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Crocs, Inc.

– 2013
Forest R. David

A. Case Abstract
Headquartered in Niwot, Colorado, Crocs is a footwear company that offers colorful slip-on, casual
and athletic shoes made of closed-cell resin (Croslite); Jibbitz are Crocs’ decorative add-on charms.
Crocs designs, develops, manufactures, markets, and distributes boots, sandals, sneakers, mules, and
flats in more than 90 countries. With manufacturing facilities in Mexico, Italy, and China and
distribution centers worldwide, Crocs has 4,150 employees. Crocs, Inc. owns 180 retail stores, 92
outlet stores, 42 Web stores, and 158 kiosks in malls worldwide. The company sells through retailers
such as Dillard’s, Nordstrom, and Dick’s Sporting Goods. In June 2013, Crocs reported a 42.5 percent
decrease in net profits from a year before. As a result the stock fell 20.2 percent in one day. The
company needs a clear strategic plan, largely because there are knock-off, cheap, imitation Crocs
flooding the market globally.

B. Vision Statement (proposed)


To produce the most comfortable shoes in the world.

C. Mission Statement (actual)

Crocs provides two separate mission statements, one for Crocs, Inc. and one for Ocean Minded.
Crocs’ mission is: “To bring profound comfort, fun and innovation to the world’s feet.” Ocean
Minded’s mission is: “To become the global leader in sustainable lifestyle footwear, apparel and
accessories whilst ensuring that the four pillars of the Ocean Minded brand – Quality, Authenticity,
Responsibility and Community – resonate throughout our company, products, associates and actions.
(Company website)

(proposed)

Crocs is committed to providing profound comfort, fun and innovation in all the shoe models (2) we
produce. Through our Croslite technology (4) (7), we are able to provide our customers (1)
dependable and lasting comfort all day. We strive to expand our brand throughout the world (3) and
are able to save on costs (5), while protecting the environment (8) with our package-less shoes. We
adhere to the belief that good ethics is good business (6) in all that we do as we strive to take care of
our employees and shareholders.

1. Customers
2. Products or services
3. Markets
4. Technology
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept

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8. Concern for public image
9. Concern for employees

D. External Audit
Opportunities

1. Many consumers do not have the income to buy expensive shoes.


2. Nurses and other healthcare professionals enjoy making Crocs the standard shoe for their working
environment.
3. No external organization has found any trace of harmful chemicals in CrosLite technology.
4. China, Vietnam, Brazil, Nigeria, Nambia, and Chile are just a few among many countries where
Crocs shoes could be very well received.
5. Kids enjoy the comfort of Crocs.
6. South and Central America has a warm climate ideal for Crocs.
7. Major shoe companies do not have nearly the formal contracts with beach stores as they do other
retail outlets.
8. Many outdoor-minded people who like Crocs shoes also enjoy hiking, jogging, and other outdoor
activities.
9. Customers are increasingly shopping on the Internet.
10. USA, Western Europe and Japan represent over 80% of the sales in the apparel and textile sector.

Threats

1. Washington Post, New York Times, and other publications have characterized Crocs as ugly in
appearance.
2. Growing number of counterfeit products proclaiming to be Crocs, but are not.
3. Rival firms offering designs similar to Crocs but at discounted prices.
4. The Swedish Society for Nature Conservation found in 2009 alarming concentrations of toxic
chemicals in many popular plastic based shoes including flip flips, sandals, clogs and other similar
style shoes.
5. The footwear industry is quite fragmented in the USA and Western Europe. Total footwear sales
rose just under 5% in 2011 to $50.5 billion in the USA.
6. Nike, and other large shoe producers could wage a price war with Crocs, or buy up shelf space at
retailers shutting Crocs out of significant revenue sources.
7. Possibility Crocs are only a fad with the public.
8. Nike or Adidas could easily take over Crocs hostilely through the purchase of stock.
9. Consumers are increasingly price conscious when it comes to shoes and other apparel.
10. Nike continues to manufacture its products in Asia where labor cost are much lower than in
Mexico.

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Competitive Profile Matrix

Crocs Nike Adidas


Critical Success Factors Weight Rating Score Rating Score Rating Score
Advertising 0.06 1 0.06 4 0.24 2 0.12
Market Penetration 0.08 1 0.08 4 0.32 3 0.24
Product Variety 0.06 1 0.06 4 0.24 3 0.18
Factory Store Locations 0.06 2 0.12 4 0.24 3 0.18
Brand Name 0.08 1 0.08 4 0.32 3 0.24
Product Quality 0.08 2 0.16 3 0.24 4 0.32
Financial Profit 0.12 1 0.12 4 0.48 2 0.24
Revenue 0.12 1 0.12 4 0.48 3 0.36
Market Share 0.07 1 0.07 4 0.28 3 0.21
Company Worth 0.07 1 0.07 4 0.28 3 0.21
Comfort of Shoe 0.10 4 0.40 2 0.20 3 0.30
Price Competitiveness 0.10 3 0.30 4 0.40 2 0.20
Totals 1.00 1.64 3.72 2.80

Crocs does not compare well with Nike and Adidas mainly because the company is 1) so much smaller
and 2) offers a limited array of products. However, Crocs has a unique, comfortable product.

EFE Matrix

Opportunities Weight Rating Weighted Score


1. Many consumers do not have the income to buy more expensive 0.03 2 0.06
shoes.
2. Nurses and other healthcare professionals enjoy making Crocs 0.03 4 0.12
the standard shoe for their working environment.
3. No external organization has found any trace of harmful 0.03 3 0.09
chemicals in CrosLite technology.
4. China, Vietnam, Brazil, Nigeria, Nambia, and Chile are just a few 0.07 3 0.21
among many countries where crocs shoes could be very well
received.
5. Kids enjoy the comfort of Crocs. 0.07 3 0.21
6. South and Central America has a warm climate ideal for Crocs. 0.04 3 0.12
7. Major shoe companies do not have nearly the formal contracts 0.05 3 0.15
with beach stores as they do other retail outlets.
8. Many outdoor-minded people who like Crocs shoes also enjoy 0.07 3 0.21
hiking, jogging, and other outdoor activities.
9. Customers are increasingly shopping on the Internet. 0.05 2 0.10
10. USA, Western Europe and Japan represent over 80% of the 0.08 3 0.24
sales in the apparel and textile sector.

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Threats Weight Rating Weighted Score
1. Washington Post, New York Times, and other publications have
0.02 2 0.04
couched Crocs as being ugly in appearance.
2. Growing number of counterfeit products proclaiming to be
0.09 2 0.18
Crocs, but are not.
3. Rival firms offering designs slimier to Crocs but at discounted
0.09 2 0.18
prices.
4. The Swedish Society for Nature Conservation found in 2009
alarming concentrations of toxic chemicals in many popular
0.03 2 0.06
plastic based shoes including flip flips, sandals, clogs and other
similar style shoes.
5. The footwear industry is quite fragmented in the USA and
Western Europe. Total footwear sales rose just under 5% in 0.03 3 0.09
2011 to $50.5 billion in the USA.
6. Nike, and other large shoe producers could rage a price war with
Crocs, or buy up shelf space at retailers shutting Crocs out of 0.06 2 0.12
significant revenue sources.
7. Possibility Crocs are only a fad with the public. 0.04 3 0.12
8. Nike or Adidas could easily take over Crocs hostilely through
0.03 2 0.06
the purchase of stock.
9. Consumers are increasingly price conscious when it comes to
0.06 3 0.18
shoes and other appeal.
10. Nike continues to manufacture its products in Asia where labor
0.03 3 0.09
cost are much lower than in Mexico.
TOTALS 1.00 2.63

With an EFE score of 2.63, Crocs has room for improvement. Note that the only rating of 4 deals
with the healthcare industry. Note there are no ratings of 1, which is good for Crocs.

E. Internal Audit
Strengths

1. Crocs’ Croslite, a proprietary material, aids in making Crocs one of the most comfortable shoes
available.
2. Crocs are produced in many different styles including, boots, sandals, sneakers, flats, golf shoes, mules
and the popular original clog style offered in more than 20 colors.
3. Crocs has an alliance with the American Nurses Association providing nurses with a 25% discount on
shoes.
4. For the first time in its history, Crocs reported revenues over $1 billion at year end 2011 and in 2012
celebrated its tenth birthday.
5. Over 50% of all Crocs revenues are derived from outside North and South America.
6. Operate 180 retail stores and over 90 outlet stores.
7. Crocs’ Asian segment is the fasted growing market in total volume, with Europe being the fastest
growing market based on percent revenue increases.
8. Most Crocs manufactured for the USA market are produced in Mexico.
9. Crocs avoids all boxing and packaging for Crocs branded shoes.
10. Keeping production in-house allows for improved quality control and deliver of products.

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Weaknesses

1. Many do not like the clunky design of Crocs footwear.


2. All white males comprise Crocs top management.
3. Operate under division-by-region but division-by-product may be better.
4. Less than 15% of sales are derived from Crocs website.
5. Many Crocs can become slippery if any moisture is on the floor.
6. Crocs keeps the CrosLite chemistry as proprietary information.
7. Inventory turnover of 3.4 compared to Nike’s 4.2
8. Around 95% of all revenues are derived from Crocs footwear.
9. Not well diversified in the shoe market.

Financial Ratio Analysis

Profit Margin Percent Crocs Industry


Gross Margin 52.99 43.23
Pre-Tax Margin 10.07 11.57
Net Profit Margin 8.85 8.4

Liquidity Ratios
Debt/Equity Ratio 0.01 0.24
Current Ratio 3.42 3.36
Quick Ratio 2.43 2.02

Profitability Ratios
Return On Equity 16.91 19.88
Return On Assets 12.2 12.31
Return On Capital 16.53 16.57

Efficiency Ratios
Income/Employee 21,589.8 27,293.83
Revenue/Employee 244,090.61 325,038.29
Receivable Turnover 8.12 9.56
Inventory Turnover 3.44 3.72
Asset Turnover 1.38 1.47

Crocs is doing exceptionally well financially and manages inventory well based on its quick ratio. Having
much of the production plants in Mexico serves the company well as it allows for moderate versions of JIT
inventory systems to become more practical.

Net Worth Analysis (in millions)

Crocs Company Worth Analysis


Stockholders' Equity - (Goodwill + Intangibles) $558
Net Income x 5 $655
(Share Price/EPS) x Net Income $1,529
Number of Shares Outstanding x Share Price $1,251
Method Average $998

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Nike Company Worth Analysis
Stockholders' Equity - (Goodwill + Intangibles) $10,643
Net Income x 5 $12,425
(Share Price/EPS) x Net Income $66,407
Number of Shares Outstanding x Share Price $64,454
Method Average $38,482

Crocs is doing well financially as of year-end 2012, but as indicated above, faltered in June 2013.

IFE Matrix

Strengths Weight Rating Weighted Score


1. Crocs’ Croslite, a proprietary material aids in making Crocs being
0.12 4 0.48
one of the most comfortable shoes available.
2. Crocs are produced in many different styles including, boots,
sandals, sneakers, flats, golf shoes, mules and the popular 0.06 4 0.24
original clog style offered in more than 20 colors.
3. Crocs has an alliance with the American Nurses Association
providing nurses with a 25% discount on shoes. 0.02 3 0.06

4. For the first time in its history, Crocs reported revenues over $1
billion at year end 2011 and in 2012 celebrated its tenth birthday. 0.14 4 0.56

5. Over 50% of all revenues are derived from outside North and
0.07 4 0.28
South America.
6. Operate 180 retail stores and over 90 outlet stores. 0.05 4 0.20
7. Crocs’ Asia segment is the fasted growing market in total
volume with Europe being the fastest growing market based on 0.05 4 0.20
percent revenue increases.
8. Most Crocs manufactured for the USA market are constructed in
0.04 4 0.16
Mexico.
9. Crocs avoids all boxing and packaging for Crocs branded shoes. 0.03 3 0.09
10. Keeping production in-house allows for improved quality
0.04 4 0.16
control and deliver of products.

Weaknesses Weight Rating Weighted Score


1. Many do not like the clunky design of Crocs footwear. 0.10 2 0.20
2. All white males comprise Crocs top management. 0.02 1 0.02
3. Operate under division-by-region but division-by-product may
0.04 1 0.04
be better.
4. Less than 15% of sales are derived from Crocs website. 0.03 2 0.06
5. Many Crocs can become slippery if any moisture is on the floor. 0.06 1 0.06
6. Crocs keeps the CrosLite chemistry as proprietary information. 0.03 2 0.06
7. Inventory turnover of 3.4 compared to Nike’s 4.2 0.04 2 0.08
8. Around 95% of all revenues are derived from Crocs footwear. 0.02 2 0.04
9. Not well diversified in the shoe market. 0.04 2 0.08
TOTALS 1.00 3.07

Crocs is doing an excellent job managing internal issues. The most glaring weakness is the clunky design
of the traditional Crocs shoe which puts many people off to Crocs altogether. With Crocs new lines of
products using Croslite technology, hopefully this weakness may be overcome.

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F. SWOT
SO Strategies

1. Develop three new lines of shoes designed for nurses and medical professionals (S1, S2, S3, O2).
2. Expand production facilities in Asia by 100% over the next 4 years (S4, S5, S7, O1, O4).
3. Develop a line of boots for people in the construction industry (S1, S2, O8).
4. Allocate $25 million to research and better predict trends among fashion in kids (S4, O5).

WO Strategies

1. Continue to increase new shoe offerings at a rate of 20% per year other than the traditional clog type of
shoe (W1, O8).
2. Develop a line of shorts and shirts (W8, O4, O6, O8).
3. Advertise in key markets that no harmful components have ever been found in Croslite Technology
(W6, O3).
4. Invest $10 million in R&D to develop soles of shoes that are not as slippery (W5, O2).

ST Strategies

1. Spend $100 million on advertising to promote the benefits and enjoyment customers receive from
Crocs products (S1, S2, S6, T1, T2, T3).
2. Expand production facilities in Asia by 100% over the next 4 years (S4, S5, S7, T5).
3. Maintain lower prices to prevent Nike or another company from starting a price war (S8, S9, S10, T6).
4. Continue to increase new shoe offerings at a rate of 20% per year, other than the traditional clog type
of shoe (S2, T7).

WT Strategies

1. Build a new hub in San Paulo, Brazil to help expansion of serving the South American market (W1,
W8, T2, T3)
2. Advertise in key markets that no harmful components have ever been found in Croslite Technology
(W6, T4).
3. Offer discounts to customers who shop on Crocs website (W4, T2, T3).

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G. SPACE Matrix

FP
Conservative Aggressive
7

5 X = 0.8
Y = 0.2
4

CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1

-2

-3

-4

-5

-6

-7
Defensive Competitive
SP

Internal Analysis: External Analysis:


Financial Position (FP) Stability Position (SP)
Revenue 4 Rate of Inflation -2
Profit 4 Technological Changes -2
Liquidity 5 Counterfeit Products -7
Company Worth 3 Competitive Pressure -7
Quick Ratio 6 Barriers to Entry into Market -3
Financial Position (FP) Average 4.4 Stability Position (SP) Average -4.2

Internal Analysis: External Analysis:


Competitive Position (CP) Industry Position (IP)
Market Share -5 Growth Potential 3
Product Quality -3 Financial Stability 4
Customer Loyalty -3 Ease of Entry into Market 3
Technological know-how -2 Resistance to Economic Downturns 5
Control over Suppliers and Distributors -2 Profit Potential 4
Competitive Position (CP) Average -3.0 Industry Position (IP) Average 3.8

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Crocs is close to the origin on the SPACE Matrix but nevertheless is positioned within the Aggressive Quadrant.
Crocs should continue to expand its base clog type shoe into new markets and expand its current product offering in
existing markets.

H. Grand Strategy Matrix

Rapid Market Growth

Quadrant II Quadrant I

Weak Strong
Competitive Competitive
Position Position

Quadrant III Quadrant IV

Slow Market Growth

Based solely on Crocs core product line, the company has a strong competitive position within the casual
shoe industry. However, when compared on boarder terms with firms such as Nike and Adidas, Crocs
position would shift to the left and be considered Weak Competitive Position. Overall the market is
experiencing moderate growth.

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I. The Internal-External (IE) Matrix
The Total IFE Weighted Scores
Strong Average Weak
4.0 to 3.0 2.99 to 2.0 1.99 to 1.0
4.0 I II III

High
Asia

3.0 IV V VI

Americas
The
EFE
Total Medium
Weighted
Scores

Europe

2.0 VII VIII IX

Low

1.0

2012
Segment Total Sales (in millions) Profit
Americas 495,852 85,538
Asia 457,411 140,828
Europe 169,464 21,678
Total 1,123,301 248,044

Asia has the highest profit margin of all regions. This possibly can be explained by the fact that most
products sold in Asia are produced in Asia with cheaper labor and transport costs. Overall, Crocs is doing
well financially as of year-end 2012.

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J. QSPM

Increase
Expand
Development
Current Line
of New
of Products
Products by
by 30%
30%
Annually
Annually
Opportunities Weight AS TAS AS TAS
1. Many consumers do not have the income to buy more expensive
0.03 0 0.00 0 0.00
shoes.
2. Nurses and other healthcare professionals enjoy making Crocs
0.03 4 0.12 3 0.09
the standard shoe for their working environment.
3. No external organization has found any trace of harmful
0.03 0 0.00 0 0.00
chemicals in CrosLite technology.
4. China, Vietnam, Brazil, Nigeria, Nambia, and Chile are just a few
among many countries where crocs shoes could be very well 0.07 4 0.28 3 0.21
received.
5. Kids enjoy the comfort of Crocs. 0.07 4 0.28 3 0.21
6. South and Central America has a warm climate ideal for Crocs. 0.04 4 0.16 3 0.12
7. Major shoe companies do not have nearly the formal contracts
0.05 0 0.00 0 0.00
with beach stores as they do other retail outlets.
8. Many outdoor-minded people who like Crocs shoes also enjoy
0.07 2 0.14 4 0.28
hiking, jogging, and other outdoor activities.
9. Customers are increasingly shopping on the Internet. 0.05 0 0.00 0 0.00
10. USA, Western Europe and Japan represent over 80% of the
0.08 0 0.00 0 0.00
sales in the apparel and textile sector.

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Threats Weight AS TAS AS TAS
1. Washington Post, New York Times, and other publications have
0.02 1 0.02 4 0.08
couched Crocs as being ugly in appearance.
2. Growing number of counterfeit products proclaiming to be
0.09 0 0.00 0 0.00
Crocs, but are not.
3. Rival firms offering designs slimier to Crocs but at discounted
0.09 0 0.00 0 0.00
prices.
4. The Swedish Society for Nature Conservation found in 2009
alarming concentrations of toxic chemicals in many popular
0.03 0 0.00 0 0.00
plastic based shoes including flip flips, sandals, clogs and other
similar style shoes.
5. The footwear industry is quite fragmented in the USA and
Western Europe. Total footwear sales rose just under 5% in 0.03 1 0.03 3 0.09
2011 to $50.5 billion in the USA.
6. Nike, and other large shoe producers could rage a price war with
Crocs, or buy up shelf space at retailers shutting Crocs out of 0.06 0 0.00 0 0.00
significant revenue sources.
7. Possibility Crocs are only a fad with the public. 0.04 1 0.04 4 0.16
8. Nike or Adidas could easily take over Crocs hostilely through
0.03 0 0.00 0 0.00
the purchase of stock.
9. Consumers are increasingly price conscious when it comes to
0.06 0 0.00 0 0.00
shoes and other appeal.
10. Nike continues to manufacture its products in Asia where labor
0.03 0 0.00 0 0.00
cost are much lower than in Mexico.

Increase
Expand
Development
Current Line
of New
of Products
Products by
by 30%
30%
Annually
Annually
Strengths Weight AS TAS AS TAS
1. Crocs’ Croslite, a proprietary material aids in making Crocs being
0.12 4 0.48 3 0.36
one of the most comfortable shoes available.
2. Crocs are produced in many different styles including, boots,
sandals, sneakers, flats, golf shoes, mules and the popular 0.06 2 0.12 4 0.24
original clog style offered in more than 20 colors.
3. Crocs has an alliance with the American Nurses Association
0.02 4 0.08 3 0.06
providing nurses with a 25% discount on shoes.
4. For the first time in its history, Crocs reported revenues over $1
billion at year end 2011 and in 2012 celebrated its tenth birthday. 0.14 4 0.56 3 0.42

5. Over 50% of all revenues are derived from outside North and
0.07 0 0.00 0 0.00
South America.
6. Operate 180 retail stores and over 90 outlet stores. 0.05 0 0.00 0 0.00
7. Crocs’ Asia segment is the fasted growing market in total
volume with Europe being the fastest growing market based on 0.05 0 0.00 0 0.00
percent revenue increases.
8. Most Crocs manufactured for the USA market are constructed in
0.04 0 0.00 0 0.00
Mexico.
9. Crocs avoids all boxing and packaging for Crocs branded shoes. 0.03 0 0.00 0 0.00
10. Keeping production in-house allows for improved quality
0.04 0 0.00 0 0.00
control and deliver of products.

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Weaknesses Weight AS TAS AS TAS
1. Many do not like the clunky design of Crocs footwear. 0.10 1 0.10 4 0.40
2. All white males comprise Crocs top management. 0.02 0 0.00 0 0.00
3. Operate under division-by-region but division-by-product may
0.04 0 0.00 0 0.00
be better.
4. Less than 15% of sales are derived from Crocs website. 0.03 0 0.00 0 0.00
5. Many Crocs can become slippery if any moisture is on the floor. 0.06 1 0.06 4 0.24
6. Crocs keeps the CrosLite chemistry as proprietary information. 0.03 0 0.00 0 0.00
7. Inventory turnover of 3.4 compared to Nike’s 4.2 0.04 0 0.00 0 0.00
8. Around 95% of all revenues are derived from Crocs footwear. 0.02 0 0.00 0 0.00
9. Not well diversified in the shoe market. 0.04 1 0.04 4 0.16
TOTALS 2.51 3.12

The QSPM Matrix reveals it is more advantageous for Crocs to develop new products as opposed to
expanding the current offerings. A deeper analysis may reveal it is best to expand current tried and true
products into new market places and expand new products into existing places. Many potential customers
do indeed like the comfort of Crocs but are turned off by their appearance.

K. Recommendations
1. Develop three new lines of shoes designed for nurses and medical professionals at a cost of $10M.
2. Expand production facilities in Asia by 100% over the next 4 years for a cost of $50M.
3. Develop a line of boots for people in the construction industry for a cost of $5M.
4. Continue to increase new shoe offerings at a rate of 20% per year, other than the traditional clog type
of shoe at a cost of $20M per year.
5. Advertise in key markets that no harmful components have ever been found in Croslite Technology at
a cost of $10M
6. Invest $10 million in R&D to develop soles of shoes that are not as slippery.

L. EPS/EBIT Analysis (in millions expect for EPS and Share Price)
Amount Needed: $105
Stock Price: $13.66
Shares Outstanding: 91.6
Interest Rate: 3%
Tax Rate: 18%

Common Stock Financing Debt Financing


Recession Normal Boom Recession Normal Boom
EBIT $100 $200 $300 $100 $200 $300
Interest 0 0 0 3 3 3
EBT 100 200 300 97 197 297
Taxes 18 36 54 17 35 53
EAT 82 164 246 79 161 243
# Shares 99 99 99 92 92 92
EPS 0.83 1.65 2.48 0.87 1.76 2.66

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40 Percent Stock 60 Percent Stock
Recession Normal Boom Recession Normal Boom
EBIT $100 $200 $300 $100 $200 $300
Interest 2 2 2 1 1 1
EBT 98 198 298 99 199 299
Taxes 18 36 54 18 36 54
EAT 80 162 244 81 163 245
# Shares 95 95 95 96 96 96
EPS 0.85 1.72 2.58 0.84 1.69 2.55

Debt financing is the best option for Crocs under all possible economic conditions. With Crocs’ low long
term debt, debt is likely the superior strategy.

M. Epilogue
It is now June 2013 and Crocs has a dreaded Zacks Rank of 5 or Strong Sell, meaning that Crocs’ stock is
likely to underperform other stocks in the next three-month period. The stock also has an ‘Underperform’
Zacks Recommendation, meaning that the outlook is not any better for longer time periods, and that
investors should stay far away from Crocs’ stock. However, Crocs’ revenues in Asia, where most of the
world's population resides, increased in Q1 2013 by 56% in China and 49% in South Korea over the 2012
level. In Japan, Crocs’ wholesale business declined 6%. Overall for Q1 2013 that ended 3-31-13, Crocs’
revenues increased $39.9 million, or 14.7%, from the same period in 2012, to $311.7 million in 2013.
Crocs’ gross profit in Q1 2013 increased $21.1 million, or 14.5%, from the same period in 2012 to $165.8
million in 2013. Net income increased $0.6 million, or 2.2% to $29.0 million in 2013.

Crocs in September 2013 cut its third-quarter outlook because of weaker-than-expected sales in the
Americas. Shares lost 44 cents, or 3.3 percent, to $13.17 in morning trading as the company forecasted Q3
net income of 15 to 18 cents per share and $285 million to $295 million in revenue – a drop from previous
estimates and a drop from the prior year’s Q3 earnings of 49 cents per share on $295.6 million in revenue.
In 2013, Crocs has been trying to expand its product line beyond its signature plastic clogs, adding wedges,
sandals and even golf shoes. Sales in the Americas are weaker than anticipated in Q3 of 2013, but sales in
the Asia-Pacific region and Europe were somewhat better than expected. Crocs plans to set aside $80
million to $100 million for buying back its own stock or other "strategic investments." Note that stock
repurchases can boost a company's earnings per share by reducing the amount of outstanding stock.

Chapter 12: CROCS

10 Basic Questions

1: D

2: A

3 B
4: D

5: B

6: C

7: C

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8: A

9: B

10: A

15 Applied Questions

Vision and Mission Statements

1: B

2: B

3: B

4: C

5: B

Competitive Profile Matrix (CPM)

1: C

2: A

3: D

4: A

5: A

Outsourcing

1: D

2: D

3: A

4: C

5: D

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