CROX 2Q14 Earnings Preview, Blackstone Analysis

8/12/2019 CROX 2Q14 Earnings Preview, Blackstone Analysis

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Crocs 2Q14 Earnings Preview; Blackstone stake analysis7/20/2014

Crocs Inc. (CROX) - $14.86

Why Read?Crocs, a manufacturer and retailer of causal lifestyle appareland footwear (97% of sales), recently received a $198mconvertible preferred share investment from Blackstone. Thishas led many to speculate that brighter days are still to come forthe company. We believe although this may be true, in the shortterm, Crocs still has many headwinds to overcome includingdeteriorating store productivity, unproven new products,irreversible gross margin erosion, and key vacancies inmanagement.

"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""! Sales Metrics: Since 2Q12, Crocs has only posted positive consolidated comparable store sales in 3 quarters, most recently a

less than inspiring +1.0% in 2Q13. We are forecasting +1.0% comparable store sales for the remained of the year after thecompany reported -1.5% comparable store sales in 1Q14. We believe this estimate may be overly optimistic, but believelapping currency headwinds from FY13 may make the difference.

! Store Economics: Since 2Q12, Crocs increased total store count by 42% from 440 to 623. 44% of these new stores are inAsia, 44% in Europe, and only 12% in the Americas. During the same period, TTM average sales per store decreased from$792k to $714k, -9.8%. Management guidance for new store ROI is >35% and 1-3 year payback period, although withdeteriorating store productivity and increased initial investment, we believe this guidance is misleading.

! Margins: Since their gross margin low of 36.9% in 1Q09, results have improved, although they have never reached their FYpre-crash highs, peaking at 54.5% in FY12. The main contributor to declining gross margins is the shift away from thetraditional clog product to a more diversified portfolio of footwear products, which do not carry the same high margins. In1Q14, clogs consisted of 42% of sales, down from 47% of sales in 1Q13, and 49% of sales in 1Q12. As the brand continuesto diversify its product offering, they will never be able to recover these margin dollars due to higher input costs.

! Blackstone Preferred Share Investment: After swirling rumors that Crocs was pursuing a sale of the company in the fall,on December 29 th, these rumors were put to rest when Blackstone invested $198m in the company in form of convertiblepreferred stock. We believe that if Blackstone were to pursue a more significant investment in Crocs, they are using thisopportunity to place to experts on the Board, get a view behind the curtain, and unlock value by pressuring an acceleratedbuyback program.

! Boardroom/Management: We are happy to see that CEO John McCarvel resigned in 2013. It is time for Crocs tocompletely rid itself of the Flextronics old guard and bring in fresh faces. Until this post has been filed, we feel that Crocswill remain in a standstill regarding operational realignment. Additionally, Crocs still continues to operate without a

managing director for its Asia Pacific division. Considering this area is where the majority of their sales and store growth isoccurring we find this absolutely ridiculous.

! Estimates: We expect 2Q14E revenue of $372m vs. consensus of $372.8m. For 2Q14E we expect Crocs to earn $0.26 vs.consensus of $0.31. We expect 3Q14E revenue of $296m vs. consensus of $300.5m, as well as the company to guide belowconsensus. For FY14E we expect $1.215bn in sales vs. a consensus of $1.22bn. For FY14E we expect Crocs to earn $0.44(S/O adj. for buybacks) vs. a consensus of $0.48. We can easily envision many scenarios where we will lower our estimatesfor FY14E in 2H14 including lower than forecasted buybacks.

! Crocs Valuation: We believe the market is overvaluing Crocs due to the companys declining store metrics, erodingmargins, vague ROI on new store investment disclosures, as well as vacancies in management positions. We believe the onlything putting a floor under the stock price is the $14.50 Blackstone preferred share price. We believe shares should be worthcloser to $13.40 given these issues and believe they will remain range bound between $13-$16 for the year.

Price $14.8652-Week Range $11.96 - $17.54Market Cap (m) $1,331S/O dil. (m) 89,539

2013A 2014E 2015ERevenue 1,192.7 1,215.0 1,240.7

EPS $0.82 $0.44 $0.65


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Sales Metrics:

Since 2Q12, Crocs has only posted positive consolidated comparable store sales in 3 quarters, most recently a less than inspiring+1.0% in 2Q13. Japan comparable store sales have been deeply impacted by currency headwinds and sales tax increase.

With the rise in ASP and generally flat to negative comparable store sales, we believe Crocs has experienced lowertransactions/traffic per maturing store. We believe this is a negative indication of the brands strength as they shift away from theirtraditional clog product.

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Sequential TTM sales growth has decelerated across all channels, even with the rampant store openings since 2Q12. Wholesalerevenue has turned negative in 2 out of the last 3 quarters. Despite focus on retail growth, particularly in Asia, Wholesale revenuestill made up 56% of FY13 revenue. Internet channel growth has posted negative results in 4 out of the last 6 quarters. This isalmost unheard of as retailers move to omni-channel distribution models. We believe management saw revenue growth slowingeven before 2Q12 and reacted by opening more retail stores, in weaker locations, to mitigate slowing topline results. We expect thestore base requires rightsizing and will face margin headwinds from both low ROIC locations and one time non-recurringimpairments from store closures.

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5 6,& 7&%1(120 +)89)2,1%( :&";,35% ROI, what are they generating? 30% or 20%? The company needs toupdate their new store investment guidance and stop cherry picking historical metrics.

Margins:

Crocs original strength before the 2008 crash was its impressive gross and operating margins. In FY07, Crocs had 58.7% grossmargins and 27.0% operating margins on 850m in revenue. After revenue dropped -14.8% in FY08, gross margins declined to43.7% and operating margins contracted to -3.6%, causing the stock to drop from $36.81 at the end of 2007 to just $1.24 at the endof 2008. Needless to say, Crocs relies heavily on their gross margin dollars to drive earnings and cannot quickly adjust their fixedcosts to react to contracting revenue.

Since their gross margin low of 36.9% in 1Q09, results have improved, although they have never reached their FY pre-crash highs,peaking at 54.5% in FY12.

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The main contributor to declining gross margins is the shift away from the traditional clog product to a more diversified portfolioof footwear products, which do not carry the same high margins. In 1Q14, clogs consisted of 42% of sales, down from 47% ofsales in 1Q13, and 49% of sales in 1Q12. As the brand continues to diversify its product offering, they will never be able to recoverthese margin dollars due to higher input costs. Additionally, their new casual footwear offerings are competing in a much morecompetitive space, going head to head against many competitors such as Wolverine World Wide (WWW) and Deckers (DECK).There is a significant chance over time these products will fail to experience the same market traction the classic clog product andat the very minimum we expect further inventory write-downs and increased promotions and markdowns to clear obsoleteinventory.

Gross Margin Breakouts Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014Product Costs due to Mix negative negative negative negative negative negative negative negative negativeSupply Chain positive positive positiveManufacturing positive positive positiveDiscounting positive negativeAt Once Wholesale negative negativeUnits positive positive positive positive positiveASP positive positive positive positiveYoY Change (Bps) 69 166 85 (8) (6) (404) (115) (242) (321)Gross Margin (%) 53.3% 59.3% 54.4% 48.9% 53.2% 55.2% 53.2% 46.5% 50.0%

Notice ASP increases have no longer been a positive margin contributor as well as increase in units. We believe that units have nolonger been a positive contributor to gross margins as incremental unit sales have been in the newer casual footwear categorieswhich are gross margin dilutive.


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Crocs has not been able to offset any of their lost gross margin with SG&A leverage, in fact, SG&A delevered against sales by(415) Bps in 2013.

Blackstone Preferred Share Investment:

After swirling rumors that Crocs was pursuing a sale of the company in the fall, on December 29 th, these rumors were put to restwhen Blackstone invested $198m in the company in form of convertible preferred stock. These shares carry a 6% cash dividend(8% if company misses payments) as well as a $14.50 conversion price. Along with the investment, Blackstone also received 2seats on the board. Following the announcement, CROX traded up 21% from $13.33 to $16.14, well above Blackstonesconversion price.

Surprisingly to us, Blackstone placed this investment from their BCP VI fund rather than Tactical Opportunities. BCP is their latestprivate equity buyout fund, which completed its fundraising in 2012 at $15.1 billion. We had expected this investment seemedbetter suited for the Tactical Opportunities fund, a smaller $5.5 billion fund with a wider investment mandate than traditionalequity placement. Although we believe this leaves the door open for further control-oriented investments from Blackstone, we donot believe a complete Crocs buyout from Blackstone is in the works. Crocs does not fit the consumer/retail profile of previousBlackstone buyout investments. Blackstone prefers steadier businesses with more consistent comps and barriers to entry; thinkMichaels (MIK), or large asset bases to serve as collateral Sea World (SEA).

Furthermore, Blackstone is prohibited from acquiring more than 25% of common stock so long as they are entitled to seats on theBoard. Additionally, they are prohibited from selling their preferred shares for at least 2 years, and cannot sell to any of Crocscompetitors.

We believe that if Blackstone were to pursue a more significant investment in Crocs, they are using this opportunity to place toexperts on the Board, get a view behind the curtain, and unlock value by pressuring an accelerated buyback program. They get allof these benefits while receiving 6%, convertible upside, and seniority to common equity. Once they have helped shape the searchfor a new CEO the board seats are less valuable to them. Then Blackstone can convert the preferred to common shares, relinquishthe board seats, and acquire the remaining common shares.


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Below we have outlined some hypothetical investment results for Blackstone. Given the IRR profiles of their BCP VI and TacticalOpportunities, we believe our case would be IRR dilutive for BCP VI but IRR accretive for Tactical Opportunities. Given theirpenchant for a margin of safety, we believe that Blackstone could have more in the work since the investment came from BCP VI,but we dont see anything happening until at least 2H15. Blackstone is still in a tricky spot. They need the share price to staysuppressed and accelerated buybacks sooner rather than later. We were shocked that the company only repurchased $13m in stockduring 1Q14 after announcing the $350m buyback program. The company needs to accelerate they buyback activity before a newCEO is announced, which will most likely drive up share prices, at least temporarily.

CF Case 2014E 2015E 2016ERevenue 1,214,968 1,240,731 1,268,980

2% 2%

Net Income 31,838 53,011 62,65367% 18%

P/E Multiple 41x 25x 22x

Market Cap 1,294,710 1,299,038 1,353,280S/O 86,314 76,414 67,664Share Price $15.00 $17.00 $20.00

BX Shares % 13.8% 15.3% 16.9%

2016 ExitIRR 17.0% 229,150

Initial Investment 198,000


BX Case 2014E 2015E 2016ERevenue 1,214,968 1,263,567 1,314,109

4% 4%

Net Income 34,019 63,178 78,84786% 25%

P/E Multiple 38x 24x 21x

Market Cap 1,294,710 1,528,280 1,691,600S/O 86,314 76,414 67,664Share Price $15.00 $20.00 $25.00

BX Shares % 13.8% 15.3% 16.9%

2016 ExitIRR 29.8% 286,438

Initial Investment 198,000


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Boardroom/Management:

In tandem with their preferred share investment, Blackstone received two seats on the Board. Blackstone chose to appoint PrakashMelwani, CIO of their private equity group, as well as Gregg Ribatt, former president and CEO of Stride Rite. We are comfortablewith these appointments and hope that Gregg Ribatt is dispensing his footwear experience in the boardroom and activelycontributing to the new CEO search efforts. On the other hand, we are wary that they have yet to find a new CEO for Crocs andhad initially hoped Gregg Ribatt himself would shift from the Board to the CEOs office after becoming accustomed with thecompany.

We are happy to see that CEO John McCarvel resigned in 2013. It is time for Crocs to completely rid itself of the Flextronics oldguard and bring in fresh faces. Only Scott Crutchfield, COO, remains. We are still concerned that a new CEO still has not beenannounced. The seat has now been vacant for nearly 7 months. Until this post has been filed we feel that Crocs we remain in astandstill regarding operational realignment, unless Gregg Ribatt has been running the show from the backseat and will eventuallyfill the CEO position.

Lastly, Crocs still continues to operate without a managing director for their Asia Pacific division. Considering this area is wherethe majority of their sales and store growth is occurring we find this absolutely ridiculous. There seems to be a complete lack ofurgency is shoring up the management team and setting the roster to take this company forward.

Crocs Valuation:

We believe Crocs is trading relativelyclose to fair value. Given the holes in keyleadership positions, untested brandtraction in its casual footwear offerings,and questions surrounding the longevity ofits traditional clog business, it rightfullydeserves to trade at a discount to its peerson an EV/S basis. We place less emphasison valuing Crocs on a P/E basis asearnings will continue to be choppy as weexpect further impartment and restrictingcharges to occur over the next few years,hopefully in conjunction with a new CEOand a defined strategic plan.

For now we expect the company willcontinue to hug the $14.50 Blackstoneconversion price. There is no compellingreason for the stock to rise significantlyhigher, and if it did so would only hurtlong-term EPS as the company would notbe able to buyback shares at anopportunistic price. For now we believe Blackstone is happy to wait, and may even be directing management to delay the buybackuntil shares fall below their conversion price. We are sure they are happy to have enhanced strategic influence through the Boardand satisfied with their 6% dividend and seniority over common shares.

Croc's (CROX) ValuationCOMPS Forward EV/S Forward P/E

DECK 1.46x 17.8xSHOO 1.47x 15.7xSKX 0.84x 22.2xWWW 1.21x 15.3xAverage 1.25x 17.7xCROX 0.76x 31.0xPremium -39% 75%

75% EV/S, 25% P/E

CROX @ Average $1,915,935 $694,522 $1,610,582Per Share $21.40 $7.76 $17.99

Consumer FoxValuation 0.75x 22.0x 75% EV/S, 25% P/ECROX @ CF $1,312,673 $861,377 $1,199,849Per Share $14.66 $9.62 $13.40

Shares Outstanding 89,539 Premium to Current -9.8%


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( 1 7 , 2 0 2 )

5 4 , 1

2 4

7 8 , 4

6 7

I n t e r e s t

I n c o m e /

( E x p e n s e

)

( 1 , 4

9 5 )

( 6 5 7 )

( 8 5 3 )

5 9 8

4 1 7

( 2 2 6 )

3 5 9

8 6 0

9 7

2 5 1

8 0 9

2 5 9

1 , 4 1 6

2 8 6

2 5 0

2 5 0

2 5 0

1 , 0 3 6

( 8 0 0 )

O t h e r

N o n - O p e r (

I n c o m e )

/ E x p e n s e

4 , 0 5 8

4 1 4

1 , 0 3 8

( 4 7 )

5 2 0

( 7 1 )

3 2 4

1 , 0 1 4

2 8

( 1 9 5 )

( 1 3 )

3 0 6

1 2 6

1 4 1

1 0 0

1 0 0

1 0 0

4 4 1

4 0 0

I n c o m e

B e f o r e

T a x

( 4 8 , 6 2 1 )

8 0 , 7

9 2

1 3 6 , 6 9 0

3 6 , 0

7 1

7 3 , 8

2 5

3 9 , 6

9 6

( 4 , 0

4 4 )

1 4 5 , 5 4 8

3 5 , 1

7 5

4 9 , 6

6 1

1 7 , 6

6 0

( 4 2 , 5 3 7 )

5 9 , 9

5 9

1 4 , 4

8 1

3 2 , 3

7 4

2 5 , 5

9 8

( 1 6 , 8 5 2 )

5 5 , 6

0 1

7 8 , 0

6 7

I n c o m e

T a x

( E x p

) / B e n e f

i t

6 , 5 4 3

( 1 3 , 0 6 6 )

( 2 3 , 9 0 2 )

( 7 , 7

2 5 )

( 1 2 , 3 0 1 )

5 , 3 8 4

4 3 7

( 1 4 , 2 0 5 )

( 6 , 2

1 4 )

( 1 4 , 3 0 5 )

( 4 , 6

2 4 )

( 2 4 , 3 9 6 )

( 4 9 , 5 3 9 )

( 5 , 3

5 7 )

( 5 , 8

2 7 )

( 4 , 6

0 8 )

3 , 0 3 3

( 1 2 , 7 5 9 )

( 1 4 , 0 5 2 )

D i v o n

R e d e e m

C o n v

P r e f

S h a r e s

0

0

0

0

0

0

0

0

0

0

0

0

0

( 2 , 7

5 1 )

( 2 , 7

5 1 )

( 2 , 7

5 1 )

( 2 , 7

5 1 )

( 1 1 , 0 0 4 )

( 1 1 , 0 0 4 )

I n c o m e

B e f o r e

M i n o r

i t y I n t e r e s t

( 4 2 , 0 7 8 )

6 7 , 7

2 6

1 1 2 , 7 8 8

2 8 , 3

4 6

6 1 , 5

2 4

4 5 , 0

8 0

( 3 , 6

0 7 )

1 3 1 , 3 4 3

2 8 , 9

6 1

3 5 , 3

5 6

1 3 , 0

3 6

( 6 6 , 9 3 3 )

1 0 , 4

2 0

6 , 3 7 3

2 3 , 7

9 6

1 8 , 2

3 9

( 1 6 , 5 7 0 )

3 1 , 8

3 8

5 3 , 0

1 1

M i n o r

i t y I n t e r e s t

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

N e t

I n c o m e

B e f

D i s c o n t

i n u e

d

( 4 2 , 0 7 8 )

6 7 , 7

2 6

1 1 2 , 7 8 8

2 8 , 3

4 6

6 1 , 5

2 4

4 5 , 0

8 0

( 3 , 6

0 7 )

1 3 1 , 3 4 3

2 8 , 9

6 1

3 5 , 3

5 6

1 3 , 0

3 6

( 6 6 , 9 3 3 )

1 0 , 4

2 0

6 , 3 7 3

2 3 , 7

9 6

1 8 , 2

3 9

( 1 6 , 5 7 0 )

3 1 , 8

3 8

5 3 , 0

1 1

N e t

I n c o m e p e r s h a r e - D

i l

( 0 . 4

9 )

0 . 7 6

1 . 2 4

0 . 3 1

0 . 6 8

0 . 4 9

( 0 . 0

4 )

1 . 4 4

0 . 3 3

0 . 4 0

0 . 1 5

( 0 . 7

5 )

0 . 1 2

0 . 0 6

0 . 2 6

0 . 2 1

( 0 . 2

0 )

0 . 3 6

0 . 6 8

D i s c o n t

i n u e

d O p e r a

t i o n s

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

N e t

I n c o m e

( 4 2 , 0 7 8 )

6 7 , 7

2 6

1 1 2 , 7 8 8

2 8 , 3

4 6

6 1 , 5

2 4

4 5 , 0

8 0

( 3 , 6

0 7 )

1 3 1 , 3 4 3

2 8 , 9

6 1

3 5 , 3

5 6

1 3 , 0

3 6

( 6 6 , 9 3 3 )

1 0 , 4

2 0

6 , 3 7 3

2 3 , 7

9 6

1 8 , 2

3 9

( 1 6 , 5 7 0 )

3 1 , 8

3 8

5 3 , 0

1 1

N e t

I n c o m e p e r s h a r e - D

i l

( 0 . 4

9 )

0 . 7 6

1 . 2 4

0 . 3 1

0 . 6 8

0 . 4 9

( 0 . 0

4 )

1 . 4 4

0 . 3 3

0 . 4 0

0 . 1 5

( 0 . 7

5 )

0 . 1 2

0 . 0 6

0 . 2 6

0 . 2 1

( 0 . 2

0 )

0 . 3 6

0 . 6 8

W e i g h

t e d s h a r e s - B a s

i c

8 5 , 1

1 2

8 5 , 4

8 2

8 8 , 3

1 8

8 9 , 3

0 7

8 9 , 5

1 9

8 9 , 9

4 8

9 0 , 2

4 8

8 9 , 5

7 1

8 7 , 7

8 1

8 7 , 8

6 5

8 8 , 1

0 9

8 8 , 4

0 9

8 7 , 9

8 9

8 8 , 2

3 9

8 6 , 2

3 9

8 3 , 7

3 9

8 1 , 2

3 9

8 4 , 8

6 4

7 4 , 9

8 9

W e i g h

t e d s h a r e s - D

i l u t e d

8 5 , 1

1 2

8 7 , 5

9 6

8 9 , 9

8 1

9 0 , 4

8 0

9 0 , 6

1 4

9 0 , 8

5 0

9 1 , 7

4 8

9 0 , 5

8 8

8 8 , 6

7 2

8 8 , 8

3 7

8 8 , 9

0 8

8 9 , 9

0 9

8 9 , 0

8 9

8 9 , 5

3 9

8 7 , 7

3 9

8 5 , 2

3 9

8 2 , 7

3 9

8 6 , 3

1 4

7 6 , 4

1 4

P r o f

i t a b

i l i t y M e t r i c s :

0 . 3 5

0 . 4 8

0 . 1 8

( 0 . 2

0 )

0 . 8 2

0 . 1 4

0 . 2 6

0 . 2 1

( 0 . 2

0 )

0 . 4 4

0 . 6 8

G r o s s

P r o f

i t M a r g i n

4 7 . 7

0 %

5 3 . 8

3 %

5 3 . 5

9 %

5 3 . 2

7 %

5 9 . 2

5 %

5 4 . 3

8 %

4 8 . 9

1 %

5 4 . 4

5 %

5 3 . 2

2 %

5 5 . 2

1 %

5 3 . 2

3 %

4 6 . 4

9 %

5 2 . 5

4 %

5 0 . 0

0 %

5 2 . 7

1 %

5 2 . 7

3 %

4 5 . 9

9 %

5 0 . 7

3 %

5 0 . 2

4 %

S G & A E x p e n s e

R a t

i o

- 4 6 . 1 9 %

- 4 3 . 3 2 %

- 4 0 . 2 4 %

- 3 8 . 3 7 %

- 3 7 . 6 9 %

- 4 0 . 8 5 %

- 4 7 . 5 3 %

- 4 0 . 6 5 %

- 4 0 . 5 4 %

- 4 0 . 8 5 %

- 4 5 . 9 5 %

- 5 5 . 4 5 %

- 4 4 . 8 0 %

- 4 2 . 0 2 %

- 4 3 . 4 4 %

- 4 3 . 7 2 %

- 5 2 . 7 3 %

- 4 4 . 9 3 %

- 4 3 . 5 9 %

O p e r a

t i n g

M a r g i n

1 . 5 1 %

1 0 . 5

0 %

1 3 . 3

5 %

1 4 . 9

0 %

2 1 . 5

6 %

1 3 . 5

4 %

1 . 3 8 %

1 3 . 8

0 %

1 2 . 6

8 %

1 4 . 3

6 %

7 . 2 8 %

- 8 . 9

5 %

7 . 7 4 %

7 . 9 9 %

9 . 2 7 %

9 . 0 1 %

- 6 . 7

3 %

5 . 8 0 %

6 . 6 5 %

D e p r e c i a t

i o n

& A m o r

t E x p e n s e

3 6 , 6

7 1

3 7 , 0

5 9

3 7 , 2

6 3

8 , 3 5 3

8 , 9 0 4

9 , 5 5 8

9 , 8 7 9

3 6 , 6

9 4

1 0 , 2

6 4

1 0 , 2

5 8

1 0 , 6

4 5

1 0 , 3

3 9

4 1 , 5

0 6

9 , 3 7 3

1 0 , 0

0 0

1 0 , 0

0 0

1 0 , 0

0 0

3 9 , 3

7 3

4 0 , 0

0 0

E B I T D A

4 6 , 4

2 6

1 2 0 , 0 0 2

1 7 0 , 9 0 4

4 8 , 8

6 2

8 0 , 2

7 1

4 9 , 5

7 2

1 2 , 9

9 5

1 9 1 , 7 0 0

4 9 , 7

6 7

6 2 , 5

0 7

3 1 , 6

4 1

( 1 0 , 1 3 6 )

1 3 3 , 7 7 9

3 4 , 3

2 6

4 4 , 5

2 4

3 6 , 7

4 8

( 5 , 7

0 2 )

1 0 9 , 8 9 6

1 2 2 , 4 6 7

S a l e s

M e t r i c s :

T o t a l R e v e n u e

G r o w

t h

- 1 0 . 5 %

2 2 . 3

%

2 6 . 7

%

1 9 . 9

%

1 2 . 0

%

7 . 5 %

1 0 . 4

%

1 2 . 2

%

1 4 . 7

%

9 . 9 %

- 2 . 4

%

1 . 6 %

6 . 2 %

0 . 2 %

2 . 4 %

2 . 9 %

2 . 0 %

1 . 9 %

2 . 1 %

T o t a l W h o l e s a

l e R e v e n u e

G r o w

t h

1 9 . 1

%

2 4 . 2

%

1 5 . 9

%

7 . 3 %

1 . 5 %

6 . 1 %

7 . 9 %

1 5 . 5

%

6 . 8 %

- 1 0 . 2 %

1 . 2 %

4 . 3 %

- 1 . 4

%

- 1 . 0

%

- 1 . 0

%

- 1 . 0

%

- 1 . 1

%

1 . 0 %

T o t a l R e t a i

l R e v e n u e

G r o w

t h

2 8 . 7

%

3 1 . 7

%

3 3 . 2

%

2 2 . 6

%

1 7 . 7

%

2 0 . 9

%

2 2 . 2

%

1 7 . 4

%

1 7 . 6

%

1 1 . 2

%

0 . 4 %

1 1 . 5

%

6 . 3 %

8 . 3 %

7 . 3 %

6 . 5 %

7 . 3 %

3 . 6 %

T o t a l I n t e r n e

t R e v e n u e

G r o w

t h

2 4 . 2

%

2 7 . 9

%

2 3 . 3

%

6 . 6 %

6 . 0 %

- 2 . 1

%

7 . 0 %

- 1 . 2

%

0 . 8 %

- 1 3 . 7 %

8 . 1 %

- 1 . 7

%

- 3 . 3

%

- 1 . 0

%

3 . 0 %

- 1 . 0

%

- 0 . 5

%

3 . 0 %

C o m p a r a

b l e

S t o r e

S a l e s

2 . 3 %

1 . 8 %

1 . 0 %

- 3 . 5

%

1 . 5 %

- 5 . 2

%

1 . 0 %

- 4 . 2

%

- 4 . 0

%

- 2 . 7

%

- 1 . 5

%

1 . 0 %

1 . 0 %

1 . 0 %

0 . 6 %

- 1 . 0

%

B a l a n c e

S h e e

t H i g h l i g h t s :

C a s

h & C a s

h E q u

i v a l e n

t s

8 0 , 8

5 9

1 4 5 , 5 8 3

2 5 7 , 5 8 7

2 0 6 , 6 0 3

2 7 8 , 8 2 7

3 1 2 , 5 8 0

2 9 4 , 3 4 8

2 9 4 , 3 4 8

2 3 2 , 6 7 3

2 8 9 , 3 5 4

3 3 2 , 4 9 1

3 1 7 , 1 4 4

3 1 7 , 1 4 4

4 1 1 , 8 0 6

I n v e n t o r y

9 3 , 3

2 9

1 2 1 , 1 5 5

1 2 9 , 6 2 7

1 6 9 , 0 7 1

1 6 6 , 0 1 3

1 8 7 , 5 2 7

1 6 4 , 8 0 4

1 6 4 , 8 0 4

1 7 7 , 8 1 4

1 6 0 , 7 6 3

1 7 6 , 1 1 8

1 6 2 , 3 4 1

1 6 2 , 3 4 1

1 9 2 , 3 7 6

1 7 4 , 6 4 1

1 7 3 , 9 2 6

1 6 8 , 6 4 1

1 6 8 , 6 4 1

I n v e n t o r y

% F w d Q t r C G S

1 2 5 . 4 %

1 2 3 . 1 %

1 6 3 . 2 %

1 1 3 . 0 %

1 0 9 . 1 %

1 1 9 . 1 %

1 4 3 . 9 %

1 0 3 . 9 %

1 0 9 . 2 %

1 2 4 . 5 %

1 3 8 . 1 %

1 0 4 . 6 %

C a p

i t a l E x p e n

d i t u r e s

2 7 , 0

2 7

4 5 , 1

0 5

4 1 , 6

4 0

9 , 6 7 4

1 1 , 1

3 9

1 9 , 3

0 7

2 5 , 8

8 5

6 6 , 0

0 5

1 5 , 6

3 4

1 5 , 8

7 5

2 1 , 9

0 9

1 5 , 4

1 0

6 8 , 8

2 8

1 5 , 3

3 6

1 6 , 0

0 0

1 6 , 0

0 0

1 6 , 0

0 0

6 3 , 3

3 6

6 0 , 0

0 0

T o t a l D e b

t

1 , 5 5 2

1 , 9 0 1

1 , 1 1 8

2 4 , 3

2 6

6 1

2 8

4 , 5 9 6

4 , 5 9 6

7 , 1 1 2

6 , 8 9 9

9 , 3 4 5

1 1 , 6

7 0

1 1 , 6

7 0

1 0 , 3

5 9

1 0 , 3

5 9

1 0 , 3

5 9

1 0 , 3

5 9

1 0 , 3

5 9

1 0 , 3

5 9

T o t a l D e b

t % T o t a l I n v

C a p

i t a l

0 . 5 %

0 . 5 %

0 . 2 %

4 . 4 %

0 . 0 %

0 . 0 %

0 . 7 %

0 . 7 %

1 . 1 %

1 . 0 %

1 . 3 %

1 . 8 %

1 . 8 %

1 . 6 %

1 . 6 %

1 . 5 %

1 . 6 %

1 . 6 %

1 . 5 %

T o t a l S h a r e

h o l d e r

' s E q u

i t y

2 8 7 , 6 2 0

3 7 6 , 1 0 6

4 9 1 , 7 8 0

5 2 9 , 3 1 9

5 8 3 , 6 8 0

6 4 0 , 9 8 4

6 1 7 , 4 0 0

6 1 7 , 4 0 0

6 3 3 , 8 1 4

6 6 7 , 6 0 9

6 9 0 , 2 2 5

6 2 4 , 7 4 4

6 2 4 , 7 4 4

6 2 1 , 7 4 5

6 4 5 , 5 4 1

6 6 3 , 7 8 0

6 4 7 , 2 1 0

6 4 7 , 2 1 0

7 0 0 , 2 2 1

V a l u a

t i o n

( G A A P ) :

M a r

k e t P r i c e p e r S

h a r e

$ 5 . 7

5

$ 1 7 . 1 2

$ 1 4 . 7 7

$ 2 0 . 9 2

$ 1 6 . 1 5

$ 1 6 . 2 1

$ 1 4 . 3 9

$ 1 4 . 3 9

$ 1 4 . 8 2

$ 1 6 . 5 0

$ 1 3 . 6 0

$ 1 5 . 9 2

$ 1 5 . 9 2

$ 1 5 . 6 0

$ 1 5 . 0 3

$ 1 4 . 8 6

$ 1 4 . 8 6

$ 1 4 . 8 6

$ 1 4 . 8 6

M a r

k e t C a p - A v g

D i l u t e d

4 8 9 , 3 9 7

1 , 4 9 9 , 6 3 7

1 , 3 2 9 , 0 2 5

1 , 8 9 2 , 8 4 4

1 , 4 6 3 , 4 1 0

1 , 4 7 2 , 6 7 8

1 , 3 2 0 , 2 4 9

1 , 3 0 3 , 5 6 7

1 , 3 1 4 , 1 1 9

1 , 4 6 5 , 8 1 3

1 , 2 0 9 , 1 4 6

1 , 4 3 1 , 3 5 3

1 , 4 1 8 , 3 0 4

1 , 3 9 6 , 8 0 8

1 , 3 1 8 , 7 1 7

1 , 2 6 6 , 6 5 2

1 , 2 2 9 , 5 0 2

1 , 2 8 2 , 6 2 6

1 , 1 3 5 , 5 1 2

B o o

k V a l u e p e r S

h a r e

$ 3 . 3

8

$ 4 . 2

9

$ 5 . 4

7

$ 5 . 8

5

$ 6 . 4

4

$ 7 . 0

6

$ 6 . 7

3

$ 6 . 8

2

$ 7 . 1

5

$ 7 . 5

1

$ 7 . 7

6

$ 6 . 9

5

$ 7 . 0

1

$ 6 . 9

4

$ 7 . 3

6

$ 7 . 7

9

$ 7 . 8

2

$ 7 . 5

0

$ 9 . 1

6

P r i c e p e r 4 - Q

t r S a l e s

0 . 8

1 . 9

1 . 3

1 . 8

1 . 4

1 . 3

1 . 2

1 . 2

1 . 1

1 . 2

1 . 0

1 . 2

1 . 2

1 . 2

1 . 1

1 . 0

1 . 0

1 . 1

0 . 9

E n t

V a l u e p e r 4 - Q

t r E B I T D A

8 . 8

1 1 . 3

6 . 3

9 . 5

6 . 3

6 . 0

5 . 4

5 . 3

5 . 7

6 . 8

5 . 6

8 . 4

8 . 3

8 . 4

1 3 . 2

1 2 . 1

1 1 . 3

1 1 . 8

9 . 4

P / E R a t

i o - 4

Q t r T r a i

l i n g

( 1 1 . 6 )

2 2 . 5

1 1 . 9

1 5 . 9

1 1 . 7

1 0 . 6

1 0 . 0

1 0 . 0

1 0 . 2

1 4 . 1

1 6 . 4

1 2 9 . 0

1 3 6 . 1

( 1 0 9

. 1 )

( 5 4 . 5 )

( 7 1 . 0 )

4 4 . 4

4 1 . 6

2 1 . 8

P r i c e p e r f w

d 4 - Q t r S a l e s

0 . 6

1 . 5

1 . 2

1 . 6

1 . 2

1 . 2

1 . 1

1 . 1

1 . 1

1 . 2

1 . 0

1 . 2

1 . 2

1 . 1

1 . 1

1 . 0

1 . 0

1 . 0

0 . 9

E n t

V a l u e p e r f w

d 4 - Q t r E B I T D A

3 . 4

7 . 9

5 . 6

8 . 9

6 . 8

7 . 4

7 . 7

7 . 6

9 . 2

1 1 . 8

8 . 4

1 0 . 2

1 0 . 1

8 . 8

1 1 . 3

1 0 . 6

1 0 . 1

1 0 . 6

8 . 5

P / E R a t

i o - f w

d 4 Q t r

7 . 5

1 3 . 8

1 0 . 3

1 4 . 4

1 3 . 8

1 9 . 6

1 1 6 . 6

1 2 3 . 0

( 1 0 3

. 7 )

( 5 9 . 8 )

( 6 5 . 0 )

4 7 . 6

4 4 . 6

3 0 . 8

2 5 . 3

2 2 . 7

2 2 . 8

2 1 . 8

1 6 . 3

D i v i d e n

d s

$ 0 . 0

0

$ 0 . 0

0

$ 0 . 0

0

$ 0 . 0

0

$ 0 . 0

0

$ 0 . 0

0

$ 0 . 0

0

D i v i d e n

d Y i e l d

0 . 0 %

0 . 0 %

0 . 0 %

0 . 0 %

0 . 0 %

0 . 0 %

0 . 0 %


I t e m s :

Q 4 2 0 1 2 C O G S : $ 3

. 7 0 4 m

i l l i o n c h a r g e

i n v e n t o r y w r i t e -

d o w n

( $ )

Q 4 2 0 1 2 S G & A :

$ 0 . 8

7 0 m


E R P i m p l e m e n

t a t i o n

( $ )

Q 4 2 0 1 2 S G & A :

$ 2 . 2

0 0 m

i l l i o n c h a r g e c o n t

i g e n c y a c c r u a

l s ( $ )

Q 4 2 0 1 2 S G & A :

$ 0 . 6

4 8 m


d e p r e c

i a t i o n

& a m o r

t i z a t

i o n

( $ )

Q 1 2 0 1 3 S G & A :

$ 1 . 1

3 1 m



t a t i o n

( $ )

Q 1 2 0 1 3 S G & A :

$ 0 . 7

2 2 m


d e p r e c

i a t i o n

& a m o r

t i z a t

i o n

( $ )


I t e m s :

Q 2 2 0 1 3 S G & A :

$ 0 . 7

1 5 m i l l i o n c h a r g e


t a t i o n

( $ )

Q 2 2 0 1 3 S G & A :

$ 0 . 9


d e p r e c

i a t i o n

& a m o r

t i z a t

i o n

( $ )

Q 2 2 0 1 3 S G & A :

$ 6 . 0


B r a z i

l t a x c r e d

i t s ( $ )

Q 3 2 0 1 3 S G & A :

$ 2 . 1



t a t i o n

( $ )

Q 3 2 0 1 3 S G & A :

$ 0 . 9


d e p r e c

i a t i o n

& a m o r

t i z a t

i o n

( $ )


I t e m s :

Q 4 2 0 1 3 C O G S : $ 3

. 4 1 9 m

i l l i o n c h a r g e i n v e n

t o r y w r i

t e - d o w n

( $ )

Q 4 2 0 1 3 S G & A :

$ 1 . 6

5 6 m

i l l i o n c h a r g e E

R P i m p l e m e n

t a t i o n

( $ )

Q 4 2 0 1 3 S G & A :

$ 5 . 7

1 4 m

i l l i o n c h a r g e c o n

t i g e n c y a c c r u a

l s ( $ )

Q 4 2 0 1 3 S G & A :

$ 1 . 0

9 1 m

i l l i o n c h a r g e B

l a c k s t o n e

d e a l a n

d c a s h r e p a

t r i a t

i o n

( $ )

Q 4 2 0 1 3 S G & A :

$ 0 . 4

0 4 m

i l l i o n c h a r g e d e p r e c i a t

i o n

& a m o r

t i z a t

i o n

( $ )

Q 4 2 0 1 3 S G & A :

$ 0 . 6

2 5 m

i l l i o n

b e n e

f i t m a n a g e m e n

t t u r n o v e r (

$ )


I t e m s :

Q 1 2 0 1 4 S G & A :

$ 3 . 6

4 5 m

i l l i o n c h a r g e r e s t r u c t u r

i n g c h a r g e s

& e x p e n s e s

( $ )

Q 1 2 0 1 4 S G & A :

$ 1 . 9

8 5 m



t a t i o n

( $ )

Q 1 2 0 1 4 S G & A :

$ 1 . 4

2 2 m

i l l i o n c h a r g e c o n t

i g e n c y a c c r u a l s

( $ )

Q 1 2 0 1 4 S G & A :

$ 0 . 6

7 5 m

i l l i o n c h a r g e s t o r e c l o s u r e s (

$ )

Q 1 2 0 1 4 S G & A :

$ 0 . 4

0 4 m


d e p r e c

i a t i o n & a m o r

t i z a t

i o n

( $ )


12/12

$#

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mentioned or to invest in any specific security or investment product. While the information presented herein is believed to bereliable, no representation or warranty is made concerning the accuracy of any data presented. In addition, there can be noguarantee that any projection, forecast or opinion in this presentation will be realized. All trade names, trade-marks, service marks,and logos herein are the property of their respective owners who retain all proprietary rights over their use. This presentation isconfidential and may not be reproduced without prior written permission from Consumer Fox. It should be noted that ConsumerFox has no position in any security of the company mentioned in the report/presentation.

CROX 2Q14 Earnings Preview, Blackstone Analysis

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