolutely to of

up the some of also of that really lack think terms come in go you it's I Obviously, move back India, ability do to constant on COVID in number, and you're some with the were spare helped Japan, currency We think – during of emergency and Vietnam. Asia grew of wholesale quarter. XX% make that current currency places, other first out And the that then with capacity down grew kind Then our significant an some even When China. you nicely me not we some in, about capacity, have to have China enough currency seeing. performance were a to Asia. the Look, headline nicely but a impacts pleased We sorry, change. We at Southeast state around despite our really We was capacity travel let think when Asia in of and constant Asia spare we space to basis about basis. trading.

on in the that quarter China, our think well talked of the of against was I We terms have elevating mid-season China. repositioning and In in we it would think all extensively that plan we've of say dimensions enhancing really place, good repositioning executed plan, about festival. trading a I including we really marketing,

in are and feel we growth ‘XX. good we, performance accelerated about well confident and really the in very So set think I up about China

Erinn Murphy

XXXX. versus out I are hear. And that then to the get great to I'm what you to maybe ahead curious zero speak just assuming more internally could of our that's question night the using mean, established to about if rest? of is, just net little on Great, commitments footwear we've and kind benchmark. the net by to last you percent a well some you guess goal So committing bit of get reduction offset most to there companies this is I

to So job this really, already. I mean, up fantastic just put

Andrew Rees

you thank that. We Erinn. Great, appreciate

So chemical partner working ingredients from our company to would say, been on sourcing been look, sustainable say, working is a would identify as the on what for I time. dimensions. that And with, major a a into we've this product. go One of some for and this we've potential number working I

years is different it of We But of also we've looking product focused So done the our packaging. shoe use angles. comfortable scaling we coming our factors be boxes. that not lots one from like I a cross which key terms really really And think ship in solution at [indiscernible] the that thing from lowering sustainable solution ingredients. on to with. packaging From a And very we'll don't feel identified over instead in deriving is of footprint. overall that perspective, for one we years that we're

our that better a facilities, of without reuse. factories, well our So XX% sustainable shipped looking in as product do energy our box, even use of as we including there. but But would at shoe can we we some think also

the from low So look with classic key place of and the whole our carbon. X.XX components all carbon at footprint, on great into that kilograms obviously, footprint of start we at go a carbon that we clog as a very

We will we of and time measuring our website here other posting all the our that will also releasing be And that very over information. footprint be on of shortly. products

be So this. about to transparent we really want

In terms is the stage. Investor reduction future But to be of But of in part day. carbon that of at ready We're goals, that yes, offsets. in substantial our itself. more in this a making about September it not disclose footprint actual will we we'll talk much our

So significant have goals around some we do internal that.

Erinn Murphy

for last you CapEx the the that in then year the And pushed XXX out? investment? to anything terms What just to million moved guidance Great. from one investments just was Anne another there difference much. Thanks supply change? was million. you of so Or for in the it chain Was XX XXX

Anne Mehlman

this very year. Yes, is costs we're chain no, in committed really we're itself timing to making just investments our the of supply around

that. nothing So just with has it timing. do to really really It's around more

Erinn Murphy

Super.

much. so Continued Thanks success.

Anne Mehlman

Erinn. Thanks

Operator

from Your next Pivotal question Kummetz with is Mitchel Research Group.

Your line open. is

Mitchel Kummetz

consideration sell heard consideration comment Hi, versus correctly, made think clogs. was next taking many you growth what and also, just now that level clogs. I And sandals that you for that understand And there yes. don't ago my what what terms that maybe mean, to you is, of can so be now context years can if of business be like, meaningful at of congrats in you we do you're questions quarter. saying provide it going Andrew, two is Help the I is? is. as clogs the But me a that year, on that then terms could around any comparable for the a to it year as is that the what in you're Thanks sandal forward consideration how means sandal comparable? ago to going understand or way to

Andrew Rees

on picked that. Yes. Right, I'm thanks. glad you up

actually, we very think So it's important.

every consumer what to when by try a our we So assess is study are. where run brands consideration consumers consumers quarter obviously mean and we measure our we that with brand

of would has what for, questions is number they consider that's a purchasing say sandals, of the fraction I Crocs the known number clogs, clog we're the consideration One consumers for our would consideration item sandal consideration a key been most first historically a consider would for what that's consideration clog. etc.

So risen done it. marketing some that meaningful It's the were consideration brought of market that because the are risen we products the behind of think sandal because the has It's risen it's very particularly of that new over into time. personalizable. we've those

I so meaningful. think it's very And

in sample us started we that talking gives QX, about. to in about again of But think saw In trajectory mean terms it it we've in does sandal been confidence revenues? here confidence gives saying we're the clogs for to No, of what a that equivalent sales talked growth a lot of be but sales not we the future that we've will in future. I see in that strategy it that us lot

Mitchel Kummetz

Got it.

XX%. I obviously kind of just down is Anne rate like QX higher? Is of year, the supply down you're on. why a guide, that quarter based just operating address That's the on worked last that you're kind some going maybe that I chain run of of some kind curious is of QX Hopefully that then of reflect quick the the I'm you're not Does that? given you you forward? the issues that SG&A anticipating margin kind my that Can making side? kind investments correct. for And of from back Okay. model, into math one to my as from of and XX% the on

Anne Mehlman

we QX. so specifically guide for didn't Yes,

So was XX particularly SG&A year, and million. around in really going back [indiscernible] in half just reiterating approximately said about the quarter marketing we're to we are this in I continue the of to that think thing the biggest marketing invest expense,

of will a continue will last and call, just our be talked about in little marketing revenue. for marketing expenditures X% the to invest we year over We continue our we'll as

the So margins we over and will margin continue margin half year. back the through we our future to a Gross then for be up future will standpoint pressure half have accelerate, to to from And back some that continue up. accelerate although will be will growth. last will for support margins the invest

just have based with about will we pressure on freight, and of We talked environment. what overall kind logistics the some and logistics

put factors those guide to combining two to of So our for the are approximately year. XX%

Mitchel Kummetz

All right. Thanks and luck. good

Operator

question Trading. with Poser Sam next is Your from Williams

is open. line Your

Sam Poser

Thanks, everybody.

a want on you couple Mitchel's Can So I've hear question. I up me? to follow got

Andrew Rees

Yes. Hi Sam.

Sam Poser

or and Okay. quarter to of QX marketing as talk the year are marketing built into follow width just balance spend those incremental is about with it? much the pushing to you it however within how on Hi. kind you percent of in, And regarding attributed in up fourth to how want the the that and this question what incremental much guide? just there to asking how the by marketing a sales you're I incremental attributing you and can much of was incremental sales that want

Anne Mehlman

parse Okay, let that. to me try

a about marketing So from XX million in marketing here $XX we are perspective, of today, million. that QX. and was

more which you year, mentioned, of the of order approximately, over So that spend is little that we'll performance you much that to to X%, math, in obviously, the as to of And about a in that the incremental year of get in which same of bit majority which a transactional. brands. back was marketing the can is variable, type see half and little the rest do supports date spend is QX, of e-com some the is and

to long into way, see order see consideration. surveys, marketing. look trending is those need say, is term, brands we support incredibly to what to like And But related the no that much we to increased things we do revenue equate is So know to right our how And at it's effective. of continue that marketing that spend in the that. actually hard growth our in to know we

that year, and about that is So think it's I contributing about the to going the what incremental incremental really contribute is less to more our what to future.

Sam Poser

the because help in on were the I have is, you is I'm is, I'm marketing, in come question would you percent back statement on and your much gave drive of fair anticipated going marketing the been driving my a the Okay, and it, the QX. that spending quarter given marketing be than other based this what believe of brand question I'm lot money. that the you assume, a you that results shouldn't to your sales, of is, money the my is I saying guidance term, to not how near the less would that strong to Is even they is based arguing spent? results What

Anne Mehlman

marketing than percentage – less for can our sorry? Was understand, we you I what XQ? don't I'm planned

Andrew Rees

Yes.

brand on we period very marketing I expected You're variable. Even is had saying time. short above come lot media. low? that. marketing from no we that to can acceleration around especially look, planned or very into some if sales term, of marketing, back short events, of what did in And social I our would we events lead No, of we say our Because a a lean think the

were closely. we we that very, So very calibrate

strategy. I I So in is dramatic, a it was look, we clear And our wouldn't say less than expected. strategy great than it think marketing was QX we have really where

doing some We're I think, effective really team. incredible We work. have,

brand in think to clearly So we're don't the the And at incremental ignite look consumer interest spend trajectory. We to about what in as going continue from is the to year. a multiyear it onset we working. that's

Anne Mehlman

a I market. we of our some took see piece XX-Q overseas, out And the too, is in looking little results, actually that were you in that be and will investing are our our particularly the Yes. bit later. look But at you results we that U.S. that increases a at mean having if you of Asian that, can basically

quarter. the within that do can we So

Sam Poser

your how of your books inventory, right. now. All then the in inventory on is And right much transit current

Anne Mehlman

the out but what's talks is or of our increase pretty actually year been in current sitting that's as consistent cycle is transit longer We through the on year-over-year. time. significantly significant. break And about just all been Much hand, freight transit. it's as the And don't inventory it's really up and Andrew of in logistics working verse we've

Sam Poser

produced. of the the need much of is already that product for And how product made is the how for much your full that -- year you

of how I'm I next much made? impacted the how what production that Vietnam? eight months for needed, of by percent is issues And six, by that the the So asking much in is guess is

Anne Mehlman

go for some there but have is QX, and and out It’s QX point is majority the product increase good you a time QX of Yes. you your obviously, is as so for a increases product it obviously, our Sam, span.

Sam Poser

success. Alright. very Thank much and you continued

Anne Mehlman

you. Thank

Operator

with next question Riley. B. Susan is Anderson from Your

open. is Your line

Susan Anderson

Hi, on think planned thinking an or your the you Are price to if talk if was good pull thoughts about you're half there look me back my quarter. add back around levels, morning, you wondering congrats more room on maybe forward as and XXXX? increases? margin how we amazing still for and Thanks. curious let about on is I there also can promotions and impacting and gross promotions

Andrew Rees

pull I the a promotions Asian been opportunity We I are in on those I but some bit so look, don't think of would and to maybe markets. to terms through of further little heat markets. in back say, would We've forward. significant got in starts go very back not done Yes, pulling a of that's to year. accelerate the continue significant those Is the brand I particularly proactive say But lot. some there think, we've as room

If year look it's mean, been all website, you our I etc. non-promotional at long, essentially U.S.

as So, look at I stores you essentially our also, think, non-promotional.

you say market. we're outside are look communicated. Asia talk Those in given increases that manage I we in price of have as they some yes about ‘XX. been If stronger there to would in price particularly are the already increases, price to, U.S. planning value

to brand the we competition, the relative As of relative market. product at look the to we that always said in particular price

would flow this they some there year. also were are are price will But say that So dramatically ‘XX. significant made the that through less moves in increases than I

Susan Anderson

that then there's it you're for how are expanding maybe sandals? about early this that offering what that you Or year? about? new if thoughts then out talk And fall, products curious boot expect done talk your you any as you you've this if I'm on there your reads could play maybe great. to in similar to -- such Okay, could And any on,

Speaker

we're as reads strong, would a are others. parts early the some optimistic Yes, back say, about I back school. earlier country to go that very I of than think there's we look lot obviously, at

that As seeing at those we like. the were markets performance look really we we in trajectories

out of point historically is a would in at was you back school about to our grow of the out. downs the as in was ability the really confident also business of obviously back to We that from growth last year, lot school, and I very of pandemic. out seasonality seasonality fourth very our lock our look in to So strong smoothed feel anniversary and optimistic basis. the quarter, the coming we're very strength that

profitable And each so incredibly year. be of we quarter the can

building about of terms the in that. new prior is potential been products of the like being really full as But tapped the years. say particularly feel don't I online years, three/four end far our In would of in the It's we of growing, back now for as year, exciting any products. we've

the the will So will we as product clog think also more for in us both but exciting new in the half. that in come be important out broadly, back size

Susan Anderson

much. thanks of so Great, rest the Good luck the year.

Andrew Rees

Thank you.

Operator

question Your Sole UBS. is next with from Jay

open. Your line is

Jay Sole

to? to what overall? implemented the brand quarter to And that the the Great, you to operations thanks talk the just can last much. have and Andrew company's over been model the talk allocation us so benefits the about

Andrew Rees

so. think I Yes,

have between significant off allocation And manage the like brand head. control sort wholesale our of to I and which also things a wholesale. think instituted [match] they're and in styles our key so start We multi model year, our pronged at there marketplace important. really we we of really this wholesalers. one inventory What we to we're benefits really also the allocation are me manage our pricing, the competing key can not our some explicitly with to to partners promotion saying price head is earlier key is that of Obviously on our channels, trying in is, is wholesale. most that the provide do of that's and amount approach part lines at really on look to Let with DTC important provide differentiation

So want brand for which how trade will more we show allow consumers. price for show up our and them to to

So I it's don't new. think anything

I'm practices. for there you in class well would brand the about an I management adopted, say, sure of this quite occasional I as might it As are a more probably the Crocs think been shift I important products. in has we've would there would like received that brand. more the kind think partner few like across say important I part fact, been that is are But industry, kind incredibly products, industry. marketing and consider they've would best wholesale the of a of what

Jay Sole

two result. in how context is the give Understood. would of Can of model this Maybe sense allocation drive able ago? the growth quarter you're maybe been have just sales that us you kind growth Americas of to what years an XXX% phenomenal a on a to like that had supplied ago and way you follow the had move inventory you up a in growth obviously year or a

Andrew Rees

of a and pretty Yes. XXX% that channel we like the growth ahead is So is that, what demand, in I Right? frankly, either that don't to much you to in level or takeaway the it very right? point where question. healthy think we short, consumer consumer is We're keeping place. out, We're not sales answer phenomenal. Because, channel. really know the stopping allowed would as happen

of And marketing and innovation demand takeaway. result that's it's the and product consumer that consumer a we do. So really as all

of have I'm we in I So and don't been relevant, don't not what where because terms think probably comfortable that we're that it think are. I could we know really

Anne Mehlman

think profitability Yes, for really it well. I important is as

you growth the our quarter, well. hard obviously, as [indiscernible] is related, much door. If it's And our directly of look out [indiscernible] our but to in see support X% how at that the wholesalers

Jay Sole

can. one I Maybe more, if it. Got

year. are I think mentioned Andrew price some next increases coming

can that brand, about like where do you in of the ultimate have pricing, the terms the increases prices high price positioning to how and map some the given go happened of price think brand lies? Given the relative opportunity how

Andrew Rees

Yes.

And to reference States. question. the I reiterate, price a just increases, think of United good I the that's outside everything

not brand. value very a that we're much we and their brand because So a We mind the and very is of, both one This where thing is too in be providing consumer the it is value from that expensive product affluent. provides. place serve in conscious consumers, we're And turning we highly provides. never democratic think want lot consumers our to a affluent of away less the that

So push very we that don't careful pricing far. so about we're too

We're that obviously and think think think I the deserves providing incredible well the and right this I consumers innovation the as brand giving attracting point. at that to deserves and the return shareholders. value, obviously balance, value we we've product got about marketing great a as

brand about So States. conscious yes very it future the of. we're increase next mostly something trajectory, its the talked in the United very, important they year price to very and outside that's and the It's are

Jay Sole

it. That's much. helpful. so Thank super you Got

Operator

is question next Our open. from your line [indiscernible] is

Unidentified Analyst

margin a in Corinne. morning, Anne that much the bit mix talk how margin quarter and Can is channel gross year? the will was factor delta second is gross a you about what and guidance Good the little a much Andrew, be factor for in how

Anne Mehlman

Yes.

year-over-year incredibly, bit perspective was So a margin because wasn't a from strong. helped little so [indiscernible] actually retail it was

agnostic. rather an a operating standpoint margin from margin very you is gross as From so high. know, is And retail we're

QX to As our we think wholesale is tends perspective our about be quarter-over-quarter from a percentage quarter. highest

And certainly free for impact little in margins business still wouldn't Jibbitz for year, then because So quarter-over-quarter are QX the around biggest talked we as that about, very sitting biggest our the I of there. as by higher then year. in increase rate accelerate pricing it's with that QX channel could well you to impact. our somewhat And supporting The and are mix say bit those favorable. then margin offset of increased gross are from a as really product well And mix. overall have pressures, margins see we as but clogs discounts it's a pullback currency perspective, as the promotions,

Unidentified Analyst

helpful. you. Very Thank

Operator

Loop question next with from Laura Capital. Your is Champine

open. is line Your

Laura Champine

goals are what they take have will much ones other look of still I closer on Thanks third As price in more need may other question. your a on in environmental coming increase I with Or growth did then pricing? lot there but differential? a you pricing so mix And higher do a to to give for the versus regions cost you significant I sound of on is questions pricing? to you've far, up just hit it, know answered prices how the you environmentally be quarter units raise missed couple taking year price to pricing, material? Americas’ next a presume my

Anne Mehlman

me Well, about first let answer increases. price over I'll your Andrew to it turn Great. and then question

units our perspective, of outside up, So and overall from was up as the overall And And our pair from pricing were sold ASP XX.X%. were U.S. about outside X%. then our the up far as of prices be the depending the in markets on of some higher we why an necessarily, or depends product the U.S. necessarily currencies they opportunity than to tend our don't to align on is U.S., in pricing. have which

Andrew Rees

U.S. if Yes. competition say look Look, pricing really would say and market, the outside would on the at I you it's brand I dependent that the the in market.

are to And at So discount. there like, international premium where actually markets the U.S. we're where others we're there a are

are where broadly, So say relative I more consumer it's relative we line with in coming to demand. yes, to positioned competition, would

terms your trying we're that's So of that think the what of do. to question genesis in I

in we've kind term So But associated that Day with the we've that our feel talk of cover that's long incorporated planning our in our driver best that little efforts. in like terms Investor I more that the think ESG costs incremental I a of it's September. in we into Yes, think about some bit of if we business we'll and context.

Laura Champine

am accelerating. China in is I curious partners that that is your growth a do market? follow whether down it. a Asia-Pacific obviously that or you right the Got just guess, in I growth on about think your pricing, But when slowing finding it's still your at look I

Andrew Rees

e-com we very say It's repositioning at the business. in we're in about is pricing clearly it's China appropriately priced do China. about that plan of kind about believe We our marketing low we not would think look investment. the enough it’s partners, the I our and

for how as about So of a mentioned no, earlier Erinn’s we to and we question this really think trajectory the that it's that year. don't I We think positioned pricing. confident next are lot different it's of we're dimensions about

Laura Champine

Thank Great you. Great. quarter, guys.

Andrew Rees

Thank you.

Operator

from Stifel. next James with is Your Duffy question

Your open. is line

James Duffy

I about to ask And terrific morning, congratulations Thanks. execution. Good to infrastructure. the want team.

have thoughtful on points in to once is You've product the into the or additional challenges just support and about I'm you curious demand investment of U.S. been other in bottleneck But there are volumes to been or the XXXX? infrastructure. investing areas throughput very delivering huge. growth speak regions can

Andrew Rees

thoughtful question James. Really Yes.

be whether have there long so our process infrastructure. current Crocs bottlenecks it volume high long goes and be beach, So in whether bottlenecks of we out in no have goods it very we goods, on, don't warehouse a concerns be our ‘XX. I we it of process to many had our through facilities, certainly would are at chain the whether But for rail into list logistics whether availability look it's say can or of trucking, through any dock right? global the ‘XX beach, ability

expanding note Again, to And be DC. might year. the operation going will end later open that DC, significantly we're new are our also, we we the full You have a the again by next will to Netherlands that U.S. moved of be up that in year. and

impartial facilities really two today working but well. across So the operation it's

anticipate the In terms rates of grow longer term rates to we business. business continue continue the or to investment, will we rather to at grow these absolutely

some continue our our investments well. will of and countries U.S., as Asian key EMEA make to in in We infrastructure the in

Anne Mehlman

our a our margins in level. that as supporting network of from out that actually that overall margin And And call the distribution U.S. we've this one showing over year. lot up just quite note on cost is seen growth efficiencies side, our we

James Duffy

Great.

prescient. talk can of the the with business that to very path what you're in investments glide other business recovery kind The you Asia there? about total distributors Andrew, proved have seeing

Andrew Rees

that a year we're this unknown, think and not, would say I period. Right. big happening I that's not

distributors, countries in just not it's There's guidance. rightly And and how before you countries it's as you not I late or thinking that's people point I we dependent tourist those populations can our serve. next Asian start travel to asked me that's year that highly on they in it. not, going if large we're and guess So those think when be kind happen. to traveling significant. out about of Those in our prospects

James Duffy

to investor the at day. with guys forward connecting look Okay, I you great.

Andrew Rees

Thank you.

Operator

up Piper Sandler. We Murphy a from have question with Erinn follow

is line open. Your

Erinn Murphy

Great, thanks.

the for buyback. up on one Just me follow

I existing think on you quarter. that near fully authorization this Any your exhausted future? thoughts upping the in

Anne Mehlman

million is left we think obviously. almost buyback our have existing I on XXX

Erinn Murphy

Okay. Got Thank mistaken. it. you I'm much. Maybe so

Anne Mehlman

you. Thank

Operator

Williams Poser question up Sam We from also follow Trading. a have with

Your line is open.

Sam Poser

just ones the quick but channel three gross about from continue forward to mix to help have talked geographic mix you. about I Hi, product the with margin you expect and perspective looking you a

is Secondly, if can you looking at third, you're to your you And currently could if right retail, give own wholesale seeing, your stores upcoming in on partner demand some collaborations. seeing. stores partnership color relative discuss us how your inventory in both now and

Andrew Rees

let's in order. All those hit reverse Sam right

inventory partners. QX retail retail wholesale think think retail our think were not or I So own in the I inventory position retail about we look, our way is even we at optimal in

So it's certainly was it of QX, it's but not end better than at the optimal.

of weaker supply. looking stocks at So say out when and I optimal, I'm of kind

The a our the one? second What's different of things little are say all for we [clogs] a when those tracked pipeline very the year. about you've going the end remarks full So on. have an strong for out of and the a of we've talked year through increasingly bit opportunity the [clogs]. very very got prepared in full a future. we I next pipeline more have know I But would We closely. pipeline

Andrew Rees

well margins for promotional we it about pullback current taken, combined have the some the to margin basis growth year mentioned gross will related little and of and we then mix those rates. be in then expect expect points Andrew biggest our on currency slightly actions of DCs are channel And mentioned rates. as we Yes those a the all offset year bit then roughly and I of help. as currency, we've increased then do currency the are Sam efficiencies that bit to little for of and strategy and XX by drivers really earlier, as some pricing But a the continued freight

major margins drivers are up the gross will for be the in year. Jibbitzs. will, those margins But So

Sam Poser

much. very Thanks

Andrew Rees

all time. of I of we're our and think that's questions out

So attending the much company. And you everybody's in continued appreciate thank interest for really this morning. very

Operator

today’s call. Thank you for This concludes participating. conference

now may You disconnect.

Crocs (CROX) 22 Jul 212021 Q2 Earnings call transcript