When you think Crocs, you think ugly, comfy plastic clogs. But since its stock (and cool factor) tanked back in 2008, the company has been trying to reinvent itself as a bona fide footwear manufacturer, not just a one-hit-wonder.
Take a look at the company’s just-released third-quarter earnings report, and you’ll see that nearly one-third of Crocs’ revenues come from new products like sneakers, boots, sandals, flip-flops and even high heels. You’ll also notice that the company’s bottom line has improved—net income for the recent quarter was $25 million, up from $22.1 million last year.
But while the expanding lineup has helped slumping sales, the company is still caught between its loyal customers and reaching out to new ones. “In some cases their styles look too much like their predecessor [the original clogs], and in some cases they don’t look enough like their predecessor,” says Marshal Cohen, who tracks the footwear and apparel industries for NPD Group, a New York-based market research firm.
When it went public four years ago, Crocs offered just nine models of shoes. Sure, critics called the shoes “hideous” (Cohen calls them the bulldog of footwear—so ugly they’re cute), but that didn’t stop them from selling like hotcakes. Everyone was wearing Crocs—grandmas, teens, even two-year-olds. In the fall of 2007, Crocs’ stock hit an all-time high of $75.21. But soon after, the novelty wore off. By November 2008, Crocs’ stock price had tanked to just 79 cents a share. By the end of the year, the company had lost a whopping $185.1 million.
That’s why, about a year ago, the company called its top executives in for a strategy meeting. “We went through the different kinds of corporations—sales driven, operations driven, etc.,” says Dale Bathum, Crocs’ VP of product. “We decided that we are a product driven company.”
Bathum’s department was given more resources. Today, Crocs sells over 250 different models of shoes -- such a breathtaking expansion that Steve Jobs' advice to Nike may apply here. It recently came out with a line of toning footwear. Bathum says many more designs are in the pipeline, including a collection of translucent shoes. Crocs is also taking its products abroad—it’s made a big push in countries like China and India (because there’s nothing a growing middle class craves more than comfy shoes).
But can Crocs successfully expand without diluting its iconic brand? “When you first saw them you went, ‘what the heck is that?’” NPD Group’s Cohen says of the original Crocs. “It was one of the few brands that really resonated with consumers for coming out with something that’s really new and innovative—you could liken it to Apple.” Not any more.
Despite its best efforts, Crocs is still known as a one-trick pony. And that reputation is unlikely to change anytime soon, unless Crocs can dig another truly iconic product out of its giant bag of tricks—the kind of head-turning, comfy shoes the company knows how to make.
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