Crocs Investor Day

September 30, 2015
Boston, MA

1

Forward Looking Statements
Some information provided in this document will be forward-looking, and accordingly,
are subject to the Safe Harbor provisions of the federal securities law. These
statements include, but are not limited to, statements regarding future revenue and
earnings, prospects and product pipeline. We caution you that these statements are
subject to a number of risks and uncertainties described in the Risk Factors section on
the Company's 2014 report on Form 10-K, filed on March 2, 2015 with the Securities
and Exchange Commission. Accordingly, all actual results could differ materially from
those described in this presentation. Those viewing this presentation are advised to
refer to Crocs' Annual Report on Form 10-K, as well as other documents filed with the
SEC for the additional discussions of these risk factors. Crocs is not obligated to update
these forward-looking statements to reflect the impact on future events. The
Company may refer to certain non-GAAP metrics in this presentation. Explanation of
these metrics can be found in the footnotes of this presentation.
2

Q3 Guidance Update
• Revenue range $270 - $280M
• This includes an estimated $4M currency erosion within the
quarter
• Additionally, expect approximately $6M of shipment holds in
China

3

Objectives for Today
1.
1 Provide an overview of the Company

2 Share our strategy, our initiatives and our progress to date
2.

3.
3 Convey confidence in our expectations for the future

4

Crocs Leadership Team Members Presenting Today
• Gregg Ribatt, CEO
• Andrew Rees, President

• Michelle Poole, SVP Global Product Creation & Merchandising
• Terence Reilly, SVP Chief Marketing Officer
• Mike Smith, SVP Finance (Interim CFO)

5

Agenda
Topic

Speaker
Continental Breakfast

Overview

Gregg Ribatt, CEO

Crocs’ Strategy

Andrew Rees, President

Product Overview

Michelle Poole, SVP Global Product Creation & Merchandising
Break

Marketing Overview

Terence Reilly, SVP Chief Marketing Officer

Financial Plans

Mike Smith, SVP Finance (Interim CFO)

Recap

Gregg Ribatt, CEO

Q&A

Crocs Team

Lunch

6

Overview

Gregg Ribatt, CEO

7

Crocs evolution entering 5th distinct phase since inception in 2002
Crocs
Annual
Revenue
($)

2

1
Introduction

3
High growth

4
Cost cutting

5

Door growth /
international
expansion

Strategic repositioning
for sustainable growth

1,200M
900M
600M
300M

0

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Crocs today is one of the 10 largest non-athletic footwear brands in the world
8

2015

Crocs Is a Democratic Brand With a Broad Consumer Base

One of the 10 largest non-athletic footwear brands in the world

• $1B+ annual sales across 90+ countries
• Sold more than 55 M pairs last year

Appeals to the whole family
• Consumers say Crocs are “family oriented”
• 61% of people who own Crocs have kids and 68% are married

Resonates around the world with high brand awareness
• High brand awareness in key strategic markets: 76% in the U.S., 73% in the UK,
51% in Germany, 44% in China & Korea, and 68% in Japan

Reaches across broad socioeconomic groups from moderate to high income
• Crocs appeals across all income brackets, especially to the large global middle class

9

A Unique Brand With Significant Growth Runway


Strong and growing Crocs ownership in casual footwear market
Large considerer group with sizeable short-term growth opportunity
Huge neutral group that represents significant mid-to-long term growth potential
Owners

Considerers

Neutrals

Rejectors

12%

18%

51%

19%

Huge growth opportunity
Owners / Considerers : ~1/3 of
population either already owns or
is considering purchasing Crocs in
the next year

Neutrals: haven’t purchased Crocs in
past two years, aren’t considering
purchasing in next 12 months but don’t
reject Crocs brand

Brand Strength Monitor:
• Conducted in US, UK, DE, CN, JP & KR
• 9,000 participants fielded in June 2015
• General market study aligned to census

10

Rejecters: stated they are not
interested in purchasing Crocs
brand

Opportunities to Evolve the Business Model

Focus on profitable growth over door
expansion



Centralize critical functions

Add talent with industry experience in
key functional areas
11

Focus on sustainable growth and sell-thru
SKU rationalization and globally consistent
product range
Compelling product stories supported by
powerful marketing
Optimize retail portfolio
Leverage partners in sub-scale international
markets




Consistent global brand identity
Elimination of duplicative cost structures
Best-in-class, standard operating procedures
Invest in and leverage talent globally



Executive leadership
Product and Merchandising
Sourcing

Strategic Repositioning: 3 Phases
Phase 1

Strategy Formulation
2014

Phase 2

Transformation
2014/2015

Phase 3

Growth Platform
2016 & Beyond

• Deep diagnostic

• Phased restructuring

• Growth realization

• Strategy development

• Product repositioning

• Focus on 6 major markets

• Team enhancements

• Integrated marketing

• Support from best-in-class
partners

• Supply chain redesign

12

Crocs Strategic Priorities
1•

Developing powerful product stories supported with effective marketing

2•

Driving global cohesive brand positioning

3•

Increasing working marketing spend

4•

Enhancing engagement with key wholesale accounts

5•

Gaining greater strategic and economic leverage from our direct-to-consumer assets

6•

Prioritizing investment in larger-scale geographies

7•

Streamlining the cost structure by reducing duplication and complexity across regional offices and the corporate
center

8•

Investing to drive Supply Chain effectiveness and reliability

The team will cover our efforts in greater detail over the course of the morning
13

Since June 2014, we have added significant experience in senior
leadership across the organization
Name

Title

Experience

Gregg Ribatt

CEO

20+ years

Andrew Rees

President

20+ years

Michelle Poole

SVP Global Product Creation & Merchandising

20+ years

Bob Munroe

SVP GM Americas

30+ years

David Thomson

SVP GM Asia

25+ years

Mike Smith

SVP Finance (Interim CFO)

25+ years

Phil Blake

SVP Sourcing

20+ years

Donna Flood

SVP CIO

20+ years

14

BENNETT

BENNETT

Despite global headwinds, we are beginning to see the results of our efforts
Global Headwinds

Results

• Strength of U.S. dollar

• Modest core business growth* in Q2
(excluding closed stores and exited
product lines)

• Operational challenges

• Challenges in China

• DTC comp up 4% in the Americas in Q2
(vs -4% in Q1) and up 6% in EU in Q2
(vs +2% in Q1)
• E-Commerce revenues up almost 30%
globally* reflecting the benefit of
marketing investment and operational
improvements

* Constant currency basis
15

Mid-Term Potential of Crocs
8+%
Annual
sales
growth

Low 50’s
GM%

Deliver Top Quartile
Industry Performance

10-12%
EBIT
margins

Low 40’s
SG&A%

16

Strategy

Andrew Rees, President

17

Crocs Strategic Priorities
1• Developing powerful product stories supported with effective marketing
2• Driving global cohesive brand positioning
3• Increasing working marketing spend
4• Enhancing engagement with key wholesale accounts
5• Gaining greater strategic and economic leverage from our direct-to-consumer assets
6• Prioritizing investment in larger-scale geographies
7• Streamlining the cost structure by reducing duplication and complexity across regional
offices and the corporate center
8• Investing to drive Supply Chain effectiveness and reliability
18

1

Overall Merchandising Strategies for Success

• Consistent Global Product Strategy
• Re-energize core molded footwear
• Develop key casual platforms
• Embrace the trends
• Extend the Spring-Summer season
• Effective SKU & lifecycle management

• Consistent comfort delivery and storytelling

19

1

Encouraging Signs Based on Current SS16 Orders

• SS16 showing meaningful improvement based on improved product and
extended season
• Early customer orders support our expectation of high single digits
wholesale growth consistent with qualitative feedback from key partners
• Fastest wholesale growth coming from Americas and Asia
Expected Full Season Wholesale Growth*

Americas

Low double digits

Europe

Flat to low single digits

Asia

Low double digits

Total

High single digits

* Assumes constant currency

20

2

Marketing Campaign Objectives

Reignite Excitement &
Relevance For Crocs
Owners who
purchased in past
6 months

Past owners
considering
purchase

Give Consumers
Permission To Engage
General population who have
stated Crocs consideration or
are neutral

21

Establish Crocs As A
Modern Meaningful Icon
Associate our iconic clog
to Crocs brand

Marketing Campaign Objectives

2

Reignite Excitement &
Relevance For Crocs
Owners who
purchased in past
6 months

Past owners
considering
purchase

50% 54%
+8% +11%

Give Consumers
Permission To Engage
General population who have
stated Crocs consideration or
are neutral

67%
+3%

Brand Strength Monitor


Conducted in US, UK, DE, CN, JP & KR
9,000 participants fielded in June 2015
General market study aligned to census

* 2014 basis
** YOY ppt. changes

22

Establish Crocs As A
Modern Meaningful Icon
Associate our iconic clog
to Crocs brand

68%
+11%

2014*
2015**

Global Marketing Spend 2014 vs. 2015

3

Global Marketing Spend

Working Global Marketing Spend
~6% of sales

~4% of sales

+20%

2014

+50%

2015

2014

23

2015

3

Ad Engagement Impact

Consumers who recalled Crocs advertisements
vs.
Consumers who haven’t seen Crocs advertisements

Brand
Desirability

Brand
Purchase Consideration

+28%

+27%

Recall Crocs advertisement in past 6 months
Absolute difference of consumer advertising recall versus non-aware

24

4

Enhanced Wholesale Engagement Model

Top to Top
Strategic
Engagement

Real
Prelines

Sell In with
Marketing
Support

U.S.

Best in Class
Delivery &
Service

Area of Focus
Europe

25

Sell thru &
Profitability

5

Drive Real Clarity on Channel Roles

Wholesale


Main driver of future sales
growth

Reach consumers in multibrand environments

Retail

Showcase the Crocs Brand

Fastest growing channel

Interact directly with and
learn from consumers

Preeminent flagship DTC
environment

Leverage retail expertise of
key partners

Pathway for
Growth

E-Commerce

Promote the breadth of

our product in high-traffic,
highly visible locations

Focus on outlet for growth

Drive distribution in key
markets where:

• Crocs lacks resources

Educate consumers about
the product and the brand

• Critical expertise is
required

Provide access to the full
line

• Understanding of
market risks is crucial

Drive economic leverage and brand
engagement
26

Distributors

Leverage best in
class partners

5

Significant Accomplishments in DTC

Closed 148 stores over the last 18 months
Closed 9 e-commerce websites



Adam Michaels - Global E-Commerce Leader
Claire Conley – Americas Retail Leader
Neil Parker – Asia Retail and Global Franchise Leader

Focused on the nuts and bolts of an
effective DTC business

Enhanced assortment strategies and brand story
telling
Replenishment and in stocks
Consumer experience and service
Portfolio pruning

Anticipated growth in E-Commerce &
Outlet

Restructured fleet and e-commerce
platform
Brought in talent to lead key functions




27

Narrowed web site portfolio to grow scale and
increase profitability
Invest in improved web capabilities and enhanced
story telling
Targeted each region with 20% outlet penetration to
keep inventories fresh

6

International Strategy

Crocs distributed in over 90 countries
worldwide concentrated on 6 key
countries for direct business





United States
China
Korea
Japan
United Kingdom
Germany


Best in class partners in rest of
world

28

Americas
APAC
Europe

6

Significant challenges in China over the past 12 months
China challenges

Recent developments

Fragmented distributor base with more than 40
partners, many of which are small with limited
financial strength

In 2015, we moderated sell-in during the first
half to assist partners with sell thru and reduce
inventories in the channel

Consumer demand and sales began to slow in
2014 after a 3 year period of rapid expansion

Recent China market pressures have slowed
the pace of turnaround

Distributor order patterns assumed continued
market expansion

Despite these pressures, e-commerce
continues to experience strong growth of over
20%

Addressing issues with partners to evolve to a
more sustainable business model in the nearterm

We continue to have confidence in the mid-term growth potential of China
29

7

Overview of Operations Improvements/Cost Initiatives

SG&A Annualized Reductions
$Millions U.S. Dollar

50

~$43M
40
$15M
30
$11M

20
10

$17M

0
Store closures

Corporate / Americas

International

Total

Note: Offsetting $15-20M in certain additional variable expenses, including marketing and
variable compensation, anticipated in 2016
30

8

Investing in Supply Chain Effectiveness and Reliability

Invest to improve
process reliability

+

Simplify and reduce
costs

• Elevate organizational
capabilities

• 40% reduction in Global
SKUs (SS16 vs. SS15)

• Better defined planning
roles & responsibilities

• Dramatic reduction in
direct shipments

• Drive strategic advantage
from direct
manufacturing

• Stabilize and reduce lead
times

31

Improved customer
and consumer
satisfaction

Significant progress to date
1• Developing powerful product stories

• SKU count for SS16 reduced by 40% vs. SS15
• Encouraging signs from SS16 wholesale orders
• 2016 sell in accompanied by coherent marketing support

2• Driving global cohesive brand positioning

• Centralized global marketing function
• Integrated, # Find Your Fun campaign launched in 2015
• Brand consideration up by 27%

3• Increasing working marketing spend

• Increased working media by 50% in 2015
• ~$15M of incremental marketing spend
• Campaign awareness increased by 11%

4• Enhancing engagement with key wholesale

• Top-to-top meetings with 10 of the largest global accounts
• Pre-lining process implemented with 20 of the largest global
accounts
• Key accounts are supporting Crocs despite 2015 service levels

supported with effective marketing

accounts

32

Significant progress to date
5• Gaining greater strategic and economic

• Closed 148 stores over the last 18 months
• Opened selective stores, primarily outlets
• Have hired significant new talent to lead DTC

6• Prioritizing investment in larger-scale

• Focus regional and management on 6 core markets
• Leveraging best in class distributors in other market
• Distributor upgrades in several markets (Indonesia, Philippines etc.)

leverage from our direct-to-consumer
assets

geographies

7• Streamlining the cost structure by reducing • Centralized core corporate functions
duplication and complexity across regional
offices and the corporate center

8• Investing to drive Supply Chain
effectiveness and reliability

• Reduced global salaried headcount by 20% over the last 18 months
• Annualized reduction of SG&A by >$40M
• Hired dedicated supply chain leadership
• Implemented SAP ERP globally
• Simplifying the path to market for improved reliability
33

Product Overview
Michelle Poole, SVP Global Product Creation & Merchandising

34

Initial Observations (Sept 2014)
• Inconsistent Global Product Strategy
• Lack of focus on molded product & core icon
• Low awareness of global trends
• Poor SKU management & heavy SKU proliferation
• Lack of strong global product stories / launches

• <30% global alignment
• Pricing to cost not to market
• Poor milestone management
• Self imposed shortened SS selling window
35

Overall Merchandising Strategies for Success
1•

Consistent Global Product Strategy

2•

Re-energize core molded footwear

3•

Develop key casual platforms

4•

Embrace the trends

5•

Extend the Spring-Summer season

6•

Effective SKU & lifecycle management

7•

Consistent comfort delivery and storytelling
36

1

Consistent Global Product Strategy
Our customers expect our products to have certain
key attributes that are consistent globally
Colorful
Relaxed
Comfortable
Distinctive
Fun

Maximize our globally-common product assortments
with consistent Crocs DNA
37

2

Build Out Core

38

3

Develop Key Casual Platforms

39

Elevate Style

4

Trend Agency

Trade Shows &
Publications

40

Global Markets
Seoul
Los Angeles
London
Tokyo
New York
Paris
Miami
Berlin
Shanghai

5

Extend our Spring-Summer Season to 8 months

12/1 & 1/1

2/1 & 3/1

4/1

5/1, 6/1 & 7/1

Delivery 1

Delivery 2

Delivery 3

Delivery 4

Where to Play

Core refresh

Transition
items &
Spring

Spring into
Summer items

Historical Spring Season

New Spring season
41

High Summer
&
Early transition
items

Effective SKU Management

6

How do we do more with less?
Americas
Americas

APAC

Europe

APAC
Europe

SS15

SS16
2,000 SKUs at GTM;
1,296 in production
28% Global SKU Alignment

1,150 SKUs (with extra 2 months of deliveries)
-40% vs SS15 GTM
65% Global SKU Alignment

Achieving more disciplined LCM will allow us to focus on and drive growth
with our new styles while gaining operational efficiencies
42

6

Significant Improvement in SKU Productivity
Key Benefits:




Focused story telling
Globally-aligned key
collections
Planning and
Forecast Accuracy
Fit and Quality
Improvements
Lower tooling costs

Line management results in significant SKU productivity improvements
43

7

Comfort Storytelling

44

7

Comfort Storytelling

45

Product Overview
Building a product framework for success

46

Core Evolution
Core

Consistent Crocs DNA

Evolved

Classic clog

Freesail clog

Kadee flat

Sienna flat

47

Franchise Development – Citilane

Women’s
molded flat

Roka
fully molded

Cut & sew
lace up

Cut & sew
twin gore

Fabric wrap
clog

Unisex
Molded clog
Kids
Cut & sew

Flip
48

Franchise Development – Swiftwater

Leather
clog

Kids'
clog

Molded
clog

Casual
hiker
Hybrid
sandal
Casual
moc

Flip
49

Product Overview
SS16 Seasonal Big Ideas

50

Consumer Facing Seasonal Big Ideas

UNI

51

Women’s & Girls’ Isabella Collection

Isabella Mini Wedge

Isabella Sandal

52

Isabella Flat Sandal

Isabella Flat

Women’s Sienna Flat

Sienna Flat

Sienna Leopard Shiny Flat

53

Women’s Wedges – Leigh II and A-leigh II

A-leigh Crisscross Wedge

A-leigh Wedge

Leigh II 2-Strap Wedge

54

Women’s & Girls’ Karin Clog

Girl’s Karin Clog

55

Unisex Citilane Collection

CitiLane Clog

CitiLane Röka Slip On

CitiLane Canvas Clog

CitiLane Flip

56

Men’s & Kids' Swiftwater Collection

Swiftwater Sandal

Swiftwater Clog

Swiftwater Leather Clog

Swiftwater Flip

57

Summer Core Molded Flips

Kadee Flip

Classic Flip

58

Kids’ Bump It Collection

Bump It Clog

Bump It Sandal

Bump It Shoe

59

Kids’ Licensed – Star Wars, Frozen & Finding Dory

SW Millenium Falcon Bump It Shoe

Frozen Fever Elsa Sandal

Finding Dory Lights Up Clog

60

Fall 2016

61

Building a Year Round Business: Fall
Core & Core Lined

Casual / Active Shoes & Boots

New luxe clog

Rain

Kinsale chukka

Licensed*
Licensed

Fun & Stylish
Fun
& Stylish
Functional
Boots

Functional Boots

Bump it boot

Bliss boot leopard

Focused assortment & story telling
*licensed covers all 4 categories

62

Resort

Resort

Product transformation is well underway

63

Marketing Overview

Terence Reilly, SVP Chief Marketing Officer

64

Agenda
• Crocs in The News

• 2015 Marketing Campaign
• 2016 Sneak Peek

65

Marketing Overview
Crocs in The News

66

Crocs in the News

67

Crocs in the News

68

Crocs in the News

69

Marketing Overview
2015 Marketing Campaign

70

Marketing Campaign Objectives
Reignite Excitement
& Relevance For
Crocs

Give Consumers
Permission To Engage

Establish Crocs As A
Modern Meaningful
Icon

50%
Owners who haven’t
purchased in past 6 months

54%
Considerers who have owned
Crocs but haven’t purchased
in over 2 years

67%
General population who
have stated Crocs
consideration or are neutral
71

68%

Associate our iconic
clog to Crocs brand

First. A Quiz.
72

73

74

75

76

77

Celebrate our icon.

78

At Crocs, we believe our clog is an iconic symbol for having fun.
We see the fun in almost anything and believe you can turn
anything you do into something fun. So let’s celebrate the fun
we see in everything and encourage you to go find your fun.

Creating Fun = Selling Crocs

79

80

2015 Marketing Campaign
 Crocs largest media campaign in
brand history
 Broad and impactful target
consumer reach

6.8B
IMPRESSIONS!!!
Global Media Breakdown

 Magnifying integration across TV,
digital, OOH, social, store
presentation

16%
43%

TV
81

40%

Digital

OOH

Global Marketing Spend
Spend by Country Percent

Germany
U.K.

6%

South Korea
China

U.S.
Japan

82

360 Degree Campaign

BROADCAST

DIGITAL

OOH

SOCIAL

E-COM

Strong connectivity across all touch points
83

STORE ENVIRONMENT

Compelling Creative

84

New York City

85

One Piccadilly, London

86

Beijing Guomao Station

87

Digital

88

Digital

89
89

Robust Channel Integration

90

Social Media

Iconic Clog

Fans of Fun

Style Features

Crocs Thoughts

Events, Holidays, Seasons

Fun Facts
91

Seasonal Influencers

Retail

Television

92

Spring Summer Television

93

Spring Summer Television

94

Spring Summer Television

95

Marketing Campaign Objectives

2

Reignite Excitement &
Relevance For Crocs
Owners who
purchased in past
6 months

Past owners
considering
purchase

50% 54%
+8% +11%

Give Consumers
Permission To Engage
General population who have
stated Crocs consideration or
are neutral

67%
+3%

Brand Strength Monitor


Conducted in US, UK, DE, CN, JP & KR
9,000 participants fielded in June 2015
General market study aligned to census

* 2014 basis
** YOY ppt. changes

96

Establish Crocs As A
Modern Meaningful Icon
Associate our iconic clog
to Crocs brand

68%
+11%

2014*
2015**

Ad Engagement Impact

Consumers who recalled Crocs advertisements
vs.
Consumers who haven’t seen Crocs advertisements

Brand
Desirability

+28%

Recall Crocs advertisement in past 6 months
Absolute difference of consumer advertising recall versus non-aware
97

Brand
Purchase Consideration

+27%

Marketing Overview
2016 Sneak Peak

98

2016 Campaign Evolution
LEVERAGE FUN TO CREATE A DEEPER EMOTIONAL INVESTMENT

1. CREATE AND FACILITATE FUN by inspiring and amplifying fun experiences
2. TELL 2016 PRODUCT STORIES and demonstrate how wearing Crocs shoes helps people find their
own fun
3. SUPPORT WHOLESALE PARTNERS through fun Crocs activations to drive additional traffic and sales
during key periods

Increase working marketing dollars in excess of 20% to achieve 2016 objectives

99

100

Financial Plans

Mike Smith, SVP Finance (Interim CFO)

101

Crocs Financials: Key Points
• Crocs is going through a significant transition, not only in its
organizational structure and leadership, but in its business
model
• We have been making this transition in the face of significant
headwinds: currency, China, and operational challenges
• We have accomplished much in the past 12 months towards this
transition and are making meaningful progress
• When complete, we are confident Crocs can return to a 10-12%
EBIT business in the mid-term future
102

The Evolving Business and Financial Model
2011

2014

Sales

$1.0B

$1.2B

Annual Growth

27%

0.5%

8%+

Adj. GM%*

53.6%

50.5%

Low 50’s

Adj. SG&A%*

40.5%

45.1%

Low 40’s

Adj. EBIT%*

13.1%

5.4%

10—12%

430

624 (peak)

~550

Stores
Comments

Mid-Term Model

• Weak U.S. dollar results in
high Gross Margins

• Strong U.S. dollar drives down
Gross Margins

• Product mix and supply chain offset
strong dollar

• Balanced wholesale and
retail growth

• Retail door growth drives SG&A
increases

• SG&A lowered through completed
restructuring, store closures and
leveraging future sales growth

* Adjusted for restructuring, special and other non-recurring charges; Please refer to the company’s 2014 10-k filed on March 7, 2015 and other filings for
full reconciliation of GAAP to Adjusted financial results
103

Significant Challenges from US Dollar Exchange Rates
Currencies having the greatest impact:
Currency

Crocs Basket of Currency vs. USD

2011-15 %
depreciation vs. USD

116%
114%

Japan ¥

33%

EUR €

19%

112%
110%
108%

Russia ₱

57%

14%

106%

6%

104%

Brazil R$

60%

Korea ₩

6%

102%
100%
2011

2012

2013

2014

In 2014, approximately 35% of Revenue and 65% of costs were in U.S. dollars
* Through June 30th

104

2015*

Effects on Gross Margin from US Dollar Exchange Rates
• F/X rates depressed local purchasing
power and impacted gross margins
for the company

Gross Margin %

As reported

• Total impact on gross margin from
peak is about 400 basis points

At constant 2015
FX rates

• Gross Margin constant currency in
2015 comparable with that of the
peak

2011

2012

2013

2014

• Assuming current currency rates, we
anticipate gross margin to be in the
low 50’s in the mid-term

2015

105

Overview of Operations Improvements/Cost Initiatives
SG&A Annualized Reductions
$Millions U.S. Dollar

50

~$43M
40
$15M
30
$11M

20
10

$17M

0
Store closures

Corporate / Americas

International

Total

Note: Offsetting $15-20M in certain additional variable expenses, including marketing and
variable compensation, anticipated in 2016
106

To Realize Our Potential, We are Focused on…
Near term

Mid-term

• Spring Summer 2016 deliveries

• 8%+ revenue growth driven by Wholesale
and e-commerce

• Wholesale growth driven by product,
marketing, and operational improvements

• Primary growth from Asia and Americas

• Return China to sustained growth

• Broad based growth in e-commerce

• Stabilized margin based on mix and COGS
efficiencies to overcome currency and
channel shift

• Enhanced retail execution
• Cost control of SG&A expenses

• Continued investment in marketing to
support sales growth
• Limit SG&A expense by leveraging existing
talent and infrastructure

107

Mid-Term Potential
Mid-Term Potential
2018+
Sales Growth*

8% +
Annually

GM %

Low 50’s

SG&A %

Low 40’s

EBIT %

10-12%

*Organic growth at current exchange rates

108

Mid-Term Expectations Are Realistic
• Constant currency core business growth in Q2 (excluding closed stores and exited
product lines) up low single digits
• Wholesale orders continue to support expectations of high single digit wholesale
growth and are consistent with qualitative feedback from key retail partners
• Improved consumer connectivity evidenced by e-commerce results and digital
engagement

• Enhanced product margin helping to offset currency headwinds
• Annualized cost reductions are over $40M

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Summary

Gregg Ribatt, CEO

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Recap

Crocs is in the midst of a significant turnaround with the goal of creating one of
the world’s leading casual footwear brands

The initial priority was to strengthen the management team, ensure the smooth
implementation of the SAP ERP system, and drive significant cost savings through
simplification and focus

Concurrently, we have been focused on driving profitability and growth through
elevating consumer connections including improved product and marketing
execution

The full impact of our efforts will begin to be realized with the shipment and sell
through of our Spring/ Summer 2016 line—the first developed by our new team

Nonetheless, we are beginning to see the early results of our efforts
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Mid-Term Potential of Crocs
8+%
Annual
sales
growth

Low 50’s
GM%

10-12%
EBIT
margins

Low 40’s
SG&A%

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Deliver Top Quartile
Industry Performance

Q&A

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Thank you!

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