Crocs are cool ... Yes, re­ally

A fash­ion for the colour­ful plas­tic clogs is a good rea­son to buy shares in the firm that sells them

The Peterborough Examiner - - Business - JACKY WONG

You don’t need to like the look of Crocs to find the Colorado-based com­pany that sells them an at­trac­tive in­vest­ment.

Ever since they first came out more than a decade ago, the iconic plas­tic clogs have di­vided opin­ion. They are like “cargo shorts for the feet,” in the words of WSJ sports colum­nist Ja­son Gay. What­ever your view of their ap­pear­ance, how­ever, Crocs are in vogue: More peo­ple are search­ing for them and they are among the best-sell­ing shoes on Ama­zon.

Ugly seems to be the new cool: Teenagers are among Crocs’ big­gest fans. So­cial-me­dia in­flu­encers and celebri­ties are wear­ing them. Clips on Chi­nese short-video app Tik­Tok with peo­ple putting their feet into Crocs filled with shav­ing cream went vi­ral. Lim­ited-edi­tion Crocs de­signed by rap­per Post Malone and coun­try mu­si­cian Luke Combs both sold out in­stantly. The com­pany has been try­ing hard to make its shoes ap­peal to a broad au­di­ence. It has part­nered with streetwear brands like Alife and Chi­na­town Mar­kets, but also high-end de­sign­ers like Vivi­enne Tam and Christo­pher Kane.

After a near-death ex­pe­ri­ence fol­low­ing the fi­nan­cial cri­sis due to over­ex­pan­sion, the com­pany has staged a come­back by down­siz­ing, in­clud­ing out­sourc­ing its man­u­fac­tur­ing. It closed its last fac­tory last year. E-com­merce is the new growth spot: Rev­enue from on­line sales has grown at 15% a year on av­er­age since 2014.

Crocs in­creased its earn­ings fore­cast for 2019 ear­lier this month after beat­ing es­ti­mates for last quar­ter. The com­pany now ex­pects a full-year ad­justed op­er­at­ing mar­gin above 10%, com­pared with 7.8% last year. It has also moved part of its sup­ply chain out of China to pre­pare for the trade war. If ev­ery­thing goes to plan, next year less than 10% of its prod­ucts sold in the U.S.—its largest mar­ket, con­tribut­ing around 40% of rev­enue—will be sourced from China.

Even after a strong run last year, the shares aren’t ex­pen­sive, fetch­ing an un­de­mand­ing 15 times for­ward earn­ings. As more peo­ple buy Crocs, more peo­ple should buy the stocks too.

SARAH LAW TORSTAR FILE PHOTO

Ever since they first came out a decade ago, Crocs have di­vided opin­ion. But what­ever your view, the plas­tic clogs are among the best-sell­ing shoes on Ama­zon, with teens among its big­gest fans.

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