You probably don't have to walk too far to find someone sporting a pair of Crocs (CROX 2.75%) brand shoes, seeing as they're currently sold in over 90 countries around the world. Whether you feel its best-selling classic clog is a functional and fashionable win or something you wouldn't be caught dead in, does not matter if you like money.
Why? Because Crocs is making strong moves in the e-commerce side of its business to outpace the retail reaper swallowing up companies refusing to adapt to the times. Strap on your Crocs because I want to walk you through this e-commerce shift.
Double-digit e-commerce growth
Crocs reported e-commerce revenue in the second quarter of $75.41 million, an increase of 18% year over year. E-commerce grew to 21% of the company's total revenue, up from 19.5% a year ago.
Much of this growth came in Crocs' largest market, the Americas, with Q2 2019 e-commerce revenue of $34.6 million, a year-over-year increase of 27%. But e-commerce grew not just in the Americas. The Europe, Middle East, and Africa (EMEA) region reported e-commerce revenue of $13.13 million for the quarter, an increase of 23.4% year over year. In the Asia-Pacific region, Crocs reported second-quarter e-commerce revenue of $27.7 million, year-over-year growth of 6.4%.
Growth in company-owned and influential online marketplaces
The company is now active on 13 different online marketplaces, including two new channels added last quarter. In its quarterly investor presentation, Crocs mentioned a primary focus on e-commerce sales channels owned and operated by the company. In other words, it's focusing on building e-commerce sales channels where it doesn't have to pay a third-party operator, with the exception of affiliate programs. Affiliate programs are a common practice of paying other websites for sending traffic and customers to a company's website.
What stands out to me the most is that the company seems to understand the world is moving toward digital buying. Not only is the company focusing on building e-commerce channels, but it's closing retail stores before they turn into complete deadweight. I think companies willing to make moves before the inevitable doom and gloom of obvious market trends sets in are attractive. It's clear Crocs doesn't want to join the likes of companies like Payless Shoes, Forever 21, or, dare we mention our long-departed friend Blockbuster?
Crocs' ability to put up impressive growth numbers in a competitive online marketplace and its proactive instead of reactive strategies have me intrigued. Add this to double-digit sales growth for nine straight quarters in the sandal market and the fact that revenue in the most recent quarter was up double digits despite a $6 million revenue loss from store closures and you've got me sold.