Crocs, the well-known colorful shoe, had a record-breaking year in 2021, with the company reporting an annual revenue of $2.3 billion, which represents an increase of over 60% from the previous year. Its stock also reached a record high. Crocs has been actively collaborating and releasing new products in recent years to increase its visibility and attract a wider audience. However, its success during the pandemic has led some to attribute its popularity to the timing, and the stock price has decreased since the pandemic boom has subsided.
Crocs was founded in 2002 and debuted its classic clog that same year. The company was inspired by the versatility of crocodiles, which can live on land and in water. When Crocs first hit the market, they were targeted towards consumers who were looking for a functional shoe, such as gardeners, boat workers, and kitchen workers who are on their feet all day.
The material used in Crocs, a proprietary closed-cell resin called Croslite, is slip-resistant, lightweight, and easy to clean, making them highly functional. The production process for molded shoes is simpler than for sneakers, and Crocs has a clear advantage over the market because of their scale and production capabilities. In conclusion, Crocs has made a name for itself as one of fashion’s most divisive shoes through its functionality, versatility, and production capabilities.
The rise and the resilient nature of Crocs
Crocs shoes took the world by storm when they first hit the market in 2005. In just the first three-quarters of that year, the company sold 4.4 million shoes, generating $75 million in revenue. One of the key factors contributing to its early success was the availability of the shoes in a variety of retail stores, gift shops, and mall kiosks. The following year, Crocs acquired Jibbitz, a company that made plastic shoe charms, and went public, becoming the largest-ever footwear IPO in the US.
However, the company’s success was short-lived, and by 2008, the financial crisis hit Crocs hard, resulting in a net income loss of $185 million. Despite this setback, the brand managed to maintain a significant customer base due to its global presence. In 2014, Crocs made significant changes to its business model, closing stores, shifting away from malls, and turning to online sellers like Amazon.
Fast forward to 2020, and the global pandemic has once again impacted the company’s success. Before people started working from home and prioritizing comfort, there was already a growing trend of comfort-focused footwear. With the pandemic, this trend only accelerated, leading to an increase in sales for Crocs.
Crocs, the iconic and polarizing shoe brand, has experienced significant success over the years. The comfort aspect of the shoes has been widely credited as the key factor for this success. However, another crucial element is the ability to customize the shoes with Jibbitz. These small, decorative charms are easily interchangeable, allowing customers to express their individuality and personal style.
Crocs has embraced this aspect of individuality and self-expression in their marketing campaigns and social media presence. The unique design of the shoes has sparked controversy and debate, but the brand has capitalized on this polarization by partnering with celebrities and well-known brands to create limited edition versions of their classic clog.
The world of fashion has also shifted over the past decade, with people increasingly designing for Instagram. Brands aim to capture the attention of scrolling users with eye-catching designs, and Crocs is no exception. By partnering with popular figures and brands, the brand has been able to create limited edition versions of the clog that are truly unique and eye-catching.
The driving market demand of crocs and its collaborations
Crocs, the footwear brand that made its mark with its iconic clogs, has been making waves in the fashion industry with its collaborations and license programs. In 2018, the company’s Balenciaga clog, a $850 four-inch platform shoe, sold out within hours. This success was followed by partnerships with over two dozen brands, artists, and creators, who have helped to keep Crocs in the spotlight.
One of the keys to Crocs’ success has been its ability to cater to a wide range of customers. From Jibbitz to completely revamping the classic clog, the company has been able to appeal to a diverse group of customers. This has led to the rise of Croc collectors, who go after every new model released by the brand. These collector’s items are now reselling on websites like Stock and eBay, much like Nikes.
However, with the end of the pandemic, some people are starting to move away from comfortable shoes and towards more traditionalist footwear. Despite this, many people are still prioritizing comfort, as evidenced by the growth of doughy running sneakers and slides as a huge business in the luxury market.
Since reaching its high in November 2021, the stock has dropped by around 60%. This could be due to the market’s uncertainty about the short-term, particularly with supply constraints in the first quarter.
Despite this, Crocs remains optimistic. The company attributes its fourth consecutive year of revenue growth to continued global demand. They even project that their revenue will reach over $5 billion by 2026. While this is impressive, I do have my concerns about the company’s future growth but there is a limit to how many consumers can be convinced to buy Crocs.