Crocs Inc. said fourth-quarter revenue's will be at the high end of prior guidance of $200 to $205 million. It also indicated it will reach its goal of having full-year sales exceed $1 billion for the first time in the company's history.
At the ICR Xchange investor conference last week, John McCarvel, president and CEO, heralded how Crocs is one of the few global brand able to exceed $1 billion in revenues in less than 10 years. It celebrates its 10-year anniversary in 2012.
He said reaching the milestone “really builds the confidence in us, because we see how consumer behaviors react to the products that we have designed, developed and marketed and it really gives us the confidence as we go forward that this is a platform that we can build on.”
Part of the success reflects growth internationally, with 65 percent of revenues now coming outside the U.S. Particular strength is coming recently in the Middle East region, Russia and Brazil. In the U.S., Crocs is planning on adding more doors and extending styles with key partners like DSW and Famous Footwear. Men’s and kids are particularly finding success with the Cove model.
On the retail front, it plans to add 80 to 100 stores globally this year. The Internet is contributing $90 million in annual sales in four years in operation.
Also supporting the growth has been extension of the line to over 325 styles, including SMUs with key partners. The wider SKU also enables the brand to better differentiate assortments in the marketplace.
McCarvel said clog product accounted for 48.7 percent of its revenues in 2011, down 5 percent year-over-year as Crocs expands styles to become more of a lifestyle brand. Newer items include sneakers, casual slip-on slides, flip-flops, women's wedges and flats. A particular success has been its translucent collection introduced in 2011. With items such as winter boots and rain boots, the company is also increasingly able to offer fall/winter options to stores and boots will gain a heavy emphasis in 2012. A golf line tied to Hank Haney, an American professional golf instructor best known for coaching Tiger Woods and two-time major championship winner Mark O'Meara, is being launched at the PGA Show and will be in stores this spring.
McCarvel said Crocs has been able to sustain mid-50 percent gross margins with the aid of a strong direct-to-consumer business. Overall, he said about 10 percent of Croc's overall growth is expected to come from unit expansion and about 16 percent will come from ASP expansion. McCarvel said while Crocs is keeping its classic clogs at its “heritage” price points of $25 for kids and $40 for adults, the newer categories it enters enables the brand to reach higher price points.