At Baird’s 2021 Global Consumer, Technology & Services Conference, Andrew Rees, CEO, Crocs, said steps to continue to increase the brand’s relevance in the marketplace and democratic positioning are expected to help the company continue to build on its recent blockbuster gains in 2021.
In the first quarter, Crocs’ sales jumped 64 percent. The company also updated its full-year guidance that calls for sales to climb between 40 percent and 50 percent, up from previous guidance between 20 percent and 25 percent. For the second quarter, revenue growth is projected to be between 60 percent and 70 percent year-over-year.
Rees said the strong recent growth seen by the business “is not just about the pandemic.” He said the brand had shown strength going into the pandemic with sales in the fourth quarter of 2019 ahead 21.8 percent and the company expecting an “incredibly strong year” in 2020.
“We’re meeting those expectations, but it’s very different from what we thought, which was mid-single-digit declines in the first half, then we had strong growth in the back half, and we accelerated back to what we think was our ongoing trajectory.”
Elaborating on Crocs’ turnaround steps, Rees said Crocs knew it had “incredible brand awareness” not only in the U.S. but in Europe and many Asian countries.
“It is similar to that of global mega brands,” said Rees. “It’s similar to an Apple; it’s similar to a Coke; it’s similar to Nike; which is incredible for a 20-year old company that has less than $2 billion of revenue historically.”
However, the problem was that Crocs lacked relevance. Rees said, “A lot of consumers didn’t think it was for them. They knew what it was, but it wasn’t for them.”
He added, “So we made it relevant, through simple things but also some really interesting things.”
Some “simple” steps included focusing back on its core clog product, making sure the “right shoes in the right colors” were being emphasized and highlighting “great graphics.” Crocs also committed to “really powerful consumer communications” across digital and social to significantly increase engagement with Crocs’ fans. Finally, numerous limited-edition collaborations in recent years “allowed us to really create a great deal of hype.”
Last week, a collaboration with Grammy-winning DJ Diplo for a psychedelic-themed collection quickly sold out.
Rees said a second underlying factor supporting Crocs’ ability to sustain its growth momentum is the democratic nature of the brand that aims to reach everyone.
He said a “very elevated product” collaboration might fetch resale prices on eBay at $900, but the brand also donates clogs to health care workers and ensures it has a basic two-strap sandal at an accessible $35 price point.
“The democratic nature of the brand allows that relevance trajectory to accelerate revenues fast because you’re reaching a broad set of consumers,” said Rees. “And you can also reach that very broad set of consumers on a global basis.”
Asked about Crocs’ announced moves during the first quarter to terminate select North American wholesale relationships, Rees said Crocs had no plans to shift to becoming a direct-to-consumer brand and selling into a blend of channels.
“We want to be direct-to-consumer in some circumstances, particularly digital, but we think our wholesale partners are incredibly important to reach that democratic consumer base…Because our base is broad and democratic, it’s really important to reach them where they want to shop.”
Rees said the wholesale consolidation actions the company had taken focused on marketplace health.
“We’re trying to make sure that we’re sold in the right places with solid partners that support the brand in the right way and can really help us grow and cherish the brand, and we’re not investing in places that we don’t think have a long term future,” said Rees. “So it’s not an exit wholesale strategy. This is to make sure that our wholesale business is really strong and vibrant.”
On Sandals, Rees said the category had regained momentum, with sales expanding 17 percent in the first quarter.
Rees noted that sandals were growing at “very high double-digits” just before the pandemic’s arrival, but the category took a hit as stores were closed and sandals receipts were canceled by the company in a cautionary measure.
The new styles introduced last year that “didn’t get prime time” are taking off this year. That includes Brooklyn Low Wedge that features an elevated height and the return of the Strappy Everyday casual sandal. Rees said, “Those new introductions are more style-focused and continue to do well.”
A second growth driver for sandals is coming out with two sandals, the Classic Slide and Classic Two Strap, that can be personalized with Crocs’ Jibbitz charms. The effort builds on the success in Jibbitz personalization with its core clog product.
Said Rees, “They’re doing extraordinarily well. That is where you see some of those stockouts, and we under-anticipated the size of the demand, and we’re reacting to that. But you know the supply chain’s not quite as nimble as it used to be. So we feel really good about the sandal trajectory.”
Photos courtesy Crocs
