Investors still wary despite Crocs' growth

Bloomberg NewsJuly 2, 2013 

NEW YORK — Search online for "hate crocs" and you'll quickly see why Crocs Inc. is eager to transcend the clunky clogs it unleashed on an unsuspecting world 11 years ago.

Chief executive officer John McCarvel is all too aware of the Crocs animus and how it complicates his strategy to attract new customers and double sales in five years. The clogs still generate 47 percent of sales because lots of people like them, especially medical professionals and kids. Yet to hit his target, McCarvel must persuade the haters to buy the company's other footwear.

That's why Crocs is telling the world all about its wedges, sneakers and leopard-print ballet flats — and hiding Crocs in the back of stores the way grocers do with milk.

"Our milk are those clogs," McCarvel said. "If someone wants them, make them walk through all the new stuff first."

McCarvel, who became CEO in March 2010, has been credited with helping revive the company, based in Niwot, Colo., and making it profitable again. Still, even though sales rose 12 percent last year to $1.12 billion and net income was the highest since 2007, investors are wary.

Crocs plans to open 90 locations around the world this year with about half in Asia, where sales jumped 34 percent in the first quarter. That would boost total locations by 20 percent to more than 500.

"I don't doubt they need to have stores in different parts of the world," said Sam Poser, an analyst at Sterne Agee & Leach Inc. in New York, who also recommends holding the shares. Given that same-stores sales fell 5.2 percent in the most recent quarter, Crocs needs to improve existing locations "before opening a ton of new stores," he said.

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