Dive Brief:

• The ascendant clog maker Crocs has released a set of forward-looking goals, including a growth plan to hit $5 billion in revenue by 2026, according to a press release.
• The five-year objective implies a growth rate of over 17% per year. Crocs also aims to generate $1 billion in free cash flow by that point with operating margins topping 26%.
• To get there, Crocs is looking to grow its digital channel. The brand hopes for digital to make up half of its revenue by 2026. 

Dive Insight:

Crocs has been on a tear, with the brand getting a boost from both its creative partnerships and product drops as well as a turn toward comfort among consumers during the pandemic era. 

This summer, the company reported its third straight record quarter, this time with revenue up 93%. In that period, digital sales represented a total of 36% of Crocs' total revenue. While it still has a distance to go toward its goal of 50% of sales, Crocs has undergone tremendous digital growth, helped in part by a rapid shift to online — again a feature of the pandemic. 

Along with expanding the digital channel, the company's five-year goal rests on expanding sales in Asia, innovating in both products and marketing, and growing the brand's market share in sandals.

Sandals represent a "key growth driver" for Crocs, according to B. Riley Securities analysts led by Susan Anderson, who noted that the footwear category made up 22% of Crocs total sales in 2019 before declining to 18% during the pandemic. In an emailed note, the analysts said they think Crocs "has now cracked the code in sandals with various styles of personalized sandals (slides, two strap, flip flops), and management expects to see sandals revenue grow 4x between 2020 to 2026."

More generally, the analysts said they believe Crocs has more room to grow given the brand's "innovation, comfort, personalization, new products, social marketing, and inclusivity" that is "driving significant penetration among consumers."

To help hype its brand, Crocs has been partnering up with celebrities and other brands. Recent collaborations included luxury house Balenciaga, Russian rave band Little Big, South Korean snack brand Nongshim and London skate brand Palace Skateboards. Crocs even made a ranch-dressing themed clog as part of a partnership with Hidden Valley.

Crocs is also looking to make its environmental impact a selling point with customers and investors. This week, the brand announced a new biology-based Croslite material that it is adding to product lines, and which the company said is part of its commitment of hitting net zero carbon emissions by 2030. 

As for the future, the pivot to digital could define whether Crocs hits its revenue and profit goals. The company joins other footwear and DTC brands, including Nike and Adidas, that are chasing sales growth through digital and DTC channels.