Surprise Hits: Recession takes a bite out of Crocs
Filed under: Company News, Columns, Economy
What's adored by corpulento Italian chefs, despised by snarky fashionistas, and made of the same stuff that gives plastic wrap its maddening cling? That the answer is obvious is a testament to the surprising success enjoyed by Crocs Inc.'s (CROX) signature foam-rubber clogs.
The squishy shoes' rise to ubiquity helped Crocs boost sales from $109 million in 2005 to $847 million in 2007, when shoppers snapped up 46.9 million pairs. But both the company's fortunes and the shoes' popularity have slipped, leaving analysts, investors, and fans wondering if Crocs can pull off another surprise and thrive again.
As the recession deepened, Crocs sales have suffered along with its stock price, and few analysts were surprised when the company said revenue fell sharply in first quarter compared with a year ago.
Crocs's rise may have been unexpected, but its reversal of fortunes was not. As it turns out, brightly colored foam shoes neatly epitomize "discretionary spending." Now the company's auditors say bankruptcy is a real danger.
Yet someone must have bought the 8.2 million pairs of clogs, flip-flops, and hiking sandals that Crocs says it sold in the first three months of this year. And so the debate over their stylistic merits rages. Celebrities like Mario Batali, Jack Nicholson, Faith Hill, and Al Pacino are reportedly fans. And don't forget about the health benefits: Doctors say Crocs can help diabetics avoid foot injuries.
Even so, they're a sartorial lightning rod. (Indeed, some hospitals have sought to ban them on the grounds that "they act as 'isolators,' enabling enough static electricity to be generated to knock out medical equipment," according to Canadian newsweekly Maclean's.) Among Crocs' notable critics is late-night host Bill Maher, who beseeched viewers to "stop wearing rubber shoes."
Humorist Dave Barry's evidently not a fan, either. At his blog on The Miami Herald's website, a poll asking readers how they'd spend government stimulus money included among the possible responses: "This is really off-topic, but I don't think adults should wear Crocs."
Whether they keep doing so will determine if Crocs can surprise again.
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Reader Comments (Page 1 of 1)
6-26-2009 @ 11:23AM
Ron Ballard said...
Croc's are funny looking ugly things called shoes. Funny fat people love them and people with bad feet love them. They look best on big fat ass women. Americans have gone crazy in the past few years. American women have always been half nuts. Spike heels etc.
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6-26-2009 @ 10:04AM
Kat said...
I have knee and foot issues. Crocs (Melinde style) fit me and I wear them with casual, with dress, with everything. They are so comfortable and good for my knees and feet. Idiots who say "adults" shouldn't wear them, are ones who've never had the need for that extra cushion. Thank you, Crocs, for a quality product, and please, please keep making the Melindi style (may have not spelled correctly, but close). Th e"knock off" versions are useless; only the real Crocs will do. My only suggestion for improvement would be to have them in more colors. Bless you, for an excellent product.
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6-26-2009 @ 10:28AM
Victoria said...
I agree. I love my Crocs.....
As for the person who says that only fat people wear Crocs..are you calling Faith Hill fat since she is a big Croc fan?
You can always tell a person is illiterate by the way they talk.
6-26-2009 @ 10:28AM
Victoria said...
I used to be one of those that said I never would own a pair of the Crocs, but that has changed. I read several testimonies from people who have a pair ..or two of Crocs and raved about how great they feel on their feet. I decided to get a pair and since then have bought another pair. They are the most comfortable shoes that I own. My daughter made fun of mine until she wore a pair of mine one day and had to have a pair herself. We are now big Croc fans. Hope the company stays in business for years to come.
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6-28-2009 @ 6:30PM
Chris said...
The foam shoes - and I only me a quality product, and not a cheap Chinese copy - is the greatest invention in the shoe industry for years. They might not win a price as "best desig", but they are comfortable and good for your feet.
But...... one must know that Crocs is not the original - it is Waldies ( US), which definitively makes teh better shoe and has alos a beter design ( see their ARUBA model - www.waldies.net )
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6-29-2009 @ 12:19PM
Iridium said...
Crocs are asian shower sandals with an ankle strap. They cost less than a dollar per pair to make and ship to the US. $10 retail is actually too much to pay. Eight years ago we tried to sell these things in the market and nobody wanted them. We were just too early for the craze. Our price was $.65 a pair landed from a factory in Taiwan. Crocs decided to make shoes in Mexico so their price could have been less.
Enough idiots believed that these things were worth $30 a pair and went on to create a Crocs craze. Something that could not last. There is no difference between the Chinese Walmart knockoff and a real Crocs shoe. In a blind test you would never know the difference. No person should ever be forced to pay $30 for a pair of Crocs. The company has no ethics. They are in it for absolute profit at any expense and to ripp people off as much as possible.
People that think Crocs are better are the same people that believe a Coach handbag is worth $300. The Coach handbag is made in the same Chinese factory that makes $25 purses for Target. They even use the same materials. The only thing that makes a Coach handbag worth $300 is the fact that there are enough idiots out there that will overpay for a name.
Crocs is the biggest crock since the Pet Rock. I'm not saying they aren't comfortable or don't have a market. I'm just saying that it is extortion to charge $30 for something that costs under a dollar to make. Same thing goes for the stock brokers who drove a $200 million company to a market valuation of $5 billion. Crocs never should have traded above $5 a share, in fact the company never should have been public in the first place.
Crocs probably could have been a decent company running around $200 million in sales. Instead the owners and a few stockbrokers got greedy and decided to pull a con like they always do. There was no way Crocs could have ever generated over a billion dollars in sales. That doesn't matter though when you are a publicly traded company. All that matters is the perception of profit.
Crocs is a lesson to show that the stock market has lost all relevance and needs to be terminated for the good of the world.
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6-29-2009 @ 2:43PM
MeOfLittleFaith said...
Crocs are hideous. Period. And to the Kat, the idiot who wears them "with casual, with dress, with everything," you should have your a_ _ beat. They shouldn't be worn anywhere outside a fat red head cook's kitchen on TV or by a gardener in The Hamptons.
You are Crocophiles are f_ _king retarded.
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