Update February 23 @6:40 p.m.: Salehe Bembury is no longer affiliated with Versace as originally stated.
Crocs, the shoe of choice for medical professionals, restaurant workers and others who spend all day on their feet, has stepped from its humble working-class origins to the exalted echelons of high fashion.
Crocs just joined Saint Laurent, Prada, Bottega Veneta, Loewe and Mui Mui as one of the top ten most coveted luxury products in Lyst Index’s most recent quarterly report.
Since 2017, the Lyst Index has provided quarterly updates about which luxury brands and products are hot and which are not. It is based on data from more than 200 million customers that use its shopping app and augmented with data from off-platform searches, product views, brand sales and social media engagements worldwide.
Crocs Pollex clog designed by American shoe designer Salehe Bembury earned its place in Lyst’s top ten. Bembury is currently an independent designer after parting ways with Versace where he worked as vice president of sneakers and men’s footwear.
Bembury, like other designers before him, found Crocs molded-foam resin the perfect blank canvas to express his distinctive fingerprint designs. Upon its launch, the limited-edition clog collaboration with Bembury was among the company’s fastest sell-through issues ever, with units selling out within 35 seconds. And the company has a new Salehe Bembury slide collaboration in the works.
“We were incredibly proud to see our Crocs x Salehe Bembury clog earn a spot on the Lyst Top 10 Hottest Products list in 2022,” said CEO Andrew Rees. “Collaborations are a key part of our lineup as they allow us to reach new customers who might not otherwise consider our brand.”
More Collaborations Ahead
Collaborations are an important driver for the company’s growth and inspire new product innovation.
“Looking ahead, newness within our core product lines and across our partnerships will continue to play a critical role for our brand as we look to maintain high consumer demand and deliver strong revenue growth,” he continued, adding that the company has a pipeline of over 60 global brand, celebrity and licensed partnerships.
Collaborations have been in the company’s mix since 2017, including pairings with Balenciaga, Carrots, Chinatown Market, Liberty London, Palace, Vivienne Tam, Christopher Kane, Takashi Murakami, Justin Beiber, Luke Combs, Jimmy Kimmel, Bad Bunny, Vivienne Tam, Post Malone and many more.
Casual Comfort Is King
Ever since the pandemic, Crocs has been enjoying its place in the sun, with the Crocs brand reaching $2.7 billion in sales last year, up 15% year-over-year. During 2022, the company also acquired casual footwear brand HeyDude expanding its profile into sneakers and bringing total company sales to $3.6 billion.
All told, it sold 115.6 million pairs of Crocs shoes worldwide – nearly four pairs per second – increasing from 103 million pairs in 2021. And another 30.5 million Heydude brand shoes moved last year too.
Today Crocs operates 373 total company-owned stores – 173 in North America, 153 in Asia-Pacific and 47 in Europe and elsewhere. Plus the company operates several e-commerce sites and sells through third-party platforms and thousands of independent retailers. DTC sales accounted for 45% of total revenues in 2022.
One Step Back, Two Forward
Crocs was launched originally as a slip-resistant boat shoe in 2002 – Crocs debuted at the St. Lauderdale Boat Show that year. After a quick takeoff, the company went public in 2006, then slipped and fell during the recession. It lost over $200 million, dropping from its high of $847 million in 2007 to $645 million in 2009 when its stock traded around $1.
Through 2013, the company was bogged down by a fleet of 600+ stores and a product line that had grown into clothing and boots outside its core competencies. All the while, it let its iconic clog slide.
Then its fortunes started to turn with the arrival of Rees as president in 2014 and promoted to CEO in 2017. He previously held positions with L.E.K. Consulting, where he consulted on the Crocs account, and with Reebok and Laura Ashley.
Rees refocused attention on the flagship clog style, cut the store fleet and launched collaborations. And since 2018, Crocs has enjoyed a five-year run of double-digit revenue growth.
After releasing its 2022 annual report last week, its stock reached a one-year high of over $130, as it reported adjusted income from operations up 42% to $986 million, adjusted operating margin of 27.7% and adjusted diluted earnings per share up 31% to just under $11.
Something For Everybody, Everywhere
Nobody wearing Crocs goes unnoticed because of its distinctive style silhouette and funky colors. And with its promise of ultimate comfort, slip-resistance, affordable price and sizes stretching from kids to men’s size 17, Crocs has something for everyone.
“We’re a very democratic brand,” Rees shared. “Price-wise, $50 is our sweet spot, though we have shoes for less and more. We serve everyone in the family. Men buy them, women buy them, and kids buy them. Everyone can afford them, yet even wealthy people buy them. We have a very broad customer base.”
Currently, nearly 80% of sales are generated by the iconic clog design, but the company is eyeing sandals as its next big platform. Today sandals account for 12% of sales, but the company sees a total addressable market of $30 million to expand into with slides, two-strap and flip-style sandals.
The company reports it already has a $310 million sandal business and sees a long runway in the adjacent category for consumers who aren’t drawn to the clog style. “We believe our molded technologies, accessible price points and strong go-to-market strategies will allow us to compete effectively in this relatively fragmented market,” he added.
And the brand’s appeal in its home U.S. market has given it a stepping stone to consumers worldwide. It currently has an estimated penetration in international markets of about one-third that of the U.S., but it is growing rapidly overseas, tracking eight consecutive quarters of double-digit growth outside of North America.
Asia-Pacific and EMEA regions account for about 20% of revenues each, but China remains a nascent market representing only about 5% of sales.
“The Chinese market is the second biggest market in the world and has a rising middle-class,” Rees shared. “When the middle-class rises in a developing market, purchasing high-quality footwear is a priority. China has huge potential for us, especially as consumers there are interested in brands.”
Stepping Out In Personalized Style
Just as Crocs are a blank canvas for designers and brands to customize, every customer gets the opportunity to personalize their shoes with Jibbitz charms. Made for customizing and collecting, every Croc comes with 13 holes designed originally for air circulation but used more today for customers to display their passions with every step they take.
Sold in sets or individually, there is one or many Jibbitzs for all interests, and they can be swapped on or off easily, so an owner can step out in virtually a new pair of shoes every day.
“Jibbitz dramatically changes customers’ emotional engagement with the brand. The Jibbitz bars in our store bring a lot of excitement for people shopping there. People can create something that is truly unique,” Rees continued.
Last year Jibbitz, at around $5 a pop, accounted for 8% of revenues and grew 27% year-over-year.
Universal Appeal
It’s said that people either love Crocs or hate them, but the company is giving people more reason to love them. It is one of those rare fashion brands that really has something for everyone.
“Crocs have comfort, combined with style. It’s on trend and right for a whole variety of wearing occasions. You can personalize them, and they are a great value. The key is how these elements are blended together,” Rees concluded.
“We believe in making everyone comfortable in their shoes because when you’re comfortable, you can do anything.”
