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NEW YORK — Can Crocs be saved? John Duerden thinks so.
Duerden, who took over as president and CEO of the Niwot, Colo.-based company in March, is charged with untangling the mess at Crocs Inc.
In his first 70 days since replacing Ron Snyder, who remains a board member, Duerden has reached out to major department stores, made some critical cost-cutting decisions and implemented a plan for reining in product distribution.
“The biggest problem for us is reconnecting with our customers, retailers, in particular,” said Duerden. “We need to rebuild our reputation with them, which has suffered as a result of such rapid growth, [and] we need to improve the level of service. Also, we have to manage our inventory down in an effective way. We have too much inventory at the moment.”
Refueling Crocs is going to be a tough task amid major financial turmoil at the firm. Earlier this month, the company reported a loss of $22.4 million for the first quarter, compared with a loss of $4.5 million for the same period last year. What’s worse, the maker of the quirky injection-molded clogs issued a weak outlook for the second quarter.
But the CEO is no stranger to helping companies get back on track. Before joining Crocs, he ran Chrysallis Group, a consulting firm that developed and revived struggling brands. He also worked for Reebok International from 1988 to 1995, eventually becoming its president and COO.
“It’s been a very interesting experience actually getting back into footwear,” Duerden said. “Although I have kept an eye on the industry in the last few years, coming back into [it] has been an interesting and exciting experience.”
The Crocs board is betting that Duerden, 68, has the savvy to stabilize the company. According to a March
Securities and Exchange Commission filing, the executive will receive an annual salary of $850,000 and was granted 400,000 shares of stock upon hiring, plus a $350,000 signing bonus and other performance incentives.
In his first major interview since taking the helm of Crocs, Duerden weighs in on the challenges he faces and how he plans to return the company to consistent profitability.
FN: You’re 70 days into the job. What’s been the biggest surprise so far?
JD: I don’t think there’s anything that surprised me that I had not already been aware of when I was considering taking the assignment. I recognized fully that here was a company that had been through a dramatic period of growth, followed by a sudden and quite precipitous collapse over the last year or so — part of which was driven by the economy and part of it [because] a number of the controls and information systems necessary to support a company of this size [hadn’t been in place]. The growth had just outpaced the ability to do it. That’s not uncommon in companies that have grown at that speed.
FN: Why did you decide to return to footwear full time?
JD: Once I’d set up my own consulting group, I’d found myself drifting back to the footwear industry to some extent, maybe it was because I had made a lot of friends and acquaintances during that period. But I’ve always found the industry fascinating. It’s one of those few industries where it’s possible to build an iconic brand in a relatively short period of time. It’s an industry that has a dynamic about it. And I guess I enjoyed my six-and-a-half years with Reebok as much as any aspect of my professional career.
FN: Before you joined Crocs, what observations had you made as an outsider?
JD: It was difficult for Crocs not to be on anyone’s radar. It was kind of like a shooting star. I was interested and, I suppose, I had probably dismissed it as a fad. I thought, this is not going to last, but as I began to look at the company, it became clear to me that there was a passionate group of consumers out there, and that sparked my interest — and [the fact] that the brand has worldwide recognition, recognition that is right up there with the major brands. Those are two very powerful components, which led me to believe there was much more to this than I perhaps imagined.
FN: Are you worried that Crocs’ popularity has waned?
JD: My intention is to stimulate the brand. There are various stages of a brand. Obviously, it takes 12 months of cycle time to get a new product line in the marketplace, so my ability to rapidly influence the product coming to the market now is limited. But I still believe there is a buzz out there in the marketplace; there are consumers who like the idea of Crocs shoes. They are very comfortable. The materials we use are specifically focused on providing an extremely comfortable shoe that can be manufactured at a relatively low cost. And we’ve got a very good competence in injection-molded technology, and I intend to develop that competence to a point where we can be leaders in [that area].