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Crocs, the Niwot-based funky shoe company, celebrated its 10th anniversary late last month. It was a surprising milestone, in part because of the troubled waters the company was forced to navigate not too long ago—and the fact that the foam-like clog always seems to be fending off claims that the Crocs “fad” will soon end.
When I visited the company for a story in 2008, I found a company that appeared to support the doubters. The company’s stock shot to nearly $75 per share by 2007; but in 2008, the stock had fallen to $35 a share. The company announced the previous fall that it had accumulated nearly $200 million in inventory, and soon a handful of investors filed lawsuits against Crocs, alleging that the company violated securities laws (a federal judge eventually sided with Crocs). There had been layoffs and mandatory vacation time, and in February 2008, the company reported that its inventory had surged to nearly $250 million. Its previous year’s revenues, the company added, fell $2 million short of analysts’ expectations.
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In fact, things were so bad that during my 2008 interview with then-CEO Ron Snyder, he read a message on his PDA and had to excuse himself to deal with a “distributor problem.” A day earlier, Costco announced that it was carrying Crocs, a sign that sales had slowed so dramatically that inventory had to be dumped on the discount market. Later that year—despite a new line of shoes that veered from the often-mocked, swiss-cheese-like silhouette, Crocs appeared to be on its last legs. By the fall of 2008, the stock price dropped to nearly $1 per share. And the next year, Crocs’ independent auditor raised “substantial doubt about the company’s ability to continue as a going concern.” I wondered if I’d written Crocs’ obituary.
Fast forward to this year, and that couldn’t be further from the truth. The company hired a new CEO in 2010 and has seen sales of both its traditional and non-traditional-shoe lines sell well. The company also dropped the high-end YOU by Crocs line and a hockey outfit business. John McCarvel, Crocs’ chief executive, told the Denver Post that he expects the company to end 2012 with roughly $1.15 billion to $1.2 billion in revenue. The sales would be an increase of between 15 percent and 20 percent from the previous year. And anyone who invested in the company during those dark months in 2008 has to be smiling today. Shares of Crocs (CROX) closed Tuesday at $16.93.
So is Crocs here to stay? Critics still might have their doubts, but a decade of business certainly makes it difficult to argue against the company’s future. After all, 10 years is a pretty long fad.