Crocs’ billion dollar strategy: Stay ugly, stay popular
Crocs, perhaps the most polarizing shoe of our time, is making a comeback.
The company’s signature foam clog fell out of favour a decade ago, but now it is a star reborn on Twitter and beyond: On the runway, in the pages of Vogue and on feet of people who feel a little funny about it but can no longer resist.
The turnaround is no accident, analysts say, but rather the result of four years of strategic changes, following a $200-million investment by private-equity giant Blackstone Group in 2013. Since then, Crocs has closed hundreds of under performing stores, done away with unpopular styles and shifted its focus back to its classic foam clog, which sells for about $35 and accounts for nearly half of the company’s sales.
“The classic clog has reemerged as our hero,” said Terence Reilly, chief marketing officer of Crocs.
Annual sales have exceeded $1 billion for six consecutive years, and profits rose 54 per cent in the most recent quarter. Analysts say there are signs that the company is reaching new customers again. During back-to-school season, Crocs stores had a 12 per cent increase in foot traffic, marking the largest jump among national retailers, according to inMarket, a California-based firm that collected data from 50 million customers to come up with the results.
“Crocs is starting to turn itself around, even in these very difficult times,” said Steven Marotta, an analyst for CL King & Associates. “This is a company that has successfully gone back to the basics.”
“New colours and prints are selling well,” new chief executive Andrew Rees said in an earnings call last month. “We’re striking the right balance of comfort and style, and consumers are responding favourably.”
But that doesn’t mean it’s been an easy slog for Crocs, which despite selling more than 300 million pairs of shoes to date, has weathered its share of hard times.
In March, the company announced it would close 160 stores and bring on a new chief executive after posting a $44.5 million fourth-quarter loss.
Crocs, founded 15 years ago in Niwot, Colo., originally marketed its signature clog as a boating shoe.
The company found fast success in the early 2000s. Among its customers: Former president George W. Bush, actor Al Pacino and former model Brooke Shields.
But by 2008, Crocs had hit hard times. The country was in recession, and sales plunged. The company lost $185.1 million that year, and laid off roughly 2,000 workers.
But, it seems, Crocs have come back from the dead.
Company executives recently began noticing that people were buying a dozen pairs of clogs at a time, all in the same colour. It turned out, they said, that high school and college sporting teams were buying them to wear before and after competitions. Many of those students had worn Crocs as children, and were now rediscovering them.