Crocs

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For other uses, see Croc.
Crocs, Inc.
Type Public
Traded as NASDAQCROX
Industry Wholesale Trade, Retail & Consumer Services, Clothing & Clothing Accessories
Founded 2002
Headquarters Niwot, Colorado, U.S.
Key people Emily N. Tomlinson (Creator),
Andrew Rees (President of Crocs Brand and CEO)
Products Shoes
Revenue US$721.6M (2008)[1]
Operating income US$-187.7M (2008)[2]
Net income US$-2.24 million (2008)Decrease[1]
Total assets US$279.4M[1]
Employees 3,700 (2008)[1]
Website www.crocs.com

Crocs, Inc. is a shoe manufacturer founded by Scott Seamans, Lyndon "Duke" Hanson, and George Boedecker, Jr.[3]—to produce and distribute a foam clog[3] design acquired from a Quebec company called Foam Creations. The shoe had originally been developed as a spa shoe. The first model produced by Crocs, the Beach, was unveiled in 2002 at the Ft. Lauderdale Boat Show in Florida, and sold out the 200 pairs produced at that time.[4]

Crocs was the title sponsor of the Association of Volleyball Professionals (AVP) Tour from 2006 through the 2009 season.[5][6]

Manufacture and patents[edit]

Assortment of colors available for a single style of Crocs

In June 2004, Crocs purchased Foam Creations and their manufacturing operations to secure exclusive rights to the proprietary foam resin called Croslite. Croslite is a closed cell resin.[7][8] The foam forms itself to a wearer's feet and offers purported medical benefits, according to a number of podiatrists.[9][10] Crocs holds one patent covering various utility aspects of its footwear, U.S. Patent No. 6993858 B2 issued February 7, 2006, and three design patents covering various ornamental aspects, U.S. Patent Nos. D517788, D517789, and D517790 issued on March 28, 2006.

As of 2007, the company had applied to register "Crocs" and the Crocs logo as trademarks in over 40 jurisdictions around the world, including the U.S.; many such applications were pending approval. Crocs also extended the scope of their trademark registrations and applications for both the Crocs mark and logo to cover non-footwear products such as sunglasses, goggles, knee pads, watches, luggage, and some of their internet sales activities.[11]

Counterfeit Crocs[edit]

Crocs announced in 2006 that it filed complaints with the U.S. International Trade Commission (ITC) and the U.S. Federal District Court against 11 companies that manufacture, import or distribute products, called "croc-offs",[12] that Crocs believes infringe its patents.[13] Seizures of fake Crocs occurred in 2007 in the Philippines[14] and Denmark,[15] and were under litigation in South Africa.[16] In 2010, the U.S. Court of Appeals for the Federal Circuit held that Croc's design patent had been infringed.[17]

In 2007, the U.S. Consumer Product Safety Commission requested a voluntary recall of Croc-like clogs due to a potential choking hazard involving detaching plastic rivets.[18]

Croc-like brands include Airwalk, Poliwalks, USA Dawgs/Doggers, NothinZ, Veggies etc. Versions of the Croc style clogs have appeared in children's fashion catalogs, usually under their own name brands or as no names. Other knock-offs are in discount stores, amusement park stores, beach stores, department stores, and superstores.[12]

Products[edit]

Crocs selection in a shop

Crocs are made in a variety of styles. They are manufactured in Crocs facilities in Mexico, and contract manufacturers in Italy, Romania, Bosnia and Herzegovina, Vietnam, China and Argentina (Saladillo).

The shoes are produced in an array of colors depending on the model. The Classic styles are available in more than 20 colors; most other styles are produced in a palette of four to six colors or two-color combinations.

Crocs also sells other fashion accessories. Jibbitz are decorations that can be clipped to the ventilation holes in the shoes. These include designs, mainly aimed at children, which feature Disney characters. The company has also released a line of purses in a variety of colors.

A "Fuzz Collection" with removable woolly liners extend the range into winter wear.[citation needed]

In 2008, the company entered the golf shoe marketplace, acquiring golf shoe manufacturer Bite Footwear. A Croc-styled pair of golf shoes, the Ace, was introduced.[19]

Escalator safety sign warns: Take extra care when wearing soft plastic shoes

Health and safety[edit]

Some Crocs shoes were tested and recommended by the U.S. Ergonomics company in 2005[20] and were accepted by the American Podiatric Medical Association[21] in 2009.[9] In 2008, the U.S. government Centers for Medicare and Medicaid Services approved a model of Crocs with molded insoles as diabetic footwear, to help reduce foot injuries.[22]

Footwear such as Crocs and flip-flops came under scrutiny in 2006 in the U.S. and 2008 in Japan when children suffered injuries after the shoes became caught in escalator mechanisms.[23][24] This was due to the soft shoe material combined with the smaller size of children's feet.[25] In 2008, Japan's Ministry of International Trade and Industry, after receiving 65 complaints of injuries, requested that Crocs change its design.[24]

Internationally, some healthcare facilities introduced policies in 2007 regulating Crocs. Rapid City Regional Hospital in South Dakota changed its dress code to prohibit the sandal variants and those with holes, citing safety concerns, but allowed closed-top "Professional" and the healthcare-focused "Rx" Crocs to be worn.[26] Over one hundred hospitals in Canada were advised to implement similar policies.[27][28] Blekinge and Karolinska University hospitals in Sweden banned the wearing of "Forsberg slippers" (Foppatofflor)[29] by staff, due to high voltage static electricity buildup which was observed[30] to interfere with electronic equipment.[31][32][33] City hospitals in Vienna, Austria announced banning Crocs, often worn by nursing staff, to comply with antistatic requirements.[34]

Crocs announced the Fuse and two others in 2009, formulated to dissipate static electricity in accordance with European standard EN ISO 20347:2004 (E), for use in the medical sector.[35]

In 2011, Crocs was fined $230,000 by the EPA for falsely claiming[36] that the shoes are made of "antimicrobial" material.[37][38]

Acquisitions[edit]

Various types of Crocs with accessories.

In October 2006, Crocs Inc. purchased Jibbitz, a manufacturer of accessories that snap into the holes in Crocs shoes, for $10 million, or $20 million if Jibbitz met earnings goals.[39]

In January 2007, Crocs acquired assets of Ocean Minded[40] for $1.75 million in cash, plus potentially $3.75 million based on performance. Ocean Minded makes leather and ethylene-vinyl acetate-based footwear.[11] In July 2007 Crocs agreed to buy shoe and sandalmaker Bite Footwear, based in Redmond, Washington for $1.75 million, or up to double that based on earnings results.[41]

In April 2008, Crocs acquired Tidal Trade, Inc. ("Tidal Trade"), the Company's third party distributor in South Africa, for $4.6 million. The Company recorded $1.4 million in customer relationships on the date of acquisition. Crocs repurchased inventory previously sold to Tidal Trade and accordingly recognized a reduction of revenue of approximately $2.1 million.[19] Also in April the Company acquired Tagger International B.V. ("Tagger"), a private limited liability company incorporated under the Netherlands law that manufactures messenger bags. Tagger was partially owned by the Managing Director of Crocs Europe B.V. The Company acquired all Tagger assets for $2 million: $90,000 for inventory and $1.9 million for the Tagger trademark.[19] Later in June Crocs liquidated Fury, Inc. two years after acquiring it,[42] after efforts to sell it off were unsuccessful. As a result, Crocs wrote off $250,000 related to the remaining customer relationships, intangible assets and trademarks over three months.[19]

Fashion[edit]

Bill Maher New Rule: Stop wearing plastic shoes.

Starting in 2006, sales of Crocs "somehow just caught fire", according to Salon,[43] first-quarterly sales roughly tripled from 2006 to 2007, according to the New York Times.[44] A Washington Post article described the phenomenon: "Nor is the fashion world enamored of Crocs. Though their maker touts their 'ultra-hip Italian styling,' lots of folks find them hideous."[9] Tim Gunn, fashion consultant, told Time magazine, "... the Croc – it looks like a plastic hoof. How can you take that seriously?"[45] A blog named "IHateCrocs.com" was founded by two college students, (one refers to the shoes as "hideous"), while website "CrocFans.com" documents uses of the shoes.[44] The Facebook group "I Don't Care How Comfortable Crocs Are, You Look Like a Dumbass" has been mentioned in the media.[46][47][48]

Media[edit]

The shoes have been targets of satire: on Real Time with Bill Maher, Maher called for a "New rule: stop wearing plastic shoes," over a photo of Crocs,[49] and The Daily Show "Senior Public Restroom Correspondent" Rob Corddry, following up on the Senator Larry Craig June 2007 lewd conduct arrest, "reported" that anyone wearing Crocs is signalling "anything goes."[50] Websites by fans and critics have been created allowing individuals to share their views about Crocs.[44] Crocs are #6 on the "Worst" list of Maxim's "The 10 Best & Worst Things to Happen to Men in 2007."[51]

In 2007, then-President George W. Bush wore black Crocs with socks publicly.[52] In August 2009, First Lady Michelle Obama was spotted wearing Crocs with her daughter.[53] A 2008 anti-Crocs essay by Steve Tuttle in Newsweek[54] was met with "thousands of comments on the piece. The people who wrote in were elated. They were furious."[55] In late 2009, the company changed marketing direction, away from fashion and towards comfort, betting that their long-term prospects would be best served by appealing to workers who spend a lot of time on their feet. In May 2010, Time magazine listed Crocs as one of the world's "50 Worst Inventions".[56]

Legal actions[edit]

In November 2007, a class action lawsuit was filed against Crocs Inc., alleging that the company and certain of its officers issued false and misleading statements during the Class Period.[57] A settlement of $1,000,000 was reached in 2011.

Stock[edit]

Crocs completed the initial public offering of its common stock in February 2006. It began trading on the NASDAQ Stock Market under the symbol CROX. On October 31, 2007 the stock CROX dropped from $75 per share to slightly under $40 (its value six months previously) when the company announced decreased revenue projections.[58][59][60][61][62][63][64] On April 14, 2008, during the midst of the Credit crunch of 2008, the stock dropped 30% in after-hours trading after the company issued a press release in which they significantly guided down earnings estimates for the first quarter. In the same statement they also said they would lay off its 600 Quebec City factory employees as retailers have been reducing orders, though about 100 sales and marketing positions would remain. "The retail environment in the U.S. has become increasingly challenging as consumer spending and traffic levels have slowed," Chief Executive Officer Ron Snyder said. During the financial crisis, CROX dropped to as low as $0.79 before rebounding ($15.50 by November 2010).[65] On October 18, 2011, Crocs stock suffered a single day drop of about 39.4% on lowered earnings and revenues forecast.[66]

In June 2013, Crocs reported a 42.5% decrease in net profits from a year before. As a result the stock fell 20.2% in one day.[67]

In December 2013, embattled hedge fund SAC Capital Advisors has disclosed a 5% stake in footwear manufacturer Crocs just over a day after The Blackstone Group said it would invest $200 million in a convertible preferred stock offering that will allow the company to replace its CEO and buy back $350 million in stock. SAC Capital management said in a filing with the Securities and Exchange Commission on Tuesday it had accumulated a 5% passive stake in Crocs.[68]

Restructuring[edit]

On 21 July 2014, Crocs, Inc announced a restructuring plan which would both streamline its operations and workforce by eliminating 180 jobs, close 75 to 100 stores (out of 624 worldwide) and the scrap underperforming brands in its product line.[69] Crocs has previously eliminated 183 positions, including 70 positions and planned positions in its corporate headquarters in Niwot.[69] Crocs also announced that it open a "Global Commercial Center" with 50 to 75 employees in Boston later in 2014 for merchandising, marketing and retail functions.[69]

References[edit]

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  4. ^ Wellington, Elizabeth (July 5, 2007)."Fashion Attack". Philadelphia Inquirer. Retrieved August 25, 2007.
  5. ^ "Crocs snaps up beach volleyball sponsorship". SportBusiness.com. February 27, 2008. Retrieved 2009-09-9-25. 
  6. ^ Sage, Alexandria (August 10, 2009). "Beach volleyball tour says Crocs ending sponsorship". Reuters. Retrieved September 25, 2009. 
  7. ^ Maniscalco, Michelle (March 2007). "E-shots Web-exclusive: Patent check: What's in a Croc?". Injection Molding Magazine. Retrieved July 31, 2007. 
  8. ^ US 6993858 
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  12. ^ a b "A chip off the ol' Croc, Sure, they're ugly. But the popular, funky clogs have plenty of imitators at their feet.". Fort Worth Star-Telegram (TX). September 7, 2007. Pg E3.(subscription required)
  13. ^ "CROCS, INC. Form:10-Q". Filing Date: August 14, 2006.
  14. ^ "NBI seizes P16-million fake Crocs footwear". Philippine Star. February 7, 2010.
  15. ^ "Burning rubber". Copenhagen Post online. June 10, 2009.
  16. ^ Schroeder, Fatime (February 28, 2007). "'Fake Crocs' battle going to court". South Africa: Independent Online. Independent Newspapers (Pty) Limited.
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  21. ^ "Footwear with APMA Seal of Acceptance" apma.org; American Podiatric Medical Association. October 7, 2009. Note: CrocsRX is a Corporate Partner in APMA at the $100000-$249999 contributions level per APMA.org. 2009.
  22. ^ AP (July 18, 2008). "Crocs get a lift from diabetics as medical agency OKs footwear". Denver Post, based on Crocs press release. Retrieved May 31, 2010.
  23. ^ Snow, Kate (October 5, 2006). "Crocs can pose a danger on escalators". ABC News.. Retrieved April 19, 2007.
  24. ^ a b AP (April 21, 2008). "Kids Hurt While Wearing Crocs on Escalators". ABC Business News. Retrieved November 5, 2009.
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  27. ^ Talaga, Tanya (July 24, 2007). "No Crocs for docs and nurses?" The Toronto Star. Retrieved June 4, 2010.
  28. ^ AP and Olafson, Joe (July 31, 2007). "Crocs clampdown sparks health-care debate". CTV News.
  29. ^ Foppatofflor is a Swedish nickname for Crocs, after Peter "Foppa" Forsberg, Sweden's Crocs importer.
  30. ^ "Requirements to stop slippers after dangerous incidents". Dagens Medicin (SE). April 18, 2007. (English translation). Retrieved June 6, 2010.
  31. ^ "Swedish hospital to ban 'Foppatoffels'" The Local (Sweden), April 18, 2007. Retrieved April 20, 2007.
  32. ^ AP (April 19, 2007). "Plastic clogs disrupt machinery in Swedish hospital" Guardian Unlimited (AP). Retrieved April 19, 2007.
  33. ^ "Karolinska prohibits foppa slippers". Dagens Medicin (SE), April 27, 2007. (English translation). Retrieved June 6, 2010.
  34. ^ SAPA-AFP (August 12, 2008). "Vienna hospitals ban Crocs" Mail & Guardian Online. Retrieved August 13, 2008.
  35. ^ Staines, Richard (March 31, 2009). "New anti-static crocs shoe produced for use in hospitals". NursingTimes.net. Retrieved June 26, 2010. 
  36. ^ "News releases: Crocs". July 22, 2006. Retrieved August 30, 2012. "Crocs are made of a lightweight antimicrobial resin [...]. Because of Crocs’ antibacterial material, they won’t be stinky by summer’s end" 
  37. ^ Janik, David (December 30, 2010). "News Releases from Region 8: EPA and Crocs settle case over antimicrobial claims" (Press release). Environmental Protection Agency. Retrieved August 30, 2012. 
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  40. ^ "Ocean Minded website". Ocean Minded. August 4, 2008. Retrieved November 5, 2008. 
  41. ^ "Crocs will buy Wash. shoemaker". Denver Business Journal. July 30, 2007. Retrieved August 4, 2008. 
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  49. ^ "August 24, 2007". Real Time with Bill Maher. Season 5. Episode 105. August 24, 2007. 51.5 minutes in. HBO. http://www.hbo.com/billmaher. "It was only a year ago when only pre-schoolers and mental patients wore these. But now grownups, all over America, have gone Croc crazy. The latest step in our unending quest to dress as casually as humanly possible. You know, I used to wear flip-flops, but they were a little dressy. I want clothing I can hose down! Admit it: we're a nation of slobs who won't be happy until we can go to the mall in a diaper."
  50. ^ "September 10, 2007". The Daily Show with Jon Stewart. Episode 12112. September 10, 2007. 10 minutes in. Comedy Central. http://www.thedailyshow.com/watch/mon-september-10-2007/trapped-in-the-men-s-room. "...Oh, and Jon, anyone in those brightly colored plastic Crocs? That means anything goes. We're talking hardcore ass-[censored] stuff - scat play. And Jon, that's not just in bathrooms. Anytime you see anyone wearing crocs, be aware. ... If they're wearing Crocs, they are soliciting incredibly depraved gay sex. You can take that to the bank."
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  67. ^ Clifford, Catherine (July 26, 2013). "Crocodile Tears? Crocs Blames Earnings Drop on the Weather". Entrepreneur.com. 
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  69. ^ a b c http://www.dailycamera.com/boulder-business/ci_26190575/niwot-based-crocs-plans-layoffs-store-closures-major

External links[edit]