Crocs executives say they remain on track to meet long- and short-term sales targets despite headwinds in the supply chain as demand for polarizing shoes continues to outstrip supply.
CEO Andrew Rees, in a conference call with analysts and investors Thursday, Oct.21, said the company saw its direct-to-consumer (D2C) sales increase 60% from 2020 and 90% from 2020. to 2019, with demand in the channel from new and existing customers.
âWe are very confident and optimistic about the consumer activity that we see both online and in store,â said Rees.
Last month, Crocs laid out a strategic plan to reach $ 5 billion by 2026, which translates into a compound annual growth rate (CAGR) of 17%. Half of those sales are expected to come from digital channels, with a growing focus on expanding into Asia, which Rees says will likely be Crocs’ fastest growing region.
Read more: Crocs’ path to $ 5 billion in sales paved by digital growth and expansion in Asia
Rees said the company is confident it could achieve revenue growth of at least 20% next year, although that capacity may be limited by the amount of product Crocs can import into the United States, in Europe and Asia.
âWe clearly see a demand far beyond what we are able to supply given some of the disruption in supply and the overall scale of our supply chain,â said Rees. âWe think we can fix this problem over time, but we can’t fix it in the short term. “
Officially, Crocs reported nearly $ 626 million in third quarter revenue, up 73% from 2020. Digital sales were up 69% year-on-year and 129% over a two-year stack, accounting for 37% of revenue this year compared to 38% in 2020 and 32% in 2019.
Broken down by channel, D2C accounted for $ 316 million of third quarter revenue, while wholesale revenue accounted for the remaining $ 310 million, growing 88% year-over-year and 111% from a year ago. two years.
Rees told analysts that most of Crocs’ factories in Vietnam, where about 70% of its 2021 production is expected to come from, are operational, although they are in various stages of restart. COVID-19 cases across the country have forced factories to close for several weeks; Nike estimated last month that it had lost 10 weeks of production due to the closures.
See: Factory closures cause more than 10 weeks of lost production for Nike
To mitigate the impact of these disruptions, Reese said Crocs has moved its production capacity to other countries, such as China, Indonesia and Bosnia, and has prioritized its best-selling products for improve plant efficiency.
âOur shoes are really simple, and so the factories ramp up can be really quick,â Rees said, noting that the classic Crocs clog only has three components, two of which are made on site, âyou don’t. therefore not much of the external logistics to be able to start.
The company is also leveraging air freight to import products for the spring and summer 2022 selling season, and adding shipping capabilities to the U.S. east coast to reduce reliance on it. west coast ports that have seen significant container ship backups. Rees noted the company had ships waiting off the California port of Long Beach, but said most of the vacation goods were already in the United States.
âWe don’t plan to use significant air freight in the fourth quarter,â he said. “Most of the products that we will be selling in Q4 are already here or coming in, so there will be a little but not significant.”