Crocs (CROX -0.16%) reported another fantastic quarter last month. The $11 billion shoe-making enterprise registered sales of $625.9 million and net income of $153.5 million during Q3, financial results that crushed Wall Street's expectations. The company's stock price is up about 19% since the earnings announcement on Oct. 21 and about 182% since the start of the year.

The business sold over 25 million pairs of shoes just in this three-month period. That astronomical figure illustrates just how popular the brand has become. It's also a confirmation of why investors have taken notice of this top footwear stock in 2021. 

two pairs of Crocs shoes on a deck

Image source: Getty Images.

Selling comfort and coolness 

To get a better understanding of this company, it's worthwhile to know some crucial information. Crocs derives the vast majority of its revenue (82% in the quarter) from its flagship foam clogs and another 13% from its sandals. The remainder comes from slides, flip-flops, sneakers, and customizable charms called Jibbitz.

Merchandise is sold through 364 stores scattered across the globe (in North and South America, Europe, the Middle East, Africa, and Asia), its website, and through third-party retailers. Crocs are available in more than 90 countries today. 

The shoes are a major hit among consumers. The company's classic foam clog has a 4.7-star rating (out of 5) on the company's website from more than 27,000 reviews. And based on findings from Piper Sandler's (PIPR 1.65%) fall Taking Stock With Teens survey, the brand has significant mindshare among the Gen Z demographic. A brilliant marketing strategy that utilizes celebrity collaborations and social media effectively definitely helps. 

The leadership team was so impressed with the quarter that they now expect revenue to rise 62% to 65% for the full year of 2021. Sales growth in 2022 is forecast to be 20%. 

How many Crocs? 

Crocs' incredible third-quarter unit volume (25 million) was a 51% jump from the prior-year period and a 60% increase compared to Q3 2019. And the average selling price (ASP) for a pair of Crocs during the three-month period increased 14.9% year over year to $24.42. 

According to the company's recent investor day, the brand estimates more than $5 billion in annual revenue by 2026. If we assume that the ASP grows 22.3% over the next five years, which is the increase that has occurred since Q3 2016, that means Crocs will sell over 165 million pairs of shoes annually (and counting) by the end of 2026. 

Andrew Rees, Crocs' CEO, has no concerns about the higher volume his team is forecasting over the next few years. "But there is absolutely available capacity to be able to produce those kinds of pairs and partners that are willing and able to and frankly, make good money out of producing those pairs," he said on the Q3 earnings call with analysts. 

The advantage a business like Crocs has is that it sells a fairly basic, simple product that is easy to manufacture. There are only three main components, and ramping up factory production is a quick process. Therefore, the supply chain issues you've been hearing about aren't keeping Crocs' executives up at night. 

Like its customers, Crocs' shareholders should get comfortable. In this case, however, it's for superb investment returns.