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Crocs Shoe Company Stumbles During Recession
Then, chief executive John Duerden wrote in an e-mail: "the industry was taken by surprise by the severity of the downturn. It affected us more than most because the brand had been gearing up for a continuation of the extraordinary growth in the prior years."
But the shoes were hitting a saturation point; the problem with a nearly indestructible product is that shoppers rarely need to replace it.
A foray into Croslite clothing in 2007 fell flat and was quickly scaled back. The company liquidated Fury Hockey last year.
"They had added a huge amount of infrastructure to meet this demand going forward," said Jeff Mintz, an analyst with Wedbush. "Demand fell off, and they had way too much capacity and way too much supply of product."
Who needs a second pair of Crocs in a recession, particularly when the first pair is holding up just fine?
The company swung from a profit of $168.2 million in fiscal year 2007 to a loss of $185.1 million last year. In its annual report, Crocs said that an independent auditor expressed concerns about "conditions that raise substantial doubt about our ability to continue." Its stock price has plummeted 76 percent.
Five months ago, the company announced that it was replacing chief executive Ron Snyder, who went to college with the company's founders, with Duerden, an industry veteran who ran a consulting firm focused on brand renewal. Duerden believes there is life yet in Crocs and plans to market them to caterers, medical workers and people with foot problems. Actor George Clooney has promised to work with the company, Duerden told analysts. Maybe he could wear a red pair.
"The bottom line is, people talk about Crocs," he said at a conference with analysts. "They either love them or hate them, but it's in the vernacular."