How Crocs Rebounded From Its Near Death Experience
In 2008, footwear-maker Crocs (CROX) was facing a life or death situation. The Boulder, Colo., company best known for its colorful and lightweight rubber clogs watched as its popularity sank and its inventory piled up on store shelves.
Sales started to plummet, forcing the company to cut thousands of jobs. The company was on the verge of bankruptcy and Wall Street declared that the company was another victim of the 2008 recession and the fickle fashion world.
Two years later, Crocs has opened hundreds of new stores, expanded its business overseas and reported sales of $1 billion worldwide in 2011 for the first time.
The clog that made Crocs a household name now comes in every color and size, with fleece insoles or leather trim, and some even change color when exposed to sunlight. Ten years after the company first introduced its classic clog to consumers, the company's products can be found in every major metropolitan city around the world. Consumers can choose from 250 styles of Croc shoes that range from its foam clogs to sandals, flip flops, Mary Janes, sneakers, boots and loafers.
Crocs CFO Jeff Lasher, who personally owns more than 50 pairs of the company's shoes, joined The Daily Ticker's Aaron Task at the company's SoHo store in New York City to discuss how the company revived its moribund business and is reinventing itself to consumers and fashionistas.
Lasher says the company's market share has been expanding domestically but expects Asia to become its biggest market in 2013. The U.S. accounted for $350 million, or 35 percent, of last year's $1 billion in sales.
"We have a $150 million business in Japan, a $170 million business in Europe. So it's a global business," Lasher says.
The company has started changing the way consumers can buy its shoes. The Crocs kiosks found in many shopping malls are being phased out as the company concentrates on building individual retail stores. Crocs executives have also begun moving some production from China to Vietnam, partly because of the rising labor costs in China. Lasher points out that the company has a "large employment base here in the United States" and has been adding sales and finance positions over the past year.
Celebs Wearing Crocs
Kids shoes make up 25 percent of Crocs' sales but its new styles are gaining traction with adults, and not just doctors and chefs.
"It is an all-gender, all profession shoe," Lasher says. "We're happy with the product diversification outside the children's market."
Meanwhile, celebrities including Brad Pitt, Rihanna, Tom Brady, Paul Rudd, Ryan Reynolds, Mario Batali and Halle Barry have been spotted sporting Crocs in public lately. The company's shoes have been used on the TV show "Modern Family" and comedian Sasha Baron Cohen was seen wearing them on the set of his new movie "The Dictator."
Crocs-wearing celebs may get all the attention, but the company also wants its customers to know it has donated three million pairs of shoes to communities struck by natural disasters over the past few years. This week Crocs sent trucks loaded with shoes to Indiana citizens affected by severe storms and tornadoes. The company donated 100,000 shoes to Japan after last year's devastating earthquake and tsunami and partnered with UNICEF to give away 30,000 shoes to children in Haiti following the 2010 earthquake in Port-au-Prince.
