Crocs Investor Day

September 30, 2015

Boston, MA

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

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

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)

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

Overview

Gregg Ribatt, CEO

Crocs evolution entering 5th distinct phase since inception in 2002

Crocs
Annual
Revenue
($)

1
Introduction

3
High growth

4
Cost cutting

Door growth /
international
expansion

Strategic repositioning
for sustainable growth

1,200M
900M
600M
300M

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

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: havent purchased Crocs in

past two years, arent considering
purchasing in next 12 months but dont
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

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

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 50s
GM%

Deliver Top Quartile

Industry Performance

10-12%
EBIT
margins

Low 40s
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

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

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

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

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

Global Marketing Spend

Working Global Marketing Spend

~6% of sales

~4% of sales

+20%

2014

+50%

2015

2014

23

2015

Ad Engagement Impact

Consumers who recalled Crocs advertisements

vs.
Consumers who havent 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

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

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

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

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

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

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

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

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

36

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

Build Out Core

38

Develop Key Casual Platforms

39

Elevate Style

Trend Agency

Trade Shows &

Publications

40

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

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

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

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

Comfort Storytelling

44

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

Womens
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

Womens & Girls Isabella Collection

Isabella Mini Wedge

Isabella Sandal

52

Isabella Flat Sandal

Isabella Flat

Womens Sienna Flat

Sienna Flat

Sienna Leopard Shiny Flat

53

Womens Wedges Leigh II and A-leigh II

A-leigh Crisscross Wedge

A-leigh Wedge

Leigh II 2-Strap Wedge

54

Womens & Girls Karin Clog

Girls Karin Clog

55

Unisex Citilane Collection

CitiLane Clog

CitiLane Rka Slip On

CitiLane Canvas Clog

CitiLane Flip

56

Mens & 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 havent
purchased in past 6 months

54%
Considerers who have owned
Crocs but havent 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 lets 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

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 havent 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 50s

Adj. SG&A%*

40.5%

45.1%

Low 40s

Adj. EBIT%*

13.1%

5.4%

1012%

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 companys 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 50s 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 50s

SG&A %

Low 40s

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

109

Summary

Gregg Ribatt, CEO

110

Recap

Crocs is in the midst of a significant turnaround with the goal of creating one of
the worlds 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 linethe first developed by our new team

Nonetheless, we are beginning to see the early results of our efforts

111

Mid-Term Potential of Crocs

8+%
Annual
sales
growth

Low 50s
GM%

10-12%
EBIT
margins

Low 40s
SG&A%

112

Deliver Top Quartile

Industry Performance

Q&A

113

Thank you!

114