As much of the footwear sector struggles amid the ongoing pandemic, Crocs is bucking the trend — and proving that brands can make the coronavirus work for them.
The clog maker far exceed expectations for the second quarter as its trend-right casual product, tight connection with consumers and focus on digital paid off big.
“Unequivocally, we are gaining share. We see that in the marketplace. We hear that from all of our wholesale partners,” said president and CEO Andrew Rees in a conference call today, noting that Crocs is beating its competitors. “In the back half of this year, demand will certainly exceed supply. So we will manage that carefully. I would much rather be in that situation than the opposite situation.”
For the second quarter, the clog maker recorded diluted earnings per share that surged 71.2% to $1.01 on an adjusted basis — well above the prior year’s 59 cents per share and analysts’ bets of 14 cents per share. Revenues, on the other hand, declined 7.6% to $331.5 million but still beat Wall Street’s forecasts of $249.6 million.
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Digital Is Soaring
While every company has been moving fast to capitalize on a rapid and dramatic shift to digital, some brands have clicked in more than others. Crocs is certainly a winner here. The brand said its online business — which combines its own e-commerce and digital sales at its partners — represented 56% of Q2 sales, compared to 33% last year. “While these strong growth rates have recently started to temper, it is clear that the pandemic has accelerated the shift to digital, and it will remain a high priority channel going forward,” Rees said.
The Iconic Clog Is on Fire
While there’s been much debate around Crocs’ classic clog, one thing is for sure: It has serious staying power. The style drove 68% of total footwear revenues in Q2, up from 56% last year. As casual reigns and dress continues to decline, the look will likely continue to resonate. “Consumers are looking for comfort. They’re looking for value. They’re looking for great storytelling. They’re looking for personalization and inspiration,” Rees said, citing the continued focus on the Jibbitz custom charms.
Nearly All U.S. Stores Have Reopened and Asia Is on the Rise
As the brand’s locations in the U.S. get back to business, traffic is down, but conversions and transaction values are up. That proves the strength of the brand in the U.S. — and it’s also making progress in Asia, where sales rose in China and Korea during the quarter. The brand has increased relevance in China with attention-grabbing collaborations, including a livestream event with Yang Mi on TMall.
Crocs Connected With Health Care Workers & People in Need at a Critical Time
As the pandemic upended the lives of health care workers, Crocs was there for them. The brand donated more than 860,000 pairs of shoes — already in a staple in the wardrobe of many in the medical field — with a retail value of almost $40 million. In addition, as many Americans struggle with access to food, the company recently partnered with BD America, the largest domestic hunger relief organization. “This is an important step in our effort to continue to support our communities,” Rees said. “I’ve seen the power of our organization when we come together for good. And I know that together, we will continue to make a meaningful impact globally.”