Crocs (CROX) stock has proven the naysayers wrong in many respects over the years. The company’s signature foam clogs have been called a novelty and a fad. They’ve even been called ugly.
But there’s nothing ugly about the company’s remarkable growth, and Crocs is definitely not an overnight success. The company went public over 15 years ago. CROX stock is up 800% over the past 5 years, including a 95% rise over the past 12 months.
Bears would attribute CROX’s recent success to the new era of work, claiming that the home-based way of life fueled demand for relaxed footwear. But the lockdown lifestyle is in the rearview mirror and Crocs hasn’t shown any signs of slowing down.
Instead, the company has used its brand recognition and increased market share to expand its offerings and make acquisitions. Even still, detractors point out that fashion tastes can be fickle, and that there are major competitors looking to move in on CROX’s territory.
So where will Crocs stock be 12 months from now?
Crocs Revenues Rocket Higher
Crocs brand revenues increased nearly 15% over 2022, accounting for $2.6 million in revenue.
Aside from their distinctive shoes, Crocs also sells popular accessories called Jibbitz. These little charms fit in the holes of Crocs and turn the clogs into customizable fashion statements. The company also sells sandals and boots that are based on the classic foam model.
Crocs made a major acquisition in early 2022, finalizing a deal to buy the Hey Dude brand for over $2.5 billion. This new brand delivers casual, canvas-based shoes for the men’s, women’s, and youth markets. Hey Dude products may even take on Crocs-style customization features in the future.
Crocs received revenues of approximately $895 million from the Hey Dude brand in 2022, and that wasn’t even for a full year. But the company had to take on a significant amount of debt to purchase the new brand, and it’s still uncertain whether the gamble was worth it.
The Billion Dollar Revenue Deal
Those in the halls of power at Crocs believe the Hey Dude deal will pay dividends. The additional profits from the new brand and continued sales growth in their current lineup allowed CROX to report a 61% increase in revenue in 4th quarter 2022.
CROX expects to gross $1 billion in sales this year from the Hey Dude line and, when combined with the estimated growth of the main brand, management estimates the firm will pull in $5 billion a year from the combined brands.
The company also hopes to gain traction in Europe and Asia; most of the company’s current sales are from North America.
CROX also announced recent partnerships with other brands, solidifying relationships with established brands like Gucci and Nike.
A Devoted Fan Base
The Crocs brand is immediately recognizable and fully associated with its product. Couple that with an affordable, useful product and it’s a recipe for success. Though Generation Z has a particular affinity for the brand, Crocs aren’t just for kids. The shoes are gaining popularity with older generations as well.
While widespread acceptance by younger, perhaps fickle, consumers could be concerning, given how easily fashion trends come and go, Crocs appear to be here to stay. The ability to slide in and out of comfortable, close-toed shoes is a major draw, attracting everyone from athletes to nurses to musicians.
But there is also a loyal and growing fanbase of followers who wear the shoes as a fashion statement. Crocs come in a massive array of colors and patterns and can be branded with sports or entertainment logos. That means consumers who buy one pair are apt to buy another.
Couple that with the ability to customize the shoes with Jibbitz, and there’s one more reason to pick up another pair. Crocs aficionados can own the shoes in double digits, with the largest collection on record topping a whopping 2100 pairs. That kind of brand loyalty means that Crocs isn’t going anywhere anytime soon.
Concerns that CROX’s recent success was solely pandemic-based have been alleviated and the brand is well-positioned. But there are still other concerns facing the company. Namely, that there are no major barriers to entry that will stop larger, more established footwear companies from producing a similar product.
Crocs started out as a boat shoe, and its founders wisely purchased and patented the foam resin used to make the shoes. This material, called Croslite, is wearable on land or in water, and it’s easy to clean. But it also has another major plus: Croslite allowed the company to produce the shoe and the sole at the same time. This integrated shoe was affordable to mass-produce, and that was a contributor to the company’s initial success.
But now nearly every shoemaker, from Reebok to Adidas to Skechers, has been able to reproduce the shoe to one degree or another. These companies are all established brands and have a bigger retail reach than Crocs. That’s not to mention the hundreds of cheap plastic Crocs knockoffs flooding stores’ shelves.
It remains to be seen whether the Crocs fan base will still be loyal if there are cheaper, more convenient, or even more comfortable alternatives available.
Where Will Crocs Stock Be In 1 Year?
Even if Crocs has some concerns looming, there is no denying the current demand for the product.
The acquisition of the Hey Dude brand, exciting new partnerships, and the focus on overseas growth are signs that bode well for the growth of the company. The main hurdles for the future are changing public taste and more competitive products from larger companies.
While Crocs stock isn’t likely to see the pandemic boom again, the next 12 months should continue a positive trend for the shoemaker. That rosy outlook will brighten even more if the Hey Dude brand brings in enough revenue to justify the price Crocs paid for it.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.