crocs 2015 investor day presentation

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Crocs 2015 Investor Day presentation

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  • 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

    1

    2

    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

  • 13

    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

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

  • 14

    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

  • 16

    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

  • 18

    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

  • 22

    Mar