Slide 1: Investor Presentation January 2018
INVESTOR PRESENTATION JANUARY 2018
Slide 2: Forward-Looking Statement
FORWARD-LOOKING STATEMENT Some information provided in this document will be forward-looking, and accordingly, is subject to the Safe Harbor provisions of the federal securities law. These statements include, but are not limited to, statements regarding future revenues, gross margin and selling, gen
Slide 3: Agenda
AGENDA • Brand Introduction • Repositioning for Long-Term Success • Financial Outlook • Key Investment Considerations 3
Slide 4: Brand Introduction
BRAND INTRODUCTION crocs
Slide 5: Crocs Is a Powerful Global Brand
CROCS IS A POWERFUL GLOBAL BRAND • $1B+ annual sales; one of the 10 largest non- athletic footwear brands in the world • Unmistakable iconic silhouette that represents ~50% of revenue • Global aided brand awareness: ~65% • Broad democratic consumer base across men, women and kids • Established distr
Slide 6: Repositioning for Long-Term Success
REPOSITIONING FOR LONG-TERM SUCCESS 6
Slide 7: Repositioning for Long-Term Success
REPOSITIONING FOR LONG-TERM SUCCESS 1 2 3 Simplify the Business to Improve the Quality of Focus on Sustainable, Reduce Costs Revenue Profitable Growth 7
Slide 8: 1. Simplify the Business to Reduce Costs
1. SIMPLIFY THE BUSINESS TO REDUCE COSTS • Reduce the owned and operated store base - Close or transfer unproductive stores • Sell non-core markets, transition to distributors • >160 Net Store Reduction by - Sales completed: South Africa, Taiwan and the Middle East 2018 • Eliminate overhead as a res
Slide 9: 2. Improve the Quality of Revenue
2. IMPROVE THE QUALITY OF REVENUE • Reduce low quality revenue • SKU count reduced by 50% - Significantly reduced discount channel distribution relative to 2014 • Rationalize the global product line • 250 bps gross margin - Reduced the SKU base and achieved >60% global improvement since 2015 SKU ali
Slide 10: 3. Focus on Sustainable, Profitable Growth
3. FOCUS ON SUSTAINABLE, PROFITABLE GROWTH • Invest to grow our core clog silhouette • Focus on sandals, a significant growth opportunity • Embrace digital commerce to accelerate growth • Comprehensive social and digital marketing campaign to enhance brand relevance and consideration 10
Slide 11: Invest to Grow Our Core Clog Silhouette
INVEST TO GROW OUR CORE CLOG SILHOUETTE • ~$4B global market; Crocs is the global market leader • Clogs are synonymous with Crocs • Driving renewed clog relevancy with new colors, graphics, licensed images and embellishments - Classic & Crocband seeing growth in all markets and all channels - Design
Slide 12: Focus on Sandals, a Significant Growth Opportunity
FOCUS ON SANDALS, A SIGNIFICANT GROWTH OPPORTUNITY • ~$23B global market - Crocs currently has <1% global market share - Highly fragmented market - no global market leader - Appeals to our core consumer • With recent focus, sandals* reached 19% of sales in 3Q17, up from 14% in 3Q16 - Revenues from s
Slide 13: Accelerate Growth from Digital Commerce
ACCELERATE GROWTH FROM DIGITAL COMMERCE • Three Aspects of Digital Commerce - eCommerce: Crocs operated eCommerce sites o Fastest growing distribution channel o Benefitting from global deployment of best practices o Sophisticated analytics and personalization are boosting revenues and ROI - eTail: O
Slide 14: Comprehensive Social and Digital Marketing Campaign
COMPREHENSIVE SOCIAL AND DIGITAL MARKETING CAMPAIGN • Launched “Come As You Are” in April 2017 Drew Barrymore • Invested in brand ambassadors Drew Barrymore Henry Lau Yoona Lim • Collaborated with designers Christopher Kane and Balenciaga, creating impactful “buzz” • Leveraged social influencers to
Slide 15: Comprehensive Social and Digital Marketing Campaign (Cont'd)
COMPREHENSIVE SOCIAL AND DIGITAL MARKETING CAMPAIGN (CONT’D) • Social media: Record breaking results for reach, followers and engagement • Doubled PR impressions, with dramatically improved tone • Annual Brand Survey results demonstrate positive impact +15% +11% +14% BRAND DESIRABILITY BRAND RELEVAN
Slide 16: Repositioning for Long-Term Success
REPOSITIONING FOR LONG-TERM SUCCESS 1 2 3 Simplify the Business to Improve the Quality of Focus on Sustainable, Reduce Costs Revenue Profitable Growth Heavy Lifting Substantially Revenue Base Substantially Confident in Pathway to Complete More Profitable Growth 16
Slide 17: Financial Outlook
FINANCIAL OUTLOOK crocs
Slide 18: 4Q17 and Full Year 2017 Guidance
4Q17 AND FULL YEAR 2017 GUIDANCE 4Q FULL YEAR 2017 • Revenues: $195 - $198M, up ~5% compared to • Revenues: down LSD - Up LSD vs 2016 absent business model $187.4M in 4Q16 changes - Increase from prior guidance of $180 - $190M - Up HSD vs 4Q16 absent business model changes • Gross margin of ~ 50%, u
Slide 19: Looking Ahead - 2018
LOOKING AHEAD - 2018 • 2018 Revenue outlook: essentially flat with 2017 - Store closings expected to reduce revenues by ~$50M - Wholesale and eCommerce growth expected to offset store closing headwind - Absent store closures and business model changes, revenues would be up MSD compared to 2017 • $75
Slide 20: Looking Ahead – Path to Double Digit EBIT Margin
LOOKING AHEAD – PATH TO DOUBLE DIGIT EBIT MARGIN Focus on Sustainable, DD eCommerce and Moderate Wholesale Profitable Growth Growth Revenue Substantially Sustainable Gross Margin > 50% More Profitable SG&A in the low 40% Range Heavy Lifting • SG&A Reduction Plan Eliminates $75M - $85M Substantially
Slide 21: Key Investment Considerations
KEY INVESTMENT CONSIDERATIONS 21
Slide 22: Key Investment Considerations
KEY INVESTMENT CONSIDERATIONS • The Classic Clog: an unmistakable icon recognized around the world • Crocs: a powerful global brand with a democratic consumer base - At $1B+ annual sales; one of the world’s 10 largest non-athletic footwear brands • Successful business transformation that is well und
Slide 23: crocs
8242) 550028 crocs