Thursday, February 01, 2007

The Crocs Strategy Clarified

Well, I guess I should have figured this out earlier, but I was too busy trying to decipher why people were actually buying Crocs in the first place...

It appears that the folks at Crocs are actually looking ahead and figuring out that this trend of bright colorful EVA footwear can't possibly sustain itself long-term. So, they have decided to build a holding company that leverages their manufacturing resources. The company is shipping millions of pairs of EVA footwear each quarter and with operating margins in excess of 20% the company is generating loads of cash.

What will it do with that cash?

Well, there's no dividend (yet) and they certainly don't need to invest in building the Crocs brand. So, they are buying up small niche sport brands like FURY HOCKEY and most recently Ocean Minded, a skate and surf "green" brand.

So, while the Crocs fad may not be entirely sustainable at its present growth rate, I think we can all agree the current shift towards more environmentally friendly practices will be around for a long time. If Crocs can push Ocean Minded through just a portion of its current 14,000 door distribution network, I think we will see this company around for a long time...

1 comment:

Justin said...

Crocs..... they are always beneficial. My new shoes are also so stylish and good looking.