Saturday, June 02, 2007

Blue chip clogs: Celebrity Crocs

Crocs are now worn all over the world from Hollywood to Beijing the plastic shoe is as prolific as the trainer. Despite the phenomenon the shoe fashion police are in turmoil over aesthetic, but shrewd investors are thanking their lucky stars, cheap serviceable shoes are the new vogue. Crocs has a long way to go to overtake Nike but the potential is very good. Crocs went public in February 2006 and market capitalization has just topped the $3 billion mark. Revenues for 2007 are now expected at nearly $700 million and 2008 revenues could top $950 million. Crocs shoes are manufactured from a proprietary resin called Croslite and carries a range of shoes that appeal to almost every demographic set. Available at affordable price points, ranging from $29.99 to $59.99 (US) the comfortable shoes come in bright rainbow colours. The company distribute their products in over 24,000 retailers (more than half are outside the United States). International sales are very important as they carry a higher average selling price. At present Crocs has a gross profit margin at almost 60%, with operating margins between 25-27%. This puts the young company in a very healthy position and especially so when in building/expansion mode. Crocs has the pricing power and high free cash flow to fund expansion and development of new product concepts. Crocs are starting to diversify with product variation and innovation in a bid to capture bigger markets. The company intend to expand the shoe line and other product lines to remain fresh and innovative.

Celebrity Croc wearers include: Nicole Appleton; Mario Batali (celebrity chef); Nikhil Chiapas (MTV host) and his wife Pearl (DJ); Matt Damon; Peter Forsberg ice hockey player; Jennifer Garner ; Teri Hatcher; Faith Hill; Paris Hilton; Mario Lemieux; Tim McGraw; actor Shayan Munshi and wife Pia; Jack Nicholson; Rosie O’Donnel; Al Pacino; designer, Priyadarshini Rao; Adam Sandler; and Harmeet Sethi (stylist).

Interesting site

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