Fashion Flip Flop: Why Crocs are failing amid the recession

Posted by: Diane Brady on July 20, 2009

I realized this weekend that my 8-year-old son and my 6-year-old daughter have lost interest in their Crocs. Last year’s purchases are still around, ready to wear thanks to fact that each pair can span several sizes. When I asked my kids why they weren’t reaching for them this year, my daughter said “they’re ugly” (can’t argue there) and my son just dismissed his shoes as too old.

What’s going on? Has the garish foam footwear merely had its day, destined to go the way of platform boots and Earth Shoes? To some extent, yes. The Washington Post ran an article yesterday, exploring the company’s stumbles. With excess inventory and a mountain of debt, some are wondering if Crocs will even survive. The piece quotes one investment manager concluding that “the company’s toast”—an assessment that Croc CEO John Duerden vigorously disputes today on the company blog.

Others suggest that Crocs are a casualty of the recession. Cheap as they are, at around $25 a pair, they look as if they actually cost a buck to make. Jelly sandals, another not-so-hot commodity these days, tend to charge in the $5 range. (At least for kids. I came across a pair at Ralph Lauren pair at Bloomingdales that has a sticker price of $195, though they’re now on sale for $136.50.) More important, for Crocs at least, it’s pretty easy to buy cheaper knock-offs for those who love the feel of wide rubber clogs.

And who wants to look cheap right now? Many of the hip executives who wore blue jeans to the office during flush times are now reaching for suits and ties. So maybe sporting shocking pink plastic on your feet (at least as an adult) is a little less enticing, too.

Then again, maybe Crocs are just a fad that has run its course. Heelys, the skate shoe that has also fallen out of favor in our household, is having its own problems these days.

Reader Comments

mhoffman

July 20, 2009 3:47 PM

Dear Diane,
Please define in $ "a mountain of debt".
I have read that Crocs has $20 million in loans and $50 million in cash on hand.
Revenue of $700 million.
A mountain or a mole hill?
Matt

Diane Brady

July 20, 2009 4:24 PM

Hi Matt,
I went to the company's most recent earnings report. In the first quarter of this year, Crocs reported a net loss of $22.4 million on sales of $134.9 million. In the three months before that, it had a net loss of almost $35 million. Sales are dropping rapidly in the U.S. and Europe.

Crocs has cash but its needs may be far greater than what it has in the bank. In its release, execs said "the company is currently in discussions regarding a new borrowing arrangement and is exploring alternatives for other sources of capital for ongoing cash needs." Doesn't sound like a mole hill to me.

It Figures

July 20, 2009 5:08 PM

Why did you reference your kids in this article? It has no relevance to this.

If this article would have referenced a study among kids across the nation, then it would be somewhat useful, but what two random kids in a house somewhere think about something is useless.

But I wouldn't expect someone who had kids while they still have to work for a living to understand this. 99% of humans think their offspring are somehow more special than the other 98% of kids out there.

Crocs will be fine, like everythign else wil be in this economy that everyone thinks is "bad". The economy is only people who are stupid enough to get married, and then even more stupid to have a kid before they have figured out how to not have to work for a living every day and be somebody else's b**ch.

For the 1% of people out there that "get it", the economy is perfectly fine, and there is nothing new under the sun.

Don Irwin

July 20, 2009 7:07 PM

I recently just bought my first pair of crocs.... I watched all my kids and everyone else where them everywhere. However, I bought a pair with a canvas/khaki top with the tranditional sole.

I have to tell you - I like em.... I think if the company pursues this line of merchandise, it could work!

Bola

July 20, 2009 10:42 PM

your kids need new Crocs
after one year they do not fit
stop being cheap and buy new Crocs for them

Kate

July 20, 2009 11:25 PM

Firstly, Crocs are hideous, and it is still so surprising that they sold so well initially. I thought Diane Brady did a great job of expressing that people really don't want to pay $25 for something that looks like it cost $2. Very good point.

It Figures. You were out of line to say that Ms. Brady considered her children to be of more importance than other children and to say that even the topic of her children was irrelevant to the post. She was merely putting the essay into perspective and writing a good piece. I should hope that, as a good mother, she would notice her children's shoe preferences.

Also, why would you assume that Ms. Brady is in a unstable job and has a dysfunctional family life?

Kevin

July 21, 2009 8:12 AM

CROX stock hit its peak of around $75/share back in October 2007, a month later it lost half its value, and a year after that it was worth $1. A fad is a fad whether it's publicly listed or not; it has nothing to do with the recession.

Marky from Atlanta

July 21, 2009 8:22 AM

Call me crazy, but I don't know why everyone (especially adults) didn't catch on to the moccasin version of crocs... the islander.

Let's see, super light weight, leather upper sewn in, the usual holes in the foam so that your feet don't sweat in the brutal heat and of course ya don't give a s**t if starts raining and you walk through a puddle.

Granted, regular moccasins (aka docksiders, boat shoes, etc.) are definitely better suited for cooler weather. But for summer, I'd prefer seeing peoples' feet covered in "ugly" crocs, compared to looking at sandal-clad feet with ugly, awful, yellow toenails!

wow

July 21, 2009 8:29 AM

Regarding "it figures" posting:

"The economy is only people who are stupid enough to get married, and then even more stupid to have a kid before they have figured out how to not have to work for a living every day and be somebody else's b**ch."

With one geration of these self-centered; self absorbed; uterly selfish mindset of people the humand race would cease to exist. Must be quite the personal story to have such an attitude.I feel sorry for that life.

VillaH

July 21, 2009 8:37 AM

COGS (cost of goods sold) for a pair of croc's I'm guessing MAY be $2.00/pair when all taken into account. Any controller to a company with half a brain should be able to roll up material, labor, burden, subcontracting, and any overhead, and if you cannot turn a profit selling the product for $25.00 or so, they should all be lined up and have pies thrown at them. Just a thought.

Evan Rappaport

July 21, 2009 9:09 AM

...

Steve

July 21, 2009 9:41 AM

Many schools won't let kids wear crocs because they cause foot injuries. I have thrown my 2 year old's away because if she runs in them she gets a painful contact blister from the plastic rivet that holds the heal strap on.

Kat

July 21, 2009 10:19 AM

I did a case study on crocs and their future my senior year of college in a Brand Management course. The traditional croc will be in and out like dr.marten's and beanie babies due to the inevitable up and course of all trends.

One positive hope for crocs is their practicality for doctors, nurses, dentists etc. The material crocs are made of makes them optimal for quick cleaning, comfort, and uniformity for professionals.

I think they still have a chance but it a completely different target market.

Ghost

July 21, 2009 12:39 PM

Re posting from Kat.

How are Crocs practical for doctors, nurses, dentists, etc.?

So, we want medical professionals to walk around with their almost-bare feet exposed in what are supposed to be sterile environments?

Diane Brady

July 21, 2009 6:04 PM

Kat, I would love to see that case study!

And I try not to treat my children as barometers of the overall economy. But the 180 they've both done on the subject of Crocs was interesting to me. Last year, it was their favorite brand. This year, they're on to flip flops and Teva sandals. And Heelys (which always struck me as a dubious footwear option, given the number of kids I've seen wipe out with them) are out of favor, too.

Mickey Megginson

July 21, 2009 7:19 PM

My grandchildren age 7 and 4 informed me at the beginning of the summer
"That Crocs were so last year". Rather have a cheap pair of flip flops.....

Mickey

Thomas Huynh

July 21, 2009 10:17 PM

Diane,

After seeing our marketing manager wear a pair of Crocs to work a few months ago, I knew then and there that was the end of that trend! :-)

Sincerely,
Thomas, founder
Sonshi.com

Jay

July 21, 2009 10:34 PM

Re: Crocs used by medical professionals

Actually, Crocs are known to be ergonomical for people who are on their feet all day. I have read articles about medical professionals using Crocs as their work shoes for that reason. Details on ergonomics and Crocs:

http://www.ergolibrium.com/news_details.aspx?news_id=11

Diane Brady

July 21, 2009 11:07 PM

Execs in Crocs! That does seem to be a sign of sorts ...

desertsport

July 22, 2009 1:08 AM

Crocs have their place - on the playground my kids where them instead of sneakers since sneakers trap the sand. Crocs are great at the beach or swimming pool. Crocs are a favorite around the house for landscape work or just something to quickly slip on to go to the back yard. They are preferable for men to wear instead of sandals (especially thong style)which show toes - usually the least attractive feature of the male anatomy.

Yes there are many places I would not wear Crocs (or knockoff versions), but there is a place for them.

Noel

July 22, 2009 1:11 AM

Fashion is a thing of perspection ( like that of Diane's kids), taste, and cost.
Hence, while this recession is shrinking sales, it could be that Croc needs serious re-modelling. Folks, Diane's analysis fits in very well.

Discotrish

July 22, 2009 8:24 AM

Well I wade through a lot of financial articles, and also happen to appreciate good writing. Diane's lead drew me into the story and happened to illustrate quite nicely the broader trend she's talking about. Plus anyone with kids can relate. When they're BORED of a product...I probably would've just skimmed the piece if it weren't for her intro. Loved the reference to Earth Shoes, too. I'm sorry, a lot of financial info can be on the boring side. Are we really going to castigate a writer for being informatiive AND interesting?!

Paul Karingithi

July 22, 2009 10:21 AM

maybe Crocs should expand thier market beyond US and Europe...they are other places that could offer a ready market like the far East and also Africa

L Cushing

July 25, 2009 7:07 AM

Anyone who judges Crocs by their looks probably does the same thing with people. You have to really walk a mile in them to understand how comfortable and practical they are. Granted, they are not for every occasion. I live in Sarasota. They are perfect for this environment. You can wear them in the sand and water then hose them off. I wear them whenever I go fishing. They are the best boat shoes ever. Much better than the leather dock shoes. The knock offs seen at Walgreens and CVS are not the same material. I guess you really have to get over the fact that they are not fashion, just practical, inexpensive, comfortable shoes. I hope they stay around.

N jowdry

July 26, 2009 11:48 AM

I work in a hospital lab and have found that crocs are the best thing that ever happened to my feet.I thought they were ugly when I first saw them,but as soon as I tried them on, I didn't care what they looked like.My legs and feet feel great by the end of the day.I have tried on the knock-offs and wouldn't even consider buying them.And you don't have to wear them bare-footed, a pair of lightweight socks work nicely. They can be cleaned every day very easily.

mrkleen

September 4, 2009 12:57 PM

And there we have it, we have become a society obsessed with self.

I dont care what I look like, or how inappropriate I am dressed, as long as I am comfortable. Me, me me.

On a boat, in the back yard gardening - fine...wear what you want. But when people start wearing things like Crocs and flip flops to work...they need to take a serious look in the mirror.

Joe B

October 18, 2009 12:00 AM

We can harken back to Gladwell's "Tipping Point" to see the Croc phenomenon spike in 2008. IMHO, good things that last a long time generally don't tie to a flash fad.

I don't see Crocs disappearing, but I would bet a bigger name will snap that brand up when the price is right...then, trim the operational fat and make the brand a more stable, ongoing concern (probably at a lower price point as well as an unavoidably smaller market share)

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