In case you missed it, Crocs are cool again. First, Questlove wore a shimmery gold pair of its foam clogs on the Oscars red carpet, an event that is the height of Hollywood glamour. Then on Tuesday, the company reported a blockbuster 64% increase in first-quarter sales from a year earlier, helping its shares soar to an all-time high on Wednesday.
It’s tempting to conclude that Crocs Inc. is merely riding the wave of comfort dressing that was brought on by months of stay-at-home living. In 2020, when US fashion footwear sales slumped 27% from a year earlier amid the retreat indoors, sales of clogs surged 33% as shoppers splurged on all things cozy and casual, NPD Group data shows. But there appears to be more to it. Crocs’ guidance calls for a revenue increase in 2021 of 40% to 50%, indicating it is poised to deliver substantial growth on top of last year’s booming sales even as people dress up to return to offices and parties. That’s an indication of something that’s been readily apparent to fashionistas for some time: Crocs has quietly succeeded in making itself an “it” shoe brand.
Some of the rocket fuel for Crocs has been provided by celebrity partnerships. The company, whose global brand ambassador is actor Priyanka Chopra, debuted shoes in 2020 that were a collaboration with rapper Bad Bunny, the global music megastar who was the most-streamed artist on Spotify last year. Post Malone, another pop heavyweight, collaborated with the brand for a fifth time on a shoe that launched in December. And since October, Crocs has twice joined forces with Justin Bieber, who has hyped the clogs to his 171 million Instagram followers. The latest Bieber Crocs were priced at $69.99, significantly higher than Crocs' $17.64 average selling price in the latest quarter. The lavender shoes have sold recently on secondhand marketplace StockX for more than $100. This demonstrates that these special-edition Crocs have infiltrated sneakerhead culture, enjoying a halo of hype and scarcity that has strengthened the brand.
If you can put aside your reflexively conjured memory of George W. Bush looking hopelessly dorky in Crocs and socks in the early 2000s, you can see these shoes are actually a uniquely perfect fashion item for the Instagram era. The bright colors and signature shape photograph extremely well. Crocs also offers shoe charms called Jibbitz for $4.99 a pop, add-ons that allow shoppers to customize the clogs with tiny cactuses, narwhals, lollipops or their initials, making them that much more eye-catching and statement-making on social media.
Is the company’s momentum sustainable? It certainly has a lot going for it. Even though shoppers are showing renewed interest in dressier items at this phase of the pandemic, comfy, utilitarian styles will continue to have a place amid the continued strength of athleisure looks. And the so-ugly-its-cool vibe has been going strong for a while now, powering major trends such as dad sneakers and mom jeans. Plus, Crocs has ample room for growth in international markets, especially Asia, and through products such as sandals, a category that recorded a 17% increase in sales from a year earlier in the latest quarter. Meanwhile, its demonstrated ability to raise prices should help cushion any profitability blow that might come from increased logistics or raw-materials costs that are roiling the wider consumer industry.
As it enjoys the boom in demand for its products, Crocs said this week that it has begun exiting certain wholesale arrangements in North America with stores that don’t fit its desired brand perception. This is a well-worn path that Nike Inc. and certain luxury brands have taken as they aim to keep or restore cachet and realize the profitability benefits that can come from selling a bigger share of goods from their own websites and stores. Investors clearly approve of the strategy: Crocs, which had just $1.39 billion in sales last year, now has a bigger market value than retail behemoth Macy’s Inc.
Crocs seems to accept its peculiar role as a brand that consumers love to hate. Its website notes that when its shoes debuted in the early 2000s, “we were different and it made some people uncomfortable.” That hasn’t stopped Wall Street from getting quite comfortable with the quirky brand, and rightly so.