The most divisive shoe brand in recent history, Crocs are a product you either love or hate. Unfortunately for the aficionados, 90% of the human population hate them.
They were included in Time Magazine’s list of 50 worst inventions. They inspired Jon Wilde to say, “The guys who wear them are probably fine, decent people, except… they’ve made a big mistake, and they should be reminded of it, repeatedly.”
The criticism goes on.
Enraged by Crocs’ attempt to rebrand their squeaky foam clogs as something “so uncool that it’s cool” (a la Balenciaga’s ugly dad sneakers and Supreme’s deliberately over the top logo) the blog I Hate Crocs said: “The strategy now appears to be a kind of tacit acknowledgement of their crapness combined with ironic attempts at high fashion.”
But as it turns out, the unfashionable 10% of the population that like Crocs, and the executives of the most ridiculed company in history will get the last laugh, because Crocs are actually a crazy profitable business, turning over US$1.023 billion last year alone.
In their latest financial report, Andrew Rees, President and Chief Executive Officer of Crocs said, “We had a strong final quarter of the year, which enabled us to meet or exceed our revenue and gross margin guidance for the fourth consecutive quarter… we focused on our strategic objectives: simplifying our business to reduce costs, improving the quality of our revenues, and positioning ourselves to drive sustainable, profitable growth.”
“Looking at 2018,” he continued, “Our Spring/Summer collection is being well received. We expect moderate wholesale and double-digit e-commerce growth to be offset by the loss of retail revenues associated with store reductions… (as well as) continued gross margin gains and completing our SG&A reduction plan.”
“This lays the groundwork for generating top line growth in 2019 and, ultimately, delivering double-digit EBIT margins.”
Broken down into figures, Crocs’ most recent fourth quarter revenues were $199.1 million, growing 6.2% over the fourth quarter of 2016, or 3.8% on a constant currency basis. In addition, top line growth was achieved and Crocs wholesale and e-commerce businesses grew at double-digit rates.
This led to a gross margin increase of 45.4%—340 basis points over the previous year’s fourth quarter, and losses from operations of just $30.4 million, which is 23.7% better than 2016’s fourth quarter losses of $39.8 million.
Although the stats are not yet out for 2018, the report is optimistic, predicting gross margin to be up by approximately 70-100 basis points from their 2017 gross margin of 50.5%.
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