Coming off the heels of a successful earnings season, Crocs is chasing a lofty new business goal.
The clog maker said it plans to achieve $5 billion in sales by 2026, which would represent a compound annual growth rate above 17% with 2021 as a base year.
“We are incredibly proud of the track record of growth and shareholder value creation since we first embarked on the turnaround of the Crocs brand in 2014,” said CEO Andrew Rees. “Looking forward, we expect the Crocs brand to grow to over $5 billion in sales by 2026. We are confident in our ability to deliver this growth while maintaining industry-leading profitability, creating significant shareholder value, and having a positive impact on our planet and our communities.”
To achieve this new goal, Crocs has outlined a five-year plan focusing on four key areas of growth: digital sales, market share in sandals, growth in Asia, and product and marketing innovation.
In July, Crocs blew past analyst expectations with its earnings for the second quarter. The company reported a revenue growth of 93% in Q2, with quarterly net earnings rising to $319 million, or $2.23 per share, on an adjusted basis, compared to last year with $56.6 million, or $1.01. Direct-to-consumer sales, which include sales from e-commerce and brand-owned retail stores, increased 78.6% year over year, making up 52% of Q2 revenues.
As part of the new goal, Crocs said it expects at least 50% of its total revenues to come from digital channels by 2026.
Crocs has already made moves to focus its business on digital and direct-to-consumer sales. In April, Crocs said it was ending business relationships with some of its long-time wholesalers to prioritize key partners that can elevate the brand’s position in the marketplace. This came shortly after Nike made similar moves to terminate wholesale accounts with Zappos, Dillard’s, DSW, Urban Outfitters, Shoe Show and more retailers.
In a call with investors in July, Rees described the direct-to-consumer push as an “important shift for Crocs.”
Crocs is also making moves in the realm of sustainability. As part of the company’s commitment to achieve net-zero by 2030, Crocs has introduced a new bio-based Croslite material into its product lines. The company plans to modify its existing product to reduce its carbon footprint by 50% per pair by 2030.
Crocs said it also expects non-GAAP operating margins to exceed 26%, with an annual free cash flow of over $1 billion.
“While COVID-19 and its impact on our manufacturing in Vietnam remains fluid, we are reiterating our full year 2021 guidance provided in July and we are confident in our ability to achieve a 17% compound annual growth rate delivering over $5 billion of revenue by 2026,” said Crocs CFO Anne Mehlman.