Crocs snaps back with hot new styles and sales of $800m

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  • Posted on April 9, 2011

    Crocs is opening its own network of stores, including this one in central London. Photograph: Alamy

    At the height of “Crocs-mania” everybody was at it. Flick through the pages of a magazine or look over your garden fence and the cartoony plastic clogs were hard to miss. From Hollywood to Holyhead, Crocs was hitting its stride in 2007 just as the world was spinning towards financial oblivion. A-list “Crocphiles” included Al Pacino and Jack Nicholson; even George W Bush was snapped wearing a pair.

    Perhaps that was an omen. The subsequent collapse in demand nearly scuppered the young company, whose buoyant footwear was designed with sailors in mind. “We had people calling to say they wanted to return a million pairs,” chief executive John McCarvel tells the Observer. He describes the period as being in the “Bermuda Triangle” of the recession, with panicking US retailers who not only had too much stock but had suddenly gone off the product.

    What happened to the plastic Croc mountain? “We dug a big hole,” jokes McCarvel, a laid-back figure whose looks (and jokes) are reminiscent of Chevy Chase. “That’s what all the colours you can see on the Great Wall of China from space are.”

    The Crocs idea was conceived in 2002 by a group of friends who took regular fishing trips to Miami to get away from the cold winters in Colorado, where the company is now based. In 2005 production went from a standing start to a million shoes a month, and by 2007 sales had reached $847m. But the tide went out just as fast and shares fell from $75 to less than $1. After two years of losses, the business returned to profit last year, thanks in part to the arrival of McCarvel.

    To stop history repeating itself Crocs is building its own global store network, with 100 openings planned this year including a handful in the UK. It has also slashed its workforce by more than 2,000, shutting factories in Canada and Brazil. Today Crocs has $150m in the bank and no debt – a position, McCarvel says, that is as comfortable as its shoes. His personal endorsement runs to 15 pairs but he claims his wife’s collection is north of 20. The shares stand at $18: McCarvel says they were probably “overpriced at $75 and underpriced at $0.79″.

    While fashion editors may reach for the smelling salts, McCarvel is confident that Crocs are not a fad. “We don’t use the f-word,” he says, adding that consumers have bought on average 40m pairs of Crocs a year for the past four years.

    And no one could accuse Crocs of being a “one-shoe wonder” today. Under McCarvel, Crocs has moulded its patented foam resin, “Croslite”, into over 200 different styles, including flip-flops, “Crocassins”, high heels, and now trainers that he claims are one-sixth of the weight of a pair of Converse trainers. “People say ‘I hardly see your shoes any more,'” continues McCarvel. “I say ‘That’s amazing – I see them all the time.'”

    Crocs’ latest products include a kids’ translucent range that changes colour in the sun, as well as Tone shoes, which claim to exercise your muscles. Similar designs, which often have thick soles, make Crocs’ versions look as dainty as a pair of Jimmy Choos. “I’m happy to say that for once no one can accuse us of being the ugliest shoe on the market,” McCarvel says.

    The Crocs boffins are working on the next generation of shoes, due later this year, made from “Croslite 2″. It claims this foam resin will be even more hard-wearing, a feature analysts think will appeal to families with young children. “Like Lego, our shoes are almost indestructible,” says McCarvel.

    Will his company be equally as resilient? “We are a six-and-a-half-year-old company that will do sales of more than $800m this year. That makes us comfortable. It means there is a consumer out there for us.”

    In 2007, Crocs’ original clog made up a third of sales but that has dropped to between 15% and 18%. McCarvel says that in a bid to shed its clumpy image, the company is going to stop splitting out sales figures for that product. “It’s about getting people to understand that we are more than a clog,” he says.

    The Guardian | Londres/AC

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