Crocs took a page from Nike’s DTC Playbook – and it’s already paying off
Crocs just had another stellar quarter – and direct consumer sales were a big part of that.
The comfort-focused brand saw sales growth of 93% in the second quarter, with quarterly Net income rose to $ 319 million, or $ 2.23 per share, on an adjusted basis, compared to $ 56.6 million or $ 1.01 a year ago. Direct sales to end users, which include sales from e-commerce and branded retail stores, increased 78.6% year over year and accounted for 52% of sales in the second quarter.
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In the past few months, Crocs has focused on sharpening its direct customer business and streamlining certain wholesale partnerships. In April, Crocs announced that it would end relationships with some of its long-standing wholesalers in order to prioritize key partners who can improve the brand’s position in the marketplace. That came shortly after Nike did Similar steps to cancel wholesale accounts at Zappos, Dillard’s, DSW, Urban Outfitters, Shoe Show, and other retailers.
Crocs and Nike are two examples of a general industry trend towards Doubling to a direct consumer focus. For Crocs, the increasing demand for products has enabled the shoemaker to be more selective about where he presents himself to consumers.
“You are in a position where the brand is hot,” Steve Marotta, managing director of equity research at CL King & Associates, told FN about Crocs in April.
Speaking to investors Thursday, Crocs CEO Andrew Rees said the company is being selective in how much and what type of inventory it allows in the market at any given time in order to control Crocs’ branding.
Describing the direct-to-consumer push as “an important change for Crocs,” Rees said the company is implementing “best brand management practices,” which Williams trading analyst Sam Poser highlighted in his analysis of the brand.
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“Continuous product innovation, marketing, collaborations and brand management have produced strong results and will lead to more in the future,” Poser wrote in a Thursday note on Crocs.
Crocs of course continues to have strategic wholesale partners that serve the brand’s needs. Crocs reported that wholesale sales rose 112.1% in the second quarter and found that its top 20 brick and mortar accounts did well. However, the direct-to-consumer arm remains a focus area.
“I’m sure there are occasional wholesale partners who would like more products,” Rees said. “In fact, there are probably quite a few who would like more products, but that is an important part of brand management.”
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