Just when fashionistas thought they no longer had to contend with the likes of fugly footwear, Crocs (CROX) are back. To profitability in a big way, that is. But the Colorado manufacturer of those bulbous bright resin (don't call 'em rubber) clogs riddled with holes never really went away. And with this latest return to double digit growth, Crocs management offers a quick study in how to turn fad into a phenom -- and keep it going.
Revenue for the first quarter of 2010 increased 23.7 percent to $166.9 million compared to revenue of $134.9 million last year. What's more impressive is that Crocs is emerging from the recession with no bank debt -- a feat that represents a fairly rapid, yet hard won victory over a gnarly credit situation that clocked in at over $22 million at the end of 2008.
It's kind of extraordinary for what began as a niche product (think non-slip soles perfect for boaters) made with a proprietary material called Croslite, in 2002. But through a series of savvy marketing moves that positioned the company as eco-friendly (vegan shoes!) and put the funny looking shoes on the feet of stylish celebrities (and their kids), Crocs' popularity skyrocketed in short order. Sales for the first half of 2006 soared to $130.5 million, a 256 percent jump over the prior year.
Capitalizing on the spotlight, Crocs inked a series of strategic licensing deals with the likes of Disney (DIS) and NASCAR and acquired Jibbitz, the company that manufactured those irresistible (to the scooter set anyway) charms that plugged into the clogs' aeration system to create custom collages.
During this time, Crocs designers began creating side lines (think slimmer, with heels!) to combat the contention that while comfy, the shoes were an insult to the finer sensibilities of the chic. Combined with a push into the global marketplace and its attendant expansion costs and things started to go south at a serious clip.
With company debt escalating in 2008, Croc execs took an aggressive stance which tightened the manufacturing base, consolidated distribution and warehousing, and cut staff worldwide. But Crocs never stopped pushing the product that put it on the map. It spun a collection dubbed the Rx Line which bears such soothing monikers as Croc Relief and Croc Cloud â€"- perfectly touting the health benefits of that marshmallow puff of a footbed. The company promptly snagged the endorsement of clinicians treating those with diabetes and back problems.
Now that the company's back to health, it would do well to continue to operate as lean and green as it has over the past 18 months while keeping retail prices under $50. Expanding the men's offerings further should help; Crocs has stepped in a smart direction with men's flip flops (some customized with college team logos) and the more formal "Santa Cruz" style which practically begs the attention of doctors on rounds. And it wouldn't hurt to capture a little more cachet from other high-profile Croc lovers (i.e., think beyond chef Mario Batali).