Matthew Yglesias is on vacation.
Crocs, Inc., is taking a hit today after reporting to investors that its sales slid 2.4% in the most recent quarter. The sales drop is mostly tied to America, where the company is incorporated and where it still earns most of its revenue.
The decrease, from $296 million to $289 million, is also partially thanks to Japan. The deficit destroys gains Crocs made in Asia and Europe.
The biggest numbers from the report are interesting: European consumer-direct retail revenue grew by over 60%. In America, Internet revenue dropped by just over 32%. The competing tea leaves here are a bit uglier than they appear. As Businessweek notes, Crocs increased the number of company-owned stores by 29% in the past year.
European demand is curious, and indicates that the reputation issue is a significant roadblock for expanding or reinventing the business in America. In Europe, moving on from the Croc clogs isn’t quite as much of a bullet to one’s own foot.
Businessweek detailed the company’s plans to alter its image—by moving on from, well, Crocs—back in July. But you can see the change yourself just by going to the Crocs website. Unlike the caricature that the name “Crocs” calls to most of our minds, the company’s splash page is all rain boots and fuzzy clogs. The men’s page is dominated by chukka-looking loafers.
It makes sense for the company to look for ways to diversify its markets and products. The company’s stock has been a rollercoaster for some time, which is almost inevitable for a company so tied to one product. In 2007, the stock skyrocketed to $70. In 2009, it dropped to nearly $1. In 2011, nearly $30, and right now, it’s fighting around $12. Caveat emptor.
Whether the company will succeed in moving on from clogs is anyone’s guess, but doing so requires painful steps. In a year or two, they’ll have either reinvented their image, or they’ll be the weird kid who sacrificed all his friends in a vain bid for coolness.