Tue, Dec 31, 2013 - Page 15 News List

Crocs gains US$200m investment, loses CEO

Bloomberg

Crocs Inc chief executive officer John McCarvel is set to retire and Blackstone Group LP is planning to invest US$200 million in convertible preferred stock as the maker of colorful plastic clogs struggles to regain lost popularity.

The shoemaker will use the funds to increase stock repurchases to US$350 million, Niwot, Colorado-based Crocs said in a statement. McCarvel is to step down on or about April 30.

Crocs has been trying to revive its fortunes after consumers tired of its trademark clogs, knockoffs cut into sales and US consumer spending slumped. The Blackstone investment comes after Crocs attempted to find a buyer for the whole company, people familiar with the situation said last month.

“We’ve been unable to repurchase stock while negotiating this transaction, but we now expect to do so beginning in the first quarter of 2014,” Crocs chief financial officer Jeff Lasher said in the statement. The buybacks will reduce publicly traded common stock by about 30 percent, Lasher said.

Crocs shares rose 2.6 percent to the equivalent of US$13.68 in early German trading yesterday.

McCarvel, who took the helm in March 2010, expanded the company’s products to include other styles of footwear and opened new stores. The shares have declined 7.4 percent this year in New York trading, compared with a 29 percent gain in the Standard & Poor’s 500 Index.

The board has begun an outside search for McCarvel’s replacement, according to the statement.

The preferred shares that Blackstone acquired have a 6 percent cash dividend rate and are convertible to common stock at US$14.50 a share, Crocs said.

“We will focus on improving financial performance, particularly in the Americas and Japan, as well as enhancing our global retail execution,” Thomas Smach, Croc’s chairman, said in the statement. “We may moderate the pace of our investments in new retail stores.”

Crocs said it expects fourth-quarter revenue to be at the low end of the previously provided guidance range of US$220 million to US$225 million. Diluted loss per share will probably be at the higher end of the projected US$0.20 to US$0.23 range, according to the statement. That compares with the average US$0.19 a share loss of nine analyst estimates compiled by Bloomberg.

The shoemaker also expects aggregate charges of US$47 million to US$52 million in the fourth quarter, or an additional loss per diluted share of US$0.45 to US$0.50, according to the statement. The charges take into account additional costs such as expenses related to the Blackstone transaction and asset impairments.

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