Crocs expects to double sales in less than 5 years
today Feb 27, 2012
Shoe maker Crocs Inc (CROX.O) is betting on newer designs to double sales in less than five years and expects Asia to become its biggest market by the end of 2013, the company's top executive said.
Chief Executive John McCarvel told Reuters in an interview that the company's sales are likely to jump to over $2 billion in four to four-and-a-half years from $1 billion currently.
Crocs was all about its rubber clogs, but the colorful shoes' popularity have waned over the past few years, and the company has struggled with declining sales and piling inventory.
"This year is far more than just clogs, (which) is just 50 percent of our revenue today," McCarvel said.
The company has been launching new designs like wedges, heels and sneakers -- though still made with its signature Croslite material -- to attract a more fashionable consumer.
Croslite is the company's proprietary closed-cell resin material used to design all of its footwear.
"We should be able to grow our business at 15 to 20 percent every year for the next 3 to 5 years."
Last week, Crocs reported a 25 percent rise in sales for the year ended December 31. Sales in Asia, and Europe, grew by more than a third each.
"Asia will be become a larger region than all of the Americas -- that includes the U.S., Canada, Mexico, the Caribbean and South America," McCarvel said.
Last year, the Americas accounted for 45 percent of its $1 billion in sales, while Asia contributed about 38 percent.
Many retailers are betting their growth prospects on emerging markets like China as an expanding middle class yearns for international brands.
The CEO said Crocs, which sells its products in more than 90 countries, is also moving about 10-14 percent of its production from China to Vietnam as increasing Chinese wages strain margins.
McCarvel reaffirmed that gross margins will be flat in 2012.
The executive noted that rivals like Nike Inc (NKE.N) and Deckers (DECK.O) have passed on higher labor and raw material costs to shoppers, but said Crocs will not raise prices for now.
Shares of Crocs have gained nearly 30 percent since the beginning of this year. They closed at $19.41 on Friday on the Nasdaq.
(Reporting by Meenakshi Iyer in Bangalore; Editing by Saumyadeb Chakrabarty)
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