Why Crocs Is ‘Even More Confident Now’ Than It Was a Year Ago
Crocs Inc. continues to implement its pandemic playbook — and it’s paying off in a big way.
Today, the clog maker reported outstanding fourth-quarter earnings and the “highest quarterly revenues in company history,” proving the resilience of the brand as it navigates a coronavirus-plagued retail environment. But even as global COVID-19 cases top 111 million and restrictions remain on nonessential businesses, CEO Andrew Rees suggested that Crocs is “even more confident now than a year ago” about the brand’s long-term growth potential.
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“The Crocs brand has never been stronger,” said Rees during a call with analysts to discuss the brand’s Q4 results. “Despite an extremely challenging environment, our company had an extraordinary year in 2020, and we expect acceleration in 2021.”
Over the past few years, Crocs has been heavily investing in key sales drivers: digital and China, as well as its so called four “product pillars” — those being its clogs, sandals, Jibbitz and Visible Comfort Technology. During the fourth quarter, its e-commerce business advanced 92%, marking the 15th consecutive quarter of double-digit online revenue gains. The Colorado-based company also noted that it is revamping its store portfolio in China, as well as “elevating” its presence on third-party platform Tmall to leverage “personalization as our unique selling proposition.”
“From a channel and region perspective, our digital-first strategy and our long-term focus on Asia, particularly China, will drive our growth for years to come,” Rees said, adding that “by the end of this year, we’ll have executed our playbook, setting ourselves up for strong growth in 2022.”
What’s more, Crocs expressed confidence in its product lineup for 2021. During 2020, the brand sold 69.1 million pairs of shoes — up 3% from 2019. It expects to introduce a new two-strap plastic sandal as well as bring new innovation to its clogs, which rose 33% year over year in sales to represent 72% of total footwear revenues and is predicted to outpace the sandal category for the year. (Sandal revenues fell by 19% as the company canceled sandal receipts due to temporary store closures that “interrupted the peak of the sandal season,” explained Rees.)
“Clogs have been growing tremendously through 2019 [and] through 2020, and we see that continuing in 2021,” Rees said. “I think that’s partly consumer receptivity to that silhouette and to the utility that silhouette allows the consumers to have. But it’s also tremendous innovation in terms of color, print, hype, etc., that we have in our product lineup.”
Overall, for the three months ended Dec. 31, Crocs saw adjusted diluted earnings per share of $1.06, versus the prior year’s earnings of 12 cents per share. Wall Street had predicted earnings of 78 cents per share. Revenues also surged 56.5% to $411.5 million, compared with analysts’ bets of $399.51 million. Its e-commerce business advanced 92%, while wholesale rose 52.2% and retail comps climbed 40.9%.
The company also released forecasts for the next fiscal period and the full year: First-quarter revenue growth is expected to be between 40% and 50%, while adjusted operating margins are anticipated to be between 17% and 18%. For 2021, it predicted revenue gains to be between 20% and 25%, with adjusted operating margins between 18% and 19%.
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