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  • Crocs Crocs Crocs Crocs New Styles New Styles New Styles New Styles Catching OnCatching OnCatching OnCatching On, Back, Back, Back, Back----totototo----SchoolSchoolSchoolSchool Has PotentialHas PotentialHas PotentialHas Potential

    321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com

    FOLLOWFOLLOWFOLLOWFOLLOW----UPUPUPUP REPORTREPORTREPORTREPORT

    August 2August 2August 2August 2, 2011, 2011, 2011, 2011 Companies: AMZN, CROX, ETR:ADS, JWN, KSS, NKE, PSS, TGT, TJX, VFC

    Reverdy Johnson, rj@blueshiftideas.com, 415.364.3782

    SummarySummarySummarySummary ofofofof FindingsFindingsFindingsFindings Crocs Inc.s (CROX) new styles have a stronger following and

    awareness than in Blueshifts May report. Our sources said the Chameleons, Mary Janes, sandals and flip-flops are being well-received by customers and selling well in stores, echoing Crocs second-quarter earnings report.

    Because of its new sneaker, Crocs no longer will be locked out of schools and has potential for improved back-to-school sales. Crocs highlighted the sneaker as an important item for the fall. The Chameleon soon will be rolled out in wholesale stores.

    Inventory in stores appeared full and replenishments are frequent, but shipments are not always what stores or their customers want. Customers said they are increasingly ordering Crocs online as a result. Crocs corporate stated that weekly replenishment is ahead of last years pace.

    One supplier said Crocs raised prices minimally on one kids pair and one other style, which he will pass along to clients, but other sources said prices are holding firm. They also do not expect a price increase from Crocs in the near future. Crocs stated that a 5% cost increase on inventory will be offset with a price increase.

    One supplier said 75% of his Crocs merchandise in the last two months has been made in Mexico, a stark change from Crocs previous reliance on China. Crocs earnings call did not cover this topic.

    One customer noted seeing Crocs selling in discount stores T.J. Maxx and Marshalls for $15 in June.

    NewNewNewNew StylesStylesStylesStyles PickingPickingPickingPicking UpUpUpUp MoreMoreMoreMore InterestInterestInterestInterest ThanThanThanThan inininin MayMayMayMay

    CrocsCrocsCrocsCrocs aaaa GoodGoodGoodGood BackBackBackBack----ttttoooo----SchoolSchoolSchoolSchool

    BetBetBetBet

    PricePricePricePrice IncreasesIncreasesIncreasesIncreases ComingComingComingComing

    SuppliersSuppliersSuppliersSuppliers

    IndustryIndustryIndustryIndustry SpecialistsSpecialistsSpecialistsSpecialists

    StoreStoreStoreStore VisitsVisitsVisitsVisits

    CustomersCustomersCustomersCustomers

    ReReReResearch Question:search Question:search Question:search Question:

    How are CrocsHow are CrocsHow are CrocsHow are Crocs new styles being receivednew styles being receivednew styles being receivednew styles being received,,,, and what is inand what is inand what is inand what is in store for the backstore for the backstore for the backstore for the back----totototo----school school school school seasonseasonseasonseason????

    Silo SummariesSilo SummariesSilo SummariesSilo Summaries 1) SUPPLIERS1) SUPPLIERS1) SUPPLIERS1) SUPPLIERS A U.S. supplier said June was Crocs best of the last 12 A U.S. supplier said June was Crocs best of the last 12 A U.S. supplier said June was Crocs best of the last 12 A U.S. supplier said June was Crocs best of the last 12 months and that the new styles have been extremely months and that the new styles have been extremely months and that the new styles have been extremely months and that the new styles have been extremely popular,popular,popular,popular, especially among women.especially among women.especially among women.especially among women. He expects back-to-school to be a solid season for the brand. He noted an improved relationship with Crocs representatives thanks to increased promotional activity. Our second source, a supplier to a Southeast Asian country, said business is the same as in May. Classic Crocs are this sources best seller, but he does not have Chameleons yet. He does not expect increased sales activity this fall because back-to-school does not have the same meaning in Asia. The final source confirmed that Jibbitz are no longer popular.... 2) INDUSTRY SPECIALI2) INDUSTRY SPECIALI2) INDUSTRY SPECIALI2) INDUSTRY SPECIALISTSSTSSTSSTS One of three sources said Crocs is the most popular One of three sources said Crocs is the most popular One of three sources said Crocs is the most popular One of three sources said Crocs is the most popular footwear brand among moms and kids and that the footwear brand among moms and kids and that the footwear brand among moms and kids and that the footwear brand among moms and kids and that the new styles are a big hit with both groups.new styles are a big hit with both groups.new styles are a big hit with both groups.new styles are a big hit with both groups. One source said Crocs new styles have not altered the kids shoe market, while two others said Crocs is no longer popular on college campuses because it is late with new styles. Crocs is not succeeding in the world of fashion either. Its sneakers may make some noise during backIts sneakers may make some noise during backIts sneakers may make some noise during backIts sneakers may make some noise during back----totototo----school because they are school because they are school because they are school because they are the only Crocs shoes likely to the only Crocs shoes likely to the only Crocs shoes likely to the only Crocs shoes likely to be allowed in most schools.be allowed in most schools.be allowed in most schools.be allowed in most schools. None source reported a price hike from Crocs.... 3) STORE VISITS3) STORE VISITS3) STORE VISITS3) STORE VISITS These six sources Crocs sales are on par with the previous year, and sources appear generally pleased with June and July results. TheTheTheThe Chameleons are selling Chameleons are selling Chameleons are selling Chameleons are selling very well in two Crocs stores, while adult Crocs are very well in two Crocs stores, while adult Crocs are very well in two Crocs stores, while adult Crocs are very well in two Crocs stores, while adult Crocs are better sellers in two Sports Authority storesbetter sellers in two Sports Authority storesbetter sellers in two Sports Authority storesbetter sellers in two Sports Authority stores. The new sneakers have potential to attract interest for back-to-school, but the shopping season has not gotten underway yet. Although inventory shipments arrive regularly, they are not always in line with customer demand. None of the sources expect a price increase.... 4) CUSTOMERS4) CUSTOMERS4) CUSTOMERS4) CUSTOMERS Our six sources like the new Crocs styles and have bought them or will consider buying them. However, they are not keen on buying Crocs for back-to-school season. Sources seemed unaware of the new sneakers. Three sources said Crocs now are less available in Three sources said Crocs now are less available in Three sources said Crocs now are less available in Three sources said Crocs now are less available in stores and have increased their online purchases of the stores and have increased their online purchases of the stores and have increased their online purchases of the stores and have increased their online purchases of the brand as a result.brand as a result.brand as a result.brand as a result. Most sources consider Crocs a kids brand. None has seen price hikes for Crocs.

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    http://www.crocs.com/home/homepage%2Cdefault%2Cpg.htmlhttp://www.crocs.com/boys-crocs-chameleons/boys-crocs-chameleons%2Cdefault%2Csc.htmlhttp://investors.crocs.com/phoenix.zhtml?c=193409&p=irol-newsArticle&ID=1589685&highlight=http://investors.crocs.com/phoenix.zhtml?c=193409&p=irol-newsArticle&ID=1589685&highlight=http://www.crocs.com/home/homepage%2Cdefault%2Cpg.html?backtoschool=true&intid=slider_bts_110726

  • Crocs Inc.Crocs Inc.Crocs Inc.Crocs Inc.

    321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com 2

    BackgroundBackgroundBackgroundBackground Crocs reported strong second-quarter earnings, in part because of improved product diversification and solid sales of the new styles. Blueshift Researchs May 26 Crocs report found that Crocs new styles that most closely resemble the Classic had stronger sales, the best reviews and the most potential. The edgier, more unique looks were described as cheap-looking and a detriment to Crocs image. CURRENTCURRENTCURRENTCURRENT RESEARCHRESEARCHRESEARCHRESEARCH In this next study, Blueshift assessed the market for Crocs new styles since May and Crocs back-to-school business. Blueshift employed its pattern mining approach to establish and interview sources in five independent silos:

    1) Suppliers (3) 2) Industry specialists (4) 3) Store visits (6) 4) Customers (6) 5) Secondary sources (5)

    Blueshift interviewed 19 primary sources, including 11 repeat sources, and included five of the most relevant secondary sources focused on earlier back-to-school promotions but later shopping, strong demand for Crocs Chameleons, and Crocs marketing through Facebook.

    SilosSilosSilosSilos 1)1)1)1) SUPPLIERSSUPPLIERSSUPPLIERSSUPPLIERS AAAA UUUU....SSSS.... suppliersuppliersuppliersupplier saidsaidsaidsaid JuneJuneJuneJune waswaswaswas CrocsCrocsCrocsCrocs bestbestbestbest ofofofof thethethethe lastlastlastlast 12 months12 months12 months12 months andandandand that that that that thethethethe newnewnewnew stylesstyle