Crocs Look to Take a Bigger Bite From Digital Sales

Crocs are known for their simplicity. The Colorado-based footwear company says it delights in being confidently comfortable and (soon) a 100% vegan brand.

It’s a theme that resonates with consumers who helped give the company record revenue over the holiday season. In its fourth-quarter and full-year earnings call on Wednesday (Feb. 16), Crocs seemed especially bullish about its future, saying it expects digital and direct-to-customer sales to more than double by 2026.

“This year, we invested in our digital capabilities, including in the Crocs mobile app, global social platforms, such as Douyin, and digital talent across the globe,” CEO Andrew Rees said in a conference call. “We’re confident these investments and our continued focus will drive digital growth globally over the long term. We achieved strong growth in both our direct-to-consumer and wholesale channels with DTC revenues up 64% and wholesale revenues up 69% globally.”

Looking at the numbers from the past year, the optimism is certainly understandable.

Crocs said digital sales were up by double digits for a third consecutive year. They increased by 48% and 122%, respectively, when compared to 2020 and 2019, respectively. It represented 37% of total sales for the year, compared to 42% the previous year and 31% in ‘19. 

Direct-to-consumer revenue was $1.13 billion, a 64% increase over the year. By comparison, wholesale revenue was $1.17 million, up $69% over the year.

In Q4, which included the holiday shopping season, digital sales grew 41%, which was 40% of revenues. It’s also growth of 163% for the final quarter of 2019.

“Direct to consumer benefited from strong growth in both eCommerce and retail, while wholesale benefited from exceptional performance in brick and mortar,” said Executive Vice President and Chief Financial Officer Anne Mehlman. “We are extremely pleased with our (Europe, Middle East and Africa) performance, which is benefiting from improved brand relevance and consideration. In Asia, Q4 revenues were $57.1 million, up 10.3% from last year. This growth was driven equally by DTC and wholesale.”

Over the next four years, digital sales are predicted to be $2.5 billion. Crocs says it can achieve this goal through the combination of a fragmented $30 billion casual footwear market, aggressive marketing, customer satisfaction and a year-round digital opportunity. 

The digital content has been produced by customers on both TikTok and Instagram channels. Continued exposure by celebrity influencers such as Niki Minaj, Justin Bieber and Kim Kardashian will also be important.

Hey, Dude

The $2.5 billion acquisition of Italian comfy shoemaker Hey Dude, which is scheduled to close this month, is expected to play a role in this growth.

“We’re excited about the potential of Hey Dude and incredibly confident in our ability to build a $1 billion brand by 2024,” Rees said. 

Going back to the fragmented marketplace, the deal put Crocs closer to the front of its peer group and closer to rivals such as Skechers and Deckers, the parent of UGG. It also moves the brand further ahead of upstarts such as Allbirds, which has been worth about one-third as much.

Revenue for Hey Dude is expected to be between $700 million and $750 million in 2022. 

“So in terms of what we’re looking at the brand, its trajectory, its connectivity with consumers, and its relationships with its key partners and wholesale customers. I think the brand is in a great place, and there is clearly far more demand and then the ability to meet that demand in the short term,” Rees said.