This Company Might Surprise You in the Future

Himanshu is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Colors are amazing and can play a vital role in attracting customers. This is what has been applied by the footwear giant Crocs (NASDAQ: CROX) to make an impression on customers’ minds. Bright and attractive colors helped Crocs lure large number of customers, leading to higher profits.

In fact, Crocs’ variety of good quality of products led to stellar fourth-quarter results. Though the numbers met analysts’ expectations, a dull outlook led to a fall in the stock price. Let us understand further.

What happened during the quarter?

Increased selling prices, as well as higher volumes, led to a 10% jump in revenue to $225 million. In spite of a dull holiday season and overall economic weakness, Crocs witnessed growth in all segments and geographic regions.

Its expansionary moves into new markets, and addition of 38 new stores during the quarter helped it witness growth in the European market. Crocs has been focusing on Europe and this has started paying off. Even the American region performed well, mainly due to growth in the wholesale segment. Hence, the company intends to concentrate on its wholesale business growth in the future. However, Asia has also been one of the great performers with a 20% growth in revenue during the year.

Crocs’ efforts are endless. In the retail space innovation is very important, and the company has utilized its creativity well with new product launches. Its all new Retro Clog collection attracted a lot of customers, comprising 37% of the total units sold.

Competitive sphere…

However, Crocs is not the only retailer which has been emphasizing on product innovation in order to attain growth. Even peers such as Nike (NYSE: NKE) and Wolverine World Wide (NYSE: WWW) have followed a similar path. Nike’s new technology shoes, such as Flyknit and Nike Free, did lure customers to its stores. Nike has always been active in bringing new products to the market. Nike’s products, such as Nike+, have been so successful that customers are showing interest in spite of price hikes.

However, Wolverine has been following some other strategies too, besides innovation. Its acquisition strategy has placed it in a better position than other players. Investors have been looking forward to the buyout of Collective Brands’ Performance and Lifestyle business since last year. The resultant addition of four brands is expected to help Wolverine fight the unfavorable effects of a weak European segment.

The path ahead

Crocs has been on an expansion spree. It has been expanding its footprint in all directions with a special focus on Europe. With more than 100 stores already opened, the company plans to have another 95 stores this year.

After enhancing its geographical footprint, it now plans to make its marketing stronger. More expenditure on marketing is expected to benefit Crocs, with more and more customers coming in.

Additionally, the footwear retailer has been working on its Spring collection, offering more variety. Crocs also plans to concentrate on its collection for back to school. A new and improved portfolio of products is expected to win customers’ hearts.

However, the retailer’s efforts are not restricted to the retail sphere only. It plans to focus on its wholesale operations, which have been showing great potential, especially in America.

The takeaway

Crocs has been witnessing great enthusiasm for its products, mainly because of its high quality and innovative offerings. It has been expanding its presence, and has been working on its good performing segments to perform even better. It has also started taking feedback from customers in order to make their experience at its stores even better. With everything in place, this company looks like an interesting bet for future. Investors should take notice.


justhimanshu has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Crocs and Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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