That looked to be the case with Crocs, Inc., (CROX) a maker of specialty shoe and footwear products that jumped from an IPO Price of $13 in February on 2006 to an all-time high over $75 in the fall of 2007.
But that’s when things turned a big ugly. Shares took a big hit after the company announced sales were slowing, and when you throw in the financial crisis from 2008, CROX actually traded below $1 as the market worried about its survival.
But since then, a remarkable thing has happened. Crocs actually returned from the edge of darkness, steadily grinding higher over the last few years as earnings did the same. Shares suffered a sharp pullback in October of last year, but with earnings and estimates on the rise, all that did was sweeten the valuation picture. Let’s go ahead and take a closer look at the company that has defied the odds, beaten fad culture and developed a loyal following.
The last we heard from CROX was in late April with strong Q1 results that came in ahead of expectations. Sales for the period were up 20% from last year to $271 million. Earnings also looked good at 31 cents, 19% ahead of expectations, building on the company’s impressive Q4 results from early in the year that included a 50% earnings surprise. All in, CROX has an average earnings surprise of 28% over the last four quarters.
That latest report revealed a number of strengths in the CROX business model.
The first is the company’s geographic diversification, with sales up 17% in America and 41% in Asia helping to counter some general weakness in Europe where sales were down 3%. That strong international exposure helps insulate CROX from regional weakness. It also highlights the company’s strategy of going after emerging, growth markets like China, with millions of potential customers sitting on discretionary income.
The company also continues to grow its store count quite aggressively, climbing to 439 from 371 last year. That helped push retail sales up an impressive 33% to $61 million, now comprising 22% of total sales. It also appears that the extra stores are not cannibalizing existing stores, with same-store sales up 10.2% from last year.