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Crocs Wants to Take Its Odd Shoe to New Heights

Times Staff Writer

California has always had a soft spot for ugly shoes.

Birkenstocks and Tevas have caught on here, fortifying the state’s reputation as a haven for gimmicky fashion. Not everyone thinks Ugg boots are ugly, but even people who do seem to wear them.

Now come Crocs. They’re rubbery. They’re garish. They’re a lightweight sandal-clog hybrid, and if a Niwot, Colo.-based company has its way, they’re about to be omnipresent in the Southland.

On Monday, Crocs Inc. announced that it had replaced Nissan Motor Co. as the main sponsor of the Los Angeles-based AVP Pro Beach Volleyball tour, which automatically adds the shoemaker’s name to the tour title. The move signals that the company, which initially hesitated to push into more heavily populated U.S. markets for fear of not being able to keep up with demand, is sharpening its focus on California.

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Initially imagined for boating, Crocs have snagged a wider-than-expected following of fans, including children and chief executives. Made from a shiny resin, in colors that can be described as relentlessly cheerful, they are the rare fashion statement that can be hosed off. And weighing just 6 ounces apiece, they don’t bog you down.

The company, which made its first shoe in late 2002, saw sales swell to $108.6 million last year from $13.5 million in 2004. Crocs, which retail for $30 to $60, now sell in 6,500 U.S. stores and in 40 countries.

“It’s this generation’s Earth Shoe,” said Marshal Cohen, chief industry analyst for NPD Group, a market research firm in Port Washington, N.Y.

Crocs Chief Executive Ron Snyder said the company was expanding its geographic reach after beefing up its production capabilities around the world over the last year. At the beginning of 2005, Crocs could make just 100,000 pairs a month -- and was selling all of them. By the end of that year, it had the capacity to make 2 million pairs a month, he said.

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“Now we have ample production to ship into the more populated areas of the U.S. and abroad as well,” Snyder said.

The AVP Crocs Tour, as the volleyball series will now be called, will seek to heighten the brand’s visibility here and elsewhere as the Crocs name is attached to TV and radio advertising, posters and billboards. The tour, which began in Florida in March and continues through September, has major events in Santa Barbara, Huntington Beach, Hermosa Beach and Manhattan Beach.

Tour commissioner Leonard Armato said that as part of the sponsorship deal, Crocs and the AVP would develop some co-branded footwear, including a beach volleyball sand sock.

Armato said Crocs approached the AVP last year to discuss its marketing goals.

“We told them we could do some extraordinary things for them in Southern California and they agreed,” said Armato, who donned a pair of yellow Crocs with a black pinstripe suit Monday (but admitted he planned to slip back into his black Pradas before heading out to a business lunch). “AVP has all kinds of rabid fans, particularly in Southern California.”

So, apparently, do Crocs.

Nordstrom Inc. said the brand was one of its strong sellers. And the shoes are moving rapidly at the Adventure 16 store at the Lab shopping center in Costa Mesa, store manager Rolf Abro said.

“They’re very popular,” he said. “They’re really comfy to wear and very cushiony. It’s hard for us to keep a stock on them.”

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Mike Bill, general manager of Becker Surf & Sport, a Hermosa Beach-based chain of five stores, described the phenomenon as “a Hollywood thing.”

They sell best at Becker’s Malibu store, which stocks them in orange, blue, turquoise, red, navy, chocolate brown, tan, pale pink and hot pink. Sales picked up after star big-wave surfer Laird Hamilton and some of his pals began wearing them around town, assistant manager Mitch Taylor said.

Still, they are less popular with shoppers ages 18 to 30 than with the older and younger crowd, Taylor said.

And he thinks he knows why: “They’re pretty much the ugliest thing that ever hit the earth,” he said.

Snyder, Crocs’ chief executive, doesn’t take offense at such talk. In fact, the company played up the homely factor in an “ugly can be beautiful” ad campaign last year. And Snyder bragged that singer Faith Hill described the shoes as ugly but comfy on “The Oprah Winfrey Show.”

Besides, they’re pretty enough as far as investors are concerned.

When the company went public in February, its share price quickly shot up 55%. The company sold 9.9 million shares in the initial public offering, raising $240 million, Snyder said. The company took in about $109 million while the remainder went to shareholders who were selling, he said.

On Monday, the shares closed at $26.60, still almost 27% above the $21 IPO price.

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Not everyone on Wall Street is equally enthusiastic.

“Do the words ‘irrational exuberance’ ring a bell?” John Shanley, with Susquehanna Financial Group, asked in a report this year.

The business model, as Shanley describes it, sounds good. He claims that Crocs can be made for about $3.25 each, an assertion that the company denies. But cheaper knockoffs are multiplying.

Bill Boettge, president of the National Shoe Retailers Assn., said Crocs’ real challenge was, “how do you stop all the knockoffs that are coming a dime a dozen down the street?”

Snyder said Crocs was suing those who infringe its patents. It also is adding styles quickly to try to stay at least a step ahead of imitators. The company has added 10 models in 18 colors and expects to have 20 styles by the end of the year, including some that are more stylish.

Whether there is an upper limit to how stylish a Croc can be is an open question. Yes, the shoes lay claim to a few things that Manolo Blahniks can’t -- namely, they’re made of an antimicrobial material that does not attract odor.

But sexy, they’re not.

Peter Mangione, president of Footwear Distributors and Retailers of America, said Crocs were made using a technique that’s been used for half a century: injecting foam into a mold to create a one-piece shoe. Typically, shoes constructed this way are less expensive, he said.

“Go into any Wal-Mart or Kmart or even a supermarket and you will find shoes of similar-type construction,” Mangione said.

But he gives Crocs credit: “It’s pretty rare that you can take a pedestrian product and make it into a fashion statement.”


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