FN: What do you see as the biggest problem facing Crocs?
JD: The biggest problem for us is reconnecting with our customers, retailers, in particular. 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, and getting that distributed effectively without damaging the brand is a major challenge for us. We’ve made some reasonable progress on it and we will continue to manage that carefully. The second thing is to bring the cost base in line with revenue. We need to bring that down to more sustainable levels now so that we meet the relevant competitive benchmarks in the marketplace. We have to continue to focus on cash generation, of course. But we’re fortunate in that we have very limited bank debt.
FN: In March, just as you joined Crocs, auditors Deloitte & Touche raised doubts about the firm’s ability to continue as a going concern. What do you think they’re missing?
JD: They’re missing the impact of management intervention. That is what I do: look at companies and try to turn them around. The auditors are obviously entitled to a view; we take that view very seriously. But by the same token, I believe there is sufficient energy in this company and that we can secure the financing necessary for this company. Therefore, it is possible to turn this company around. But if you look at the balance sheet of the company, then the auditors are right to raise a flag of concern. But my job is basically to acknowledge it and to put in place the plans to make this company sustainable in the future.
The company has taken a lot of actions over the last 12 to 18 months to correct an adverse situation. Some of those are taking effect now. There are additional actions we need to take in order to correct the performance of the company going forward. The auditors’ report wasn’t about this year, it was about last year.
FN: How would you describe your leadership style?
JD: There are several roles for a chief executive. In many ways, I regard myself as being the representative of the customer inside the company. That might sound strange, but that’s the most critical thing — for us to be in touch with our customers and our consumers. If you take your eye off that ball in this industry, you run into serious trouble. My role then is to arrive at the right balance between dealing with short-term problems and long-term investments, and try to balance those two. I also think my role is to hire good people — and there are a number of very good people inside the company — and give them responsibility to do their jobs and provide an environment in which they can be successful. My natural instinct and background is really marketing. Companies are about marketing, and even if you have operational problems or financial problems in the short term, eventually you have to come back to the marketing equation, which deals with the price and margin of the business and the way you get your product into the marketplace.
FN: How does your leadership style differ from Ron’s?
JD: I wouldn’t want to draw a direct comparison. Ron did a terrific job in building this company. Very few people have ever built a company this fast and gotten this much recognition around the world. I really give Ron a lot of credit for that. I think different management styles are appropriate for different stages in the development of companies. So am I the same as Ron? Probably not. But hopefully, my skills will be complementary to what he’s accomplished in the company.
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