Can Crocs go the distance?

Crocs footwear

TEXT OF STORY

Kai Ryssdal: One stock that didn't hit the skids on today's continued sell-off was the Colorado-based shoemaker Crocs. Supplier of those colorful rubber shoes with the holes in the top. Shares spiked almost 10 percent after yesterday's announcement that second quarter earnings more than tripled. The Crocs craze has already outlasted most analysts' projections, and arguably the boundaries of footwear fashion. Marketplace's Sam Eaton reports it could be tricky for the shoe company to keep up the pace.

Sam Eaton: The fact that celebrity chef Mario Batali owns about 50 pairs of these infamously ugly rubber shoes says a lot about Crocs' success. They're cheap and they're comfortable and they come in so many different colors that many consumers don't stop at one pair. But with new knockoffs hitting the market every month, it's not Crocs' unique styling that's tripling the company's bottom line.

JEFF MINTZ: What the product really is is the material they use to make the shoe, which is extremely comfortable.

Jeff Mintz is an analyst with Wedbush Morgan. He says like Coca-Cola, Croc's success lies in its secret formula for a resin material called Croslite. It's lightweight, odor resistant and has so far defied attempts to replicate it.

MINTZ: So it's a combination of not knowing exactly what's in it or in what proportions, and then what the formulation process is.

Mintz says Crocs' low price tag has enabled it to expand globally. He says sales are up 900 percent in Europe. And a new plant in Brazil will soon be churning out Crocs for the masses in South America. Call it a global phenomenon. But it's still a niche. And that's where the key to Croc's future lies. The company plans to diversify by launching an apparel line. NPD Group's Marshal Cohen says that will be the true test.

MARSHAL COHEN: We've seen hundreds and hundreds of companies come from a niche product market, try to expand outside of their sweet spot, and really just not quite capture the same love that the consumer's had for the original product.

Especially if the clothes look anything like the shoes.

In Los Angeles, I'm Sam Eaton for Marketplace.

About the author

Sam Eaton is an independent radio and television journalist. His reporting on complex environmental issues from climate change to population growth has taken him all over the United States and the world.

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