How Crocs Went From Fashion Punchline to Pandemic Must-Have
Crocs — the colorful, comfortable foam clogs that break almost every rule in fashion and evoke divisive and visceral reactions from customers and critics alike — are back from the dead. The shoe company that was once the butt of everyone’s jokes, described by a wide array of critics and commentators with such language as “vermin” and “the ugliest shoes ever invented” — and in fact voted one of the top 50 worst inventions by TIME in 2010 — was the only major footwear brand in the spring of 2020 to enjoy a rise in sales. Between March and October, slippers and clogs experienced a 70% and 22% jump in sales, respectively, thanks largely to the second coming of the Croc. Here’s how Crocs went from a seemingly one-hit wonder that was barely hanging on after the 2008 recession to one of the hottest brands of 2020.
Crocs’ fall from grace
Crocs was the brainchild of three founders who had stumbled upon a new boating clog made by Canadian company Foam Creations while out on a sailing trip. It was the material the the clogs were made from, known as Croslite, that really excited them. After securing the rights to the foam-creation process and tweaking the design, they debuted Crocs in 2002 with the launch of a single design called “Beach.” While it looked very similar to the quintessential Croc shape we know today, it was originally intended to be a spa shoe.
It was an immediate hit, selling close to 75,000 pairs in its first year. In the four years that followed, the company sold more than 50 million pairs and garnered a lot of attention from the media and its love-hate relationship with the shoes. Eventually, Crocs bought out its Canadian manufacturer, and then, in 2006, had the biggest IPO for a footwear brand in U.S. history, raising $200 million. The publicity surrounding these dorky shoes seemed unlimited.
Then, out of nowhere, Crocs lost its footing. In 2008, in the midst of the financial crash, the company suffered a huge $200 million loss, forcing massive cost-cutting measures, including the closure of 158 stores and several factories and the loss of 2,000 jobs. The situation got so dire that shareholders filed lawsuits claiming mismanagement. The company hit rock bottom in 2009 when its stock price dropped to a record low of $3, down from a high of $70 in October 2007. Crocs was on the brink of collapse.
One reason for the brand’s struggles during the financial crisis was that it had diluted its image by expanding the number of sellers and outlets it partnered with. Believe it or not, Crocs were once sold in high-end fashion stores. In an interview with Slate Media’s podcast The Thrilling Tales of Capitalism, Erin Murphy, a research analyst at Piper Sandler, summarizes Crocs’ awkward pivot to mass expansion: “At its peak, one of its top accounts was Nordstrom, which at the time was very much viewed as the go-to place for fashion-forward brands. Yet they were selling in 7-Eleven, and they were selling in Hallmark. That is not a way to maintain that brand cachet.”
Believe it or not, Crocs were once sold in high-end fashion stores.
Crocs’ divisive design also acted as a double-edged sword. Even during the brief initial period when its novelty was considered “cool,” many people still felt Crocs weren’t just unfashionable, but one of the worst fashion trends ever to exist. Fashion consultant and reality TV star Tim Gunn branded the shoe a “fashion monstrosity,” writing in his 2010 book Gunn’s Golden Rules: Life’s Little Lessons for Making It Work, “I can’t imagine a more aesthetically offensive item of footwear than Crocs. That little strap! I shudder.” It became a fashion statement to wear the shoe — but not the good kind.
The brand found itself in the dumps throughout the recession and in its aftermath. In 2009, Crocs teetered on the edge of bankruptcy and was struggling to make payroll. But the company persisted through the downturn in both the economy and the brand’s popularity. It expanded the colors of its existing products and added new styles. By 2011, Crocs offered around 250 styles of shoe, and the company opened hundreds of new stores. Crocs reported sales of $1 billion worldwide in 2011 for the first time, but by 2013, the company was consistently missing its revenue projections, sending its stock into a downward slide. The company considered going private to alleviate its woes.
In 2014, Crocs received a lifeline in the form of a $200 million investment from private equity firm Blackstone, which brought on footwear executive Gregg Ribatt as CEO. He began the Crocs turnaround. In 2015, the founders were ousted, and Andrew Rees, who replaced Ribatt as CEO in 2017, continued to push the company forward. Rees’ strategy was simple: Improve manufacturing, close underperforming stores, build a new team of footwear vets, focus on the clog, and most importantly, make Crocs “cool” again.
Custom Crocs and collaboration
In the late 2010s, Crocs tried to reassert its relevance by doubling down on celebrity collaborations, including releasing a musical ad with Drew Barrymore in 2018. As part of the “Come As You Are” campaign — still one of its slogans today — the commercial publicly acknowledged the people who shame Crocs wearers. It was a move that played to the brand’s strength, emphasizing comfort and individuality.
It then targeted a younger audience, collaborating with Post Malone in 2019 to produce a “custom Croc,” which sold out in under two hours. The brand has continued to launch collaborations with celebrities, including one with Justin Bieber in 2020 that sold out in 30 minutes. It even did a shoe collaboration with KFC in 2020. (Yes, you read that correctly.) In 2019, the brand joined TikTok and gained 100,000 followers within one week.
Crocs also doubled down on user customization. Back in 2006, Crocs purchased Jibbitz, a company that made small plastic shoe charms that can be placed in the holes of Crocs to customize their appearance. Crocs turned Jibbitz into a secondary product line with the potential for recurring purchases, since Crocs fans are more likely to regularly spend $5 on an occasional charm than consistently drop $40 on additional pairs of Crocs. By updating its line of charms with new options like social justice–themed Jibbitz and launching a digital tool to let buyers virtually customize their shoes, Jibbitz accounted for 4.4% of revenue in 2020 — up more than double from 2019. In an interview with Barron’s, analyst Erinn Murphy estimated it could rise to 6.5% in 2022, representing 30% of incremental revenue.
Crocs’ divisive design acted as a double-edged sword.
The Croc became cool again, showing up on famous feet like Ariana Grande and Pharrel, which sparked a new following among teens. In October and November 2020, the shoes saw a 750% increase in sales on StockX, a popular marketplace for shoe sellers, with Crocs selling for 125% over retail value, on average.
The pandemic also provided a huge lifeline for Crocs. Since the outbreak, sales of almost every major shoe brand have gone down. But not Crocs: Shutdown measures have left many housebound consumers looking for comfortable footwear to complement their daily lounging, Zoom meetings, and trips to the mailbox at the end of the drive. As we continue to work and live at home, comfort wear has exploded. Look no further than the rise of the sweatpants, once a questionable fashion choice, now a pandemic workday staple. According to the Wall Street Journal, during this comfy renaissance, “Crocs was the only footwear brand among the top 30 tracked by researchers at NPD Group to record sales growth in March , a 14% increase compared with the same month in 2019.” And that growth has continued even as the pandemic is nearing the one-year mark and vaccines begin to roll out: In an investor update in late 2020, Crocs reported that Q4 revenue was expected to be up around 55% to $407 million, with 2020 annual revenue set to exceed $1.38 billion.
Can Crocs maintain its momentum?
What happens after the pandemic, when work routines and social activities begin to return to normal? Do Crocs become immediately irrelevant once we start to care less about 24/7 comfort and more about looking nice for in-person interactions? Crocs’ current CEO, Andrew Rees, is betting no; in an interview with CNBC in August 2020, he said, “I don’t think this represents an end to our relevance. We’ve been rebuilding the brand’s relevance for a number of years now, with strong collaborations and marketing outreach.” And he is bullish looking forward, too: “All the building blocks are in place. This is a time that’s really good for our brand and everything we stand for. There are lots of opportunities in the future, and we’re very confident about the future of Crocs on a global basis.” The Americas accounted for just over 50% of Crocs’ revenue last year, and the Asia-Pacific region nearly 30%.
The company is predicting accelerated revenue growth of 20% to 25% in 2021, and perhaps it’s not blind optimism. The New York Times declared that Crocs had “won 2020,” and according to Lyst’s 2020 report, Crocs are the eighth-most-wanted item in the entire world. Vogue is predicting big things for the brand, noting, “Having had fashion’s seal of approval — and given that they lend themselves perfectly to our newly limited lifestyles — there’s never been a better time to embrace the Croc.”
Since the coronavirus outbreak, sales of almost every major shoe brand have gone down. But not Crocs.
This isn’t the first time Crocs has tried to sustain momentum by making itself trendy. In 2016, the brand shocked the world when its shoes appeared on the catwalk at London Fashion Week covered in crystals. But this time, the brand is backed by influencers and A-listers including Rihanna and, most recently, rapper Bad Bunny, amid an unprecedented global environment that favors comfort over style. In a Who What Wear article titled “I Hate to Break It to You, But 2021 Is Set to Be the Year of the Croc,” Elinor Bock explains the shoes’ appeal and longevity despite the longstanding critiques about their design: “While I realise that it’s still going to take a bit to win some people over, I think this comment sums it up: ‘I’ll probably see them loads on Instagram over springtime styled really well, and by summer, I’ll have converted and be wearing them.’ And that, dear readers, is how fashion works.”
With a market cap above $5 billion and with shares rising 53% over the past 12 months, Crocs has found its footing again. Much like the shoes themselves, the Crocs brand is proving to be durable. The company has been able to capitalize on its moments in the fashion limelight and make the most of its divisive image while successfully weathering the many storms it has faced. Not only did Crocs survive the pandemic’s retail apocalypse, it thrived, and it may continue to do so even as shutdowns end. The brand will always be the Marmite of the shoe world — whether you love it or hate it, you probably have a strong opinion about it — but if its journey so far tells us anything, it’s that the company is more than happy to keep toeing that line.