crocs 2015 investor day presentation
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Crocs 2015 Investor Day presentationTRANSCRIPT
1Crocs Investor DaySeptember 30, 2015
Boston, MA
2Some 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.
Forward Looking Statements
3 Revenue range $270 - $280M
This includes an estimated $4M currency erosion within the quarter
Additionally, expect approximately $6M of shipment holds in China
Q3 Guidance Update
4Objectives for Today
1. Provide an overview of the Company
2. Share our strategy, our initiatives and our progress to date
3. Convey confidence in our expectations for the future
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3
5Crocs Leadership Team Members Presenting Today
Gregg Ribatt, CEO
Andrew Rees, President
Michelle Poole, SVP Global Product Creation & Merchandising
Terence Reilly, SVP Chief Marketing Officer
Mike Smith, SVP Finance (Interim CFO)
6Agenda
Topic Speaker
Continental Breakfast
Overview Gregg Ribatt, CEO
Crocs Strategy Andrew Rees, President
Product Overview Michelle Poole, SVP Global Product Creation & Merchandising
Break
Marketing Overview Terence Reilly, SVP Chief Marketing Officer
Financial Plans Mike Smith, SVP Finance (Interim CFO)
Recap Gregg Ribatt, CEO
Q&A Crocs Team
Lunch
7OverviewGregg Ribatt, CEO
8Crocs evolution entering 5th distinct phase since inception in 2002
Crocs Annual
Revenue($)
Introduction High growth Cost cuttingDoor growth / international
expansion
Strategic repositioning for sustainable growth
1 432 5
Crocs today is one of the 10 largest non-athletic footwear brands in the world
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
1,200M
900M
600M
300M
0
9Crocs 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
10
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
Rejecters: stated they are not interested in purchasing Crocs brand
Owners / Considerers : ~1/3 of population either already owns or is considering purchasing Crocs in the next year
Neutrals: havent purchased Crocs in past two years, arent considering purchasing in next 12 months but dont reject Crocs brand
12% 18% 51% 19%
Neutrals RejectorsConsiderersOwners
Huge growth opportunity
Brand Strength Monitor: Conducted in US, UK, DE, CN, JP & KR 9,000 participants fielded in June 2015 General market study aligned to census
11
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
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
12
Strategic Repositioning: 3 Phases
Strategy Formulation Transformation Growth Platform
Phase 1 Phase 2 Phase 3
2014 2014/2015 2016 & Beyond
Deep diagnostic
Strategy development
Team enhancements
Phased restructuring
Product repositioning
Integrated marketing
Supply chain redesign
Growth realization
Focus on 6 major markets
Support from best-in-class partners
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Crocs Strategic Priorities
Developing powerful product stories supported with effective marketing
Driving global cohesive brand positioning
Increasing working marketing spend
Enhancing engagement with key wholesale accounts
Gaining greater strategic and economic leverage from our direct-to-consumer assets
Prioritizing investment in larger-scale geographies
Streamlining the cost structure by reducing duplication and complexity across regional offices and the corporate center
Investing to drive Supply Chain effectiveness and reliability
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The team will cover our efforts in greater detail over the course of the morning
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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
BENNETT
BENNETT
15
Despite global headwinds, we are beginning to see the results of our efforts
* Constant currency basis
Global Headwinds Results
Strength of U.S. dollar
Operational challenges
Challenges in China
Modest core business growth* in Q2 (excluding closed stores and exited product lines)
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
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8+%Annual sales
growth
Low 50sGM%
Low 40sSG&A%
10-12%EBIT
margins
Deliver Top Quartile Industry Performance
Mid-Term Potential of Crocs
17
StrategyAndrew Rees, President
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Crocs Strategic Priorities
Developing powerful product stories supported with effective marketing
Driving global cohesive brand positioning
Increasing working marketing spend
Enhancing engagement with key wholesale accounts
Gaining greater strategic and economic leverage from our direct-to-consumer assets
Prioritizing investment in larger-scale geographies
Streamlining the cost structure by reducing duplication and complexity across regional offices and the corporate center
Investing to drive Supply Chain effectiveness and reliability
1
2
3
4
5
6
7
8
19
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
1
20
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
Encouraging Signs Based on Current SS16 Orders
Expected Full Season Wholesale Growth*
Americas Low double digits
Europe Flat to low single digits
Asia Low double digits
Total High single digits
1
* Assumes constant currency
21
Marketing Campaign Objectives
Reignite Excitement & Relevance For Crocs
Owners who purchased in past
6 months
Past owners considering
purchase
General population who have stated Crocs consideration or
are neutral
Associate our iconic clog to Crocs brand
Give Consumers Permission To Engage
Establish Crocs As A Modern Meaningful Icon
2
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Mar