Crocs, Inc. · NASDAQ:CROX
Crocs — Goldman Sachs 25th Annual Global Retailing Conference (September 2018)
30 slides from Crocs's conference presentation, Sep 7, 2018
Slide 1: Investor Presentation September 2018
INVESTOR PRESENTATION SEPTEMBER 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, selling, genera
Slide 3: Agenda
AGENDA • Brand Introduction…………………………………………………………………..4 • Repositioned for Long-Term Success …………………………………………..10 • Financial & Management Information……………………………………………23 • Key Investment Considerations…………………………………………....…….28 3
Slide 4: Brand Introduction
BRAND INTRODUCTION crocs
Slide 5: Unmistakable Icon
UNMISTAKABLE ICON Our very first product changed the way shoes feel forever. We created an unmistakable recognized icon loved around the world. Nothing else looks like it. Nothing else feels like it. 5
Slide 6: 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 • Clogs represent ~50% of revenue and sandals ~ 20% - both growing • Global aided brand awareness: ~65% • Broad democratic consumer base across men, women and kids • Established dis
Slide 7: Target Consumers: A Broad Reach
TARGET CONSUMERS: A BROAD REACH FEEL GOODS EXPLORERS Mainstream casual style with function Mix popular casual styles for personal look Prefers brands providing personal casual style Always mixing it up with tried-and-true classics, new options to match each family member’s unique popular styles, or
Slide 8: Significant Growth Opportunity
SIGNIFICANT GROWTH OPPORTUNITY • Strong player in the casual footwear market • Large “considerer” group with sizeable short-term growth opportunity • Huge neutral group that represents significant mid-to-long term growth potential SIGNIFICANT GROWTH OPPORTUNITY 13% 18% 51% 18% OWNERS / CONSIDERS NEU
Slide 9: Geographic Focus
GEOGRAPHIC FOCUS 3 Regions – Sales in 90+ Countries Strategic Country Focus Americas (47% FY ’17) • United States • Korea APAC (36% FY ‘17) • Germany • Japan Europe (17% FY ‘17) • China GLOBAL PRESENCE, INCLUDING TROPICAL COUNTRIES, SUPPORTS YEAR-ROUND DEMAND 9
Slide 10: Repositioned for Long-Term Success
REPOSITIONED FOR LONG-TERM SUCCESS 10
Slide 11: Repositioned for the Long-Term: Successful Turnaround Underway
REPOSITIONED FOR THE LONG-TERM: SUCCESSFUL TURNAROUND UNDERWAY 1 2 3 Generate Sustainable, Improve the Quality of Simplify the Business to Profitable Revenue Revenues Reduce Costs Growth 11
Slide 12: 1. Improve the Quality of Revenues
1. IMPROVE THE QUALITY OF REVENUES • Focus on higher quality revenues - Shift to molded product - Significantly reduced discount channel distribution • ~ 400 bps gross margin • Fewer and narrower promotions improvement between 2015 and 2017 • Rationalized global product line - Reduced the SKU base a
Slide 13: 2. Simplify the Business to Reduce Costs
2. SIMPLIFY THE BUSINESS TO REDUCE COSTS • Company-operated store base reduced to < 400 - Unproductive stores closed or transferred • Non-core markets transitioned to distributors - South Africa, Taiwan, Middle East & Hong Kong • Manufacturing facilities in Mexico and Italy closed • ~160 Net Store R
Slide 14: 3. Generate Sustainable, Profitable Revenue Growth
3. GENERATE SUSTAINABLE, PROFITABLE REVENUE GROWTH • Bring innovation to our core clog silhouette • Focus on sandals, a significant growth opportunity • Introduce products incorporating new technologies that deliver enhanced comfort • Embrace digital commerce to accelerate growth • Employ social and
Slide 15: Grow Our Core Clog Silhouette
GROW OUR CORE CLOG SILHOUETTE • ~$4B* global market; Crocs is the global market leader - Grew clog revenues 11% in 2Q18 • Clogs are synonymous with Crocs • Driving greater clog relevancy with new colors, graphics, licensed images and embellishments - Classic & Crocband seeing growth in all markets a
Slide 16: 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, grew sandals** to 20% of sales in 2017, from 16% in 2016 - 18% growth in
Slide 17: Equal Parts Science and Magic: LiteRide
INVEST IN NEW, COMFORT FOCUSED TECHNOLOGY: LITERIDETM • Our LiteRide™ collection features foam footbeds, our latest breakthrough in world-class comfort. Engineered to make you feel sensational on every step along life’s winding path. ‒ Athletically inspired for your on-the-go lifestyle; perfect for
Slide 18: Multi-Channel Distribution Model
MULTI-CHANNEL DISTRIBUTION MODEL 2017 Revenue Split 50% of wholesale sales come from e- tail and distributors 15% 2Q18 Results: Wholesale sales up: 7.1% 52% E-commerce sales up: 23.8% DTC 33% Comp: Retail comp: 7.1% 11.8% • Generate global sales through wholesale and direct to consumer (retail and e
Slide 19: Accelerating Digital Commerce Growth
ACCELERATING DIGITAL COMMERCE GROWTH • Three Aspects of Digital Commerce - E-commerce: Crocs operated e-commerce sites o Fastest growing distribution channel Sophisticated analytics and personalization are boosting revenues and ROI - E-tail: Online sales through wholesale accounts o Established hi
Slide 20: Impactful Social and Digital Marketing Campaign
IMPACTFUL SOCIAL AND DIGITAL MARKETING CAMPAIGN • In year two of our successful “Come As You Are” campaign ‒ CROCS – THE MUSICAL is our most viewed content EVER Drew Barrymore ‒ 6M Snapchat users view themselves wearing a giant, Classic clog hat Drew Barrymore Henry Lau Yoona Lim • Employ brand amba
Slide 21: Impactful Social and Digital Marketing Campaign (Cont'd)
IMPACTFUL SOCIAL AND DIGITAL MARKETING CAMPAIGN (CONT’D) • Social media: Record breaking results for reach, followers and engagement • PR impressions up 150% in 2017 and more than 50% in 1H2018, with dramatically improved tone 2017 / 2018 Annual Brand Survey results demonstrate positive impact +15%
Slide 22: Repositioned for Long-Term Success
REPOSITIONED FOR LONG-TERM SUCCESS 1 2 3 Generate Sustainable, Improve the Quality of Simplify the Business to Profitable Revenue Revenues Reduce Costs Growth Revenue Base Heavy Lifting Confident in Pathway to Substantially More Substantially Complete Growth Profitable Confident in Pathway to Growth
Slide 23: Financial & Management Information
FINANCIAL & MANAGEMENT INFORMATION 23
Slide 24: 2Q18 Financial Results
2Q18 FINANCIAL RESULTS Exceeded guidance metrics: • Revenues: $328.0M, up 4.7%, reflecting strong wholesale and e-commerce growth and positive retail comps; up 12% absent ~ $22M of fleet reduction and business model changes • Gross margin: 55.3%, up 110 bps reflecting benefits of more molded product
Slide 25: Financial Guidance
FINANCIAL GUIDANCE 3Q18 FULL YEAR 2018 • Revenues: $240 - $250M compared to $243.3M in • Revenues: Increase LSD over $1,023.5M in 2017 3Q17 - Up HSD absent ~ $60M of fleet reduction and business model changes - Up MSD – HSD absent ~ $15M of fleet reduction and business model changes • Gross margin u
Slide 26: Looking Ahead: Path to Double Digit EBIT Margin
LOOKING AHEAD: PATH TO DOUBLE DIGIT EBIT MARGIN Focus on Sustainable, DD E-commerce and Moderate Wholesale Profitable Revenue Growth Growth More Profitable Sustainable Gross Margin > 50% Revenues Heavy Lifting Substantially SG&A in the Low 40% Range Complete • SG&A Reduction Plan Eliminates $75M - $
Slide 27: CFO Transition
CFO TRANSITION • Anne Mehlman succeeding Teffner as EVP and CFO ‒ Joining Crocs from Zappos.com, a subsidiary of Amazon, where she served as CFO since 2016 ‒ Previously, a member of the Crocs management team for over five years, most recently as Vice President Corporate Finance • Carrie Teffner resi
Slide 28: Key Investment Considerations
KEY INVESTMENT CONSIDERATIONS 28
Slide 29: 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 taking hold; - C
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