The 2005 IPO of Crocs, Inc. (NASDAQ: CROX) was the "most successful ever in the footwear industry in terms of raising money," notes quantitative analyst Vahan Janjigian.
Indeed, says the editor of The Forbes Growth Investor, "The company has turned 'ugly' into a favorable feature that along with their reputation for comfort have helped boost sales by 236% in the latest quarter."
He notes that the company's tremendous success is due to the popularity of its clog-like sandals with their distinctive air holes and toe-box ventilation system. He explains, "Made from Croslite, a proprietary closed-cell resin that molds to the contours of the feet, these shoes offer an exceptionally comfortable fit."
Croslite, he points out, is lightweight, waterproof, and slip and odor resistant. The shoes became a hit with beachgoers and boaters despite their unusual look, he notes. Further, he adds, "Sales growth exploded as they gained popularity with the fashion conscious and then the mass market."
Janjigian notes, "Their unique appearance, which some call ugly, made them easily identifiable and probably added to their appeal." The shoes, he notes are now available at more than 10,000 locations in the U.S. and can be purchased in more than 8,000 locations in 80 other countries.
Janjigian notes that there are many skeptics who question the company's ability to sustain rapid growth for long. Will these shoes prove to be just a passing fad? Although he admits that the "fickle nature of consumers" makes this a possibility, he emphasizes, "We believe the real key to the company's success is the technology behind its Croslite resin."
In addition, the company has been expanding its product line. He points out that it ended 2006 with 27 styles that utilize the Croslite technology including traditional sandals, boots, slippers, flip-flops, and all-terrain shoes.
Janjigian notes that CROX continues to augment its licensing strategy, and has seen strong demand for its Disney (NYSE: DIS) footwear. And, since the start of the year, it signed an agreement with Nascar and expanded existing deals with the National Football League and the National Hockey League.
The advisor adds, "It also signed deals with Nickelodeon and Warner Bros., allowing it to sell shoes featuring Dora the Explorer, SpongeBob SquarePants, Superman, Batman, and other famous DC Comics superheroes."
Finally, he notes, "International markets still offer ample opportunities for growth and could drive overall demand even if domestic sales soften."
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