Crocs' strategy has flopped

The company plans to close stores and lay off employees, and says it needs to make some deeper changes.

By MSN Money Partner 14 hours ago
© Ed Andrieski/AP
Crocs shoes on displayBy Hayley Peterson, Business Insider

Crocs' (CROX) comeback plan is a bust.

The company is cutting jobs and closing stores amid plummeting net income. 

The company said Tuesday that it plans to close 75 to 100 of its 624 stores globally and lay off 183 employees out of more than 5,000. Its stock price rose more than 12 percent to $16.68 as investors applauded the move.

Net income fell a whopping 44 percent for the second quarter to $19.7 million, though revenues rose 3.6 percent to $376 million. 

Crocs President Andrew Rees said in a statement that the performance shows "the need for dynamic change in our strategy, organization and approach to the market."

Crocs was hoping that a new, sleeker line of shoes that was released this year -- including ballet flats, pumps, and open-toe wedges -- would revitalize the brand. But the company's new shoe styles failed to offset falling demand for its signature plastic clogs.

The new styles were "too big a reach for the brand," Rees told The Wall Street Journal.

The company is now planning to cut back on its range of styles by 30 percent to 40 percent as a result.

Crocs' colorful plastic clogs soared in popularity a decade ago.

More from Business Insider

Tags: CROX
12 hours ago
Each decade has an anti-shoe fad. The 70s had the Earth Shoe. The 80s had the Jellies. The 90s had aqua-sox. The Teens have those weird shoes with toes. The 00s had Crocs.
The fad is done just like the decade. You made your quick move along.
12 hours ago
they were ugly, the emperor has no clothes!
My wife worked for Crocs'. The corporate office was so out of touch with the local stores and decisions they made cut the sales at my wife's store by at least 50%. 

Decisions like
1. discontinuing to stock the highest demand shoe at the Tucson stores, the "Crocs' band"...reducing sales 50%
2. discontinuing selling men's shoes at the kiosk and providing only women's shoes: reducing sales 35%
3. not advertising their new shoes like the Santa Cruz models, etc.
     The general public only recognizes Crocs' for their flagship clog type shoe. The public had no
      idea that Crocs had developed a whole other line of shoe styles that are current with today's
4. forcing the kiosk to carry winter shoes in July and August when temperatures are above 100 degrees in Tucson
5. The most crucial mistake; not supplying inventory when it is needed. And shipping miscellaneous inventory "Willie-Nillie" when it had not been requested by the store managers and then expecting the store managers to decide what stores in the country needed the inventory that was shipped to them. That doubled shipping cost and caused delays in inventory being sent to stores that needed it. It's hard to calculate that loss.

The corporate office was completely out of touch with the general public. My wife and I watched the sales go down and down with each corporate decision. She went to manager's meetings in Denver where the managers were promised better control and over-site on inventory as well as actually listening to the needs of the store managers. Of course, that never happened.

What amazes me most is that Crocs' has not declared bankruptcy yet. They have a good product. But their corporate office has crippled the organization. Too bad. I like the shoes.
11 hours ago
They flopped because they were ugly and unhealthy. Great method of birth control though. Should change their marketing to reflect that.

9 hours ago

Don't over-analyze it.

There are two kinds of people, the kind that know Croc's look ridiculous, and those who are tired of being laughed at when they walk by a group of people and finally figured out why.

Crocs touted themselves as "supportive" footwear for professionals on their feet all day.  I sold Birkenstocks and other real supportive shoes for quiet a few years.  I saw lots of people come in who had tried the cheap way out when their doctors told them to get better shoes.  They not only didn't get any help from the Crocs, but in many cases, their pain and foot/ankle/knee problems got much worse.  Crocs are nothing more than crappy spongy stuff that goes flat after minor wear.  They were never any good, but they were cheap...and that's what made them sell.  I'm sure the corporate decisions affected sales...all those MBAs with no better idea than "grow the brand!"  Yeah...abandon what made you a success and come up with changes for the sake of change to justify your existence.  Companies never learn.  While successful companies do evolve and change with the times, so many of them just throw ideas at a wall and see what sticks.  If Crocs go away, nobody will care...and some people will be better off.
11 hours ago
I never shared the enthusiasm for Crocs. They looked like those funky gardening shoes that people wear to Home Depot on weekends. Ugh. I suppose there is still a market for kids if the company is clever enough to pull it off.
9 hours ago
Ugly clown shoes, never more than a fad, amazing what people will buy just for something different.
7 hours ago

I didn't know that Crocs had stand-alone stores, so them closing is not a surprise to me.

Ive never owned a pair of Crocs.

12 hours ago
They where a terrible company to work with as a vendor. Year of poor customer service to their distributors and resellers. That's what did it.
8 hours ago
It is astonishing what people will buy in the name of "fashion." Crocs were and are nothing more than injection molded crap. They should never have been priced above $2.99.
12 hours ago
8 hours ago
it's not all what it's croced up to be. it crocidied.
8 hours ago
there's a lot of loopholes that come with this product.
8 hours ago
Best option is to close now and not waste what little is left or go deeper in debt.....
Didn't just kids buy these?...You can't build a long term business on that, not in apparel...
Like Stacey London ("What Not to Wear"), if crocs were the last shoes in the world, I'd cut off my feet." Or something to that effect.
5 hours ago
i didn't know croc's sold flip-flops ...
25 minutes ago
To me, they looked like over-priced foam rubber that likely contain toxic chemicals that are unhealthful to carbon-based life forms.  Generally, when I see wearable synthetic materials with bright colors, I am thinking they use cadmium to color fast that hot pink or shocking green.
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