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What: Shares of Crocs (NASDAQ:CROX) were stepping up to the next level today, gaining as much as 13% after the footwear maker announced a restructuring plan and beat estimates in its second-quarter report.
So what: The company whose plastic sandals once swept the nation said it would close 75 to 100 retail locations among other moves, saying the closures would have an insignificant impact on future operating income. The restructuring plan seems to reflect a company still struggling to find firm ground after the fad it introduced faded away. For the quarter past, revenue improved 3.6% to $376.9 million, beating estimates of $372.8 million, while adjusted EPS clocked in at $0.36, down from $0.48 a year ago but better than expectations of $0.31.
Now what: Based on the stock's jump, investors reacted to well to the transition plan as the company will pare down its product line, lay off employees and make other changes to cut unnecessary costs. The slide in profits, which came in spite of revenue growth, seemed evidence of the need for change as Crocs President Andrew Rees implied. He also said, "We have identified the key strategic and structural improvements that we expect will allow the company to achieve its potential," stressing the importance of more efficient organization that can sustain profitable growth with an operating margin of 12% as a goal. The impact of the restructuring plan remains to be seen. For the current quarter, management guided revenue at $300 million to $305 million, slightly ahead of the consensus at $300.5 million. (NASDAQ: AAPL)
Jeremy Bowman owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Crocs. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.