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Crocs CEO Teases ‘Incredible’ Upcoming Collaborators

While Crocs would typically generate more than 60 percent of sales outside the Americas region prior to 2020, the global landscape for the casual footwear company changed during the pandemic. Accelerated growth in the U.S. powered a role reversal that now sees the Americas region driving 60 percent of total sales.

But CEO Andrew Rees still sees plenty of daylight for Crocs’ global prospects, particularly in markets like EMEA and China.

“Over the over the long run I would see international growing to be the majority of the business again,” Rees said during Baird’s 2021 Global Consumer, Technology & Services Conference.

EMEA represents the highest digital penetration among Crocs’ major markets at 41.8 percent of sales, well ahead of both the Asia Pacific (30.9 percent of sales) and Americas (29.2 percent of sales) regions. Retail partners in EMEA also had the highest digital penetration, according to Rees.

From a wholesale perspective, Rees noted the importance of keeping a good relationship with distributors in the region, whether they are in Southern Europe, Eastern Europe, Africa or the Middle East. During the pandemic, Crocs did not require distributors to take the orders that they already placed, which Rees credits for bolstering the brand’s strength in the region.

“We will retain that inventory and manage that ourselves, and that puts them in an incredibly good position,” Rees said. “They’re clean from an inventory perspective. They’re not sitting on old inventory from last year, so they can really buy fully into what we’re offering this year. I know that they say they feel really confident.”

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China, a tougher nut to crack than EMEA, is responsible for fewer than 5 percent of total revenues. Rees recognizes the opportunity that lies ahead, however, acknowledging that most global international footwear brands derive 20-plus percent of their revenues from the market.

He noted that Crocs has repositioned its product strategy to reflect how it performs in the rest of the world—making the classic clog and personalization the core. The company is focusing on top- and second-tier Chinese cities home to more affluent Gen Z consumers, and relying on ambassadors such as popular actress Yang Mi, as well as influencer marketing and livestreaming projects to continue the push.

The footwear brand, which had 18 stores in China to start 2021, is renovating the locations and opening select “Energy” concept stores in the market to jumpstart the region.

“The hardest thing has been renovating our partners themselves,” Rees said. “One of the core reasons why we had such a difficult time turning the business around has been the sophistication and the quality of those partners so we’re exiting a lot of our old partners and we’re bringing on a lot of new ones.”

Although Rees admitted growth in China has taken “a couple years longer than we thought it would,” he believes Crocs is back on track in the market, and is ready to see growth accelerate in the next two-to-three years.

Chinese actress and singer Yang Mi is a brand ambassador for Crocs.
Chinese actress and singer Yang Mi is a brand ambassador for Crocs. Imaginechina via AP Images

Reaching the ‘democratic consumer’ requires channel mix

Crocs isn’t just exiting wholesale doors in China either, with the company confirming in its most recent earnings call that it terminated select wholesale partnerships across all markets. Rees insisted that the brand is not looking to exit the channel altogether but rather looking to be sold in the right places.

“This is not a strategy that we want to be in five to 10 years from now,” Rees said. “We’ve always planned out our strategy as a blend of channels. I want to be direct to consumer in some circumstances, and our wholesale partners are incredibly important to reach that democratic consumer base. That consumer base is broad so it’s really important that we know where they want to shop. And so the actions that you’ve seen us take are really all around marketplace health.”

This “democratic customer base” is the key to Crocs’ brand relevance regardless of market, Rees said. The brand thus far has grown with the challenging approach of being all things to all people, with Rees highlighting that it offers two-strap sandals at a $35 price point, while at the same time partners with a high-end brand like Balenciaga to sell elevated products that go for nearly $900.

Look no further than this brand partnership and others with major celebrities, most recently EDM producer Diplo, as Crocs’ continues to stay in the collective conscience of culture-obsessed shoppers.

Post Malone, Justin Bieber and Bad Bunny are among the many other names that have helped Crocs grow its audience, and Rees said there is plenty more in store.

“The pipeline is incredible, so we’re going to have a huge number of collaborations through the summer and into the holidays, Rees said.

Rees comments on counterfeit complaint

The Baird event came on the same day Crocs filed a complaint with the United States International Trade Commission (ITC) seeking an investigation of unlawfully imported shoes into the U.S. in violation of its registered trademarks.

Crocs seeks an exclusion order that would block the importation and subsequent sale of products into the U.S. that infringe on its trademark rights, particularly related to the patent on the classic clog. The ITC previously had an exclusion order in effect until 2017, when the U.S. Patent and Trademark Office invalidated the company’s patent. Crocs has since replaced the patent with a 3D trademark, Rees said.

A new exclusion order would prevent knock-off products based on the 3D trademarks from entering the U.S.

“As the brand has really accelerated here in the U.S. over the last 24 months, we’ve definitely seen an increase in what I would describe as infringing product that is attempting to knock off some of our intellectual property,” Rees said. “We’re looking to be, as I would say, assertive and aggressive in terms of protecting data and ensuring that the consumer gets the benefit of the original product.”