Motley Fool  Sep 17  Comment 
Consistently trouncing expectations and achieving its first year of top-line growth in four years have seen Crocs shares more than double over the past year. The stock is hitting new five-year highs today.
The Economic Times  Aug 21  Comment 
“India will grow as one of the top-tier markets because we know the potential here is fantastic,” Teffner said in an interview with ET here on Tuesday. Globally, Crocs sells 55 million pairs of footwear every year.
Motley Fool  Aug 16  Comment 
The casual-footwear maker looks like it's putting its best foot forward.
Motley Fool  Aug 13  Comment 
Investors can still find good values in reasonably priced stocks.
CNNMoney.com  Aug 9  Comment 
The company has focused on making better clogs, expanded into sandals and closed underperforming stores.
MarketWatch  Aug 7  Comment 
Shares of Crocs Inc. slipped 0.4% in premarket trade Tuesday, after the casual footwear company beat second-quarter profit and revenue expectations, while announcing Chief Financial Officer Carrie Teffner will resign next year. Net income for the...
SeekingAlpha  Aug 7  Comment 
Benzinga  Jul 25  Comment 
It's the heart of the summer, and that's a good thing for footwear company Crocs, Inc. (NASDAQ: CROX). The Analyst Pivotal analyst Mitch Kummetz upgraded Crocs from Hold to Buy, raising the price target from $15 to $21. The Thesis Despite...


Crocs Inc. (NASDAQ:CROX) is an American footwear company, best known for its light-weight, non-slip shoe made with its patented material. As of 2009, Crocs operates a total of 307 Crocs retail locations. In 2009 the company sold a total of 36.8 million pairs of shoes worldwide. The average selling price for Crocs was $16.00 in 2009, compared to $18.35 in the previous year.[1]

However, Crocs has had a significant downturn in earnings in 2009, during which it reported a net loss of $42 million and a 10.5% decrease in net sales.[2] These are all effects of a global economic slowdown dampening demand for Crocs' products, not only in its core North American market, but around the world as well. Crocs has tried to curtail this downward trend by aggressively expanding into less-affected global markets; this strategy has been met with many challenges, including an influx of cheap imitation goods.

Company Overview

Crocs' shoes are differentiated due to their soft, lightweight, non-marking, slip- and odor-resistant nature. The product began as a simple and innovative product targeted at water sports enthusiasts, but it's popularity has since grown tremendously. Crocs operates 84 full-priced stores, 170 kiosks, and 63 outlet stores worldwide.[3] Additionally, the company generates 62.2% of its revenues from wholesale distributors such as Nordstrom (JWN), Dick's Sporting Goods (DKS), Sports Authority, and Dillard's (DDS).[4]


Footwear (95.3% of net sales): Crocs footwear products are divided into four categories:

  • Core: consists mainly of the Crocs Classic designs.
  • Active: composed of footwear intended for healthy living. It includes sport-inspired products that offer active end uses like boating, walking, and hiking as well as for recovery after workouts.
  • Casual: includes sporty and relaxed design.
  • Style: are stylish products which are intended to broaden the wearing occasion for Crocs lovers.

Other (4.7% of net sales): This includes complementary accessories and apparel for men, women and children.

Operating Segments[6]

The company divides its sales into three geographical segments:

  • Americas (46.1% of net sales) - this segment used to generate nearly all of the company's sales before it reduced it's North American business due to weakening demand.
  • Asia (36.8% of net sales) - 41.7% of the company's Asia sales were generated in Japan.
  • Europe (16.6% of net sales) - includes sales in London, Hamburg, and Turku.

Business Growth

FY 2009 (ended December 31, 2009)[2]

  • Net sales fell 10.5% to $646 million due to decreases in demand in North America and Europe. Wholesale channel revenues decreased 26.7% as well.
  • The company reported a net loss of $42 million an improvement over the $188 million loss in 2008.
  • Shoe sales increased to 36.8 million pairs in 2009 compared to 35.3 million pairs in the prior year.
  • Crocs Classic model represented just 16% of net sales, down from 25% last

Trends and Forces

Sluggish Economy Worsens Stagnating Consumer Demand for Crocs' Products

In a sluggish economy, consumers become are price conscious and spend less money on discretionary goods. This is bad news for shoe makes like Crocs because when people are spending less money, the demand for shoes fall because instead of buying a new pair of shoes, they will wear their existing ones for a little longer. The weakening demand for shoes means negative implications for Crocs' bottom line. Crocs has already felt the effects as it's net sales have dropped almost a quarter since the start of the economic downturn.

International Expansion Bolsters Crocs' Bottom Line

International sales account for more than half of Croc' revenue, a number that has been growing steadily over the years. This decline in North American revenues can be attributed to the bleak economic conditions in the United States coupled with the challenges Crocs faces in merchandising of their expanded product lines, the maturity of their core products in the consumer market and lessening demand for their products. Crocs also faced dismal performance in the European markets. This decrease in revenue can be traced to certain European countries, particularly in those which represent a more mature market for Crocs' products. The existence of imitation products that also contribute to a fall in sales. The company is making generating more growth in the Asian market, which is attributable to higher unit sales from increasing direct sales channels in China and expanded available product offerings. Crocs hopes that strengthening demand from Asian markets will be able to bolster the severe demand contractions in the more mature North American and European markets. However, the sluggish world economy and the emergence of high quality imitation goods is a increasingly threatening sales in this region.

High Profile Legal Proceedings Hurt Crocs' Reputation and Decreases Bottom Line

Crocs has been embroiled in several high-profile lawsuits over the last few years. Crocs' reputation was dealt blows when a series of lawsuits were filed against Crocs for injuries to the wearer (mostly young children) due to the shoe getting caught in moving escalators. One of the main plaintiffs won $7 million in a lawsuit against the company.[7] There were also other reports that Crocs shoes potentially generated an excessive amount of static electricity and were banned from areas with sensitive equipment. Lawsuits and rumors like this hurt the company's reputation and could sway people into buying a different brand of shoe.

Diversification And Improvement In 2010

In 2009, the board replaced CEO Ronald Snyder who presided over the boom and bust of Crocs with corporate turnaround expert John H. Duerden. Snyder, though, did not go away empty-handed. According to the Colorado company’s proxy, the 53-year-old was paid a $3.03 million “retirement package” Deurden, whose retirement at age 68 seems more plausible, was paid $2.23 million. His service ended in March when Chief Operating Officer Joel McCarvel took the job. Crocs now seems to be heading in the right direction.

Shares are up more than 142 percent this year as investors bet that a public weary of spending their days pounding the pavement looking for work would want to invest in the comfortable shoes. Crocs smartly decided to diversify its product line including its recent addition of modestly priced back-to-school shoes.

Second quarter 2010 net income was $32.3 million, or 37 cents per share, reversing a loss a year ago. Revenue in the second quarter increased 15% year-over-year . Operating Margin Improves to 16.9% Selling, General, & Administrative expenses decreased 25.8% to $93.2 million or 40.9% of sales. The Company’s cash and cash equivalents as of June 30, 2010 increased 25% to $96.9 million. It had no bank debt as of June 30, 2010.[8]


Crocs' main competitors include most mainstream athletic wear companies. The largest four include:

  • Nike is the largest seller of athletic footwear and apparel worldwide by sales. The company specializes in the development and sale of athletic footwear, apparel and equipment.
  • Timberland designs, develops, markets and distributes, premium quality footwear, apparel and accessories products for the outdoors, with added focus on hiking and trekking activities.
  • Deckers Outdoor seeks to offer footwear that is distinctive and appeals broadly to men, women and children. Its products are sold through domestic retailers, international distributors, and directly to end-user consumers through its websites and catalogs. The company's products are sold under Teva, Simple, and UGG brand names. Teva is primarily an outdoor sandal, Simple is primarily casual footwear (clogs, sneakers, and sandals) and UGG is the trendy sheepskin boot.
  • Columbia Sportswear Company designs and manufactures outdoor apparel, including sportswear, footwear, and related accessories. In addition to its namesake brand, the company owns the Mountain Hardwear, Pacific Trail, Sorel, and Montrail labels. Columbia distributes these products to approximately 14,000 retailers in about 100 countries.


  1. CROX 2009 10-K "Revenues" pg. 40
  2. 2.0 2.1 CROX 2009 10-K "Selected Financial Data" pg. 35
  3. CROX 2009 10-K "Retail Sales" pg. 8
  4. CROX 2009 10-K "Wholesale and Distributor Sales" pg. 7
  5. CROX 2009 10-K "Product Overview" pg. 4
  6. CROX 2009 10-K "Operating Segments" pg. 6
  7. Atlanta Journal Constitution "CROCS lawsuit in escalator accident settled" 25 September 2009
  8. http://247wallst.com/2010/08/09/crocs-defies-the-naysayers/
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