Clog-maker Crocs (NASDAQ:CROX) announced it would attempt to sell or convert 75 to 100 stores and lay off about 180 of its 5,000 employees as it suffers from overexpansion.
As many as 70 jobs will be cut from the company's Niwot, Colorado headquarters, reported the Wall Street Journal. The brand will also cut back the number of styles it sells by 30 to 40 percent, in addition to categories such as boots and dress shoes. The retailer will shift its focus to sandals, loafers and casual shoes.
After hitting it big in 2002 with sandals, Crocs wanted to diversify, but some of the styles were "too big a reach for the brand," Andrew Rees, president of Crocs, told the Wall Street Journal.
So now the company must shrink to improve profitability. Profits fell 44 percent to $19.7 million in the second quarter, but revenue increased 3.6 percent to $376.9 million. The retailer expects the new plan will save Crocs $4 million in 2014 and $10 million in 2015.
Rees hopes to convert to third-party operators for the 75 to 100 stores so the company can continue to operate as Crocs without the expensive ownership of excess parts. He also plans to open a new global commerce center with 75 employees in Boston later this year, reported Sports One Source. The new office will house key merchandising, marketing and retail functions. He believes the new location will be more attractive for executives than Colorado.
Blackstone invested $200 million in Crocs in January 2014 with hopes of turning profits around.
"Crocs' performance in the second quarter demonstrates the underlying potential of our global brand and business and the need for dynamic change in our strategy, organization and approach to the market," Rees said. "Overall, revenue was in line with our expectations, and we have set a course for meaningful change going forward."
Crocs receives $200 million investment, CEO exits
Nike's 2nd-quarter profit jumps 40%, beats estimates
Walmart India appoints Krish Iyer president and CEO
Lululemon names new CEO; founder Chip Wilson resigns as chairman
Sears Canada CEO leaves in dispute over paying for turnaround