BROOMFIELD, Colo., Sept. 14, 2021 /PRNewswire/ -- Crocs, Inc. (NASDAQ: CROX), a world leader in innovative casual footwear for women, men, and children, today hosted an event where Chief Executive Officer Andrew Rees and other members of the Crocs leadership team provided an overview of the Company's long-term strategy and key initiatives to deliver sustainable, profitable growth.
"We are incredibly proud of the track record of growth and shareholder value creation since we first embarked on the turnaround of the Crocs brand in 2014," said Andrew Rees, Chief Executive Officer. "Looking forward, we expect the Crocs brand to grow to over $5 billion in sales by 2026. We are confident in our ability to deliver this growth while maintaining industry-leading profitability, creating significant shareholder value, and having a positive impact on our planet and our communities."
We outlined a five-year growth framework to achieve $5 billion in revenues, representing a compound annual growth rate in excess of 17% using the midpoint of the company's 2021 guidance as the base year. Four key drivers underpin this growth – growing digital sales, gaining market share in sandals, capturing growth in Asia and innovating in product and marketing. With digital remaining a top priority, we expect at least 50% of total revenues to be derived from digital channels by the end of 2026.
As we grow revenue, we expect to deliver high levels of profitability and cash flow. By 2026, we expect Non-GAAP operating margins to exceed 26% and annual free cash flow to surpass $1 billion.
"While COVID-19 and its impact on our manufacturing in Vietnam remains fluid, we are reiterating our full year 2021 guidance provided in July and we are confident in our ability to achieve a 17% compound annual growth rate delivering over $5 billion of revenue by 2026," said Anne Mehlman, Chief Financial Officer.
Share Repurchase Activity
Today we announced that we expect to have repurchased $500.0 million of shares in 2021 by the end of the fiscal third quarter. In addition, we announced we will enter into a new Accelerated Share Repurchase ("ASR") that will conclude by the end of 2021, which will bring total expected repurchases by year end to $1.0 billion.
Earlier this month, the Board of Directors approved an increase to our repurchase authorization such that $1.05 billion will remain available for future common stock repurchases after the announced ASR is completed.
Introduction of New Bio-Based Croslite™ Material
As one of the world's largest footwear companies, we strive to make a positive impact on the global footwear industry and our planet by committing to transparent, socially conscious, and sustainable business practices. Today we announced that as part of our commitment to achieve net zero by 2030, we have begun introducing a new bio-based Croslite™ material into our iconic product lines. The company is targeting a 50% reduction in its carbon footprint per pair of Crocs™ shoes by 2030 as part of its overall commitment to becoming a net zero brand.
In addition to introducing bio-based Croslite and becoming a 100% vegan brand by the end of 2021, Crocs is exploring sustainable alternatives for other elements of its packaging and working on ways to give Crocs™ shoes a second life through consumer-led donations, recycling and re-commerce programs. To learn more about how Crocs is taking action to create a more comfortable world, visit crocs.com/crocs-purpose.
Carbon footprint reduction based upon Classic Clog footprint, utilizing July 2021 footprint of 3.94 kg CO2eq. as baseline. This metric was calculated using the Higg Product Module 1.0 at Higg.org. This calculation was conducted internally, was 3rd party verified, and represents a cradle to grave impact.
Investor Day Resources
The event materials and replay will be available on the Investors Relations section of the Crocs website, investors.crocs.com.
About Crocs, Inc.
Crocs, Inc. (Nasdaq: CROX) is a world leader in innovative casual footwear for women, men, and children, combining comfort and style with a value that consumers know and love. The vast majority of shoes within Crocs' collection contains Croslite™ material, a proprietary, molded footwear technology, delivering extraordinary comfort with each step.
In 2021, Crocs declares that expressing yourself and being comfortable are not mutually exclusive. To learn more about Crocs or our global Come As You Are™ campaign, please visit www.crocs.com or follow @Crocs on Facebook, Instagram, and Twitter.
Forward Looking Statements
This press release includes estimates, projections, and statements relating to our business plans, commitments, objectives, and expected operating results that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements regarding potential impacts to our business related to our commitment and ability to achieve net zero emissions by 2030, the COVID-19 pandemic, our financial condition, brand and liquidity outlook, and expectations regarding our future revenue, tax rate, capital expenditures, operating margin, free cash flow and ability to deliver sustained, highly profitable growth. These statements involve known and unknown risks, uncertainties, and other factors, which may cause our actual results, performance, or achievements to be materially different from any future results, performances, or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the COVID-19 pandemic and related government, private sector, and individual consumer responsive actions; current global financial conditions, including economic impacts resulting from the COVID-19 pandemic; the effect of competition in our industry; our ability to effectively manage our future growth or declines in revenues; changing consumer preferences; our ability to maintain and expand revenues and gross margin; our ability to accurately forecast consumer demand for our products; our ability to successfully implement our strategic plans; our ability to develop and sell new products; our ability to obtain and protect intellectual property rights; the effect of potential adverse currency exchange rate fluctuations and other international operating risks; and other factors described in our most recent Annual Report on Form 10-K under the heading "Risk Factors" and our subsequent filings with the Securities and Exchange Commission. Readers are encouraged to review that section and all other disclosures appearing in our filings with the Securities and Exchange Commission.
All information in this document speak only as of the date of this press release. We do not undertake any obligation to update publicly any forward-looking statements.
CROCS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
In addition to financial measures presented on the basis of accounting principles generally accepted in the United States of America ("GAAP"), we present future period guidance for "Non-GAAP adjusted operating margin" and "Free Cash Flow". Management defines "Non-GAAP adjusted operating margin", also referred to as "Adjusted Operating Margin", as the sum of GAAP Income from Operations adjusted for non-recurring items divided by GAAP Revenues. "Free Cash Flow" is defined as GAAP cash provided by operating activities less Purchases of property, equipment and software.
Non-GAAP financial measures exclude or otherwise have been adjusted for special items from our U.S. GAAP financial statements, such as inventory write-offs, duplicate rent costs, bad debt expense. We consider these items to be necessary adjustments for purposes of evaluating our ongoing business performance and are often considered non-recurring. We are unable to reconcile the above described 2026E guidance measures to their nearest U.S. GAAP measures without unreasonable efforts because we are unable to predict with a reasonable degree of certainty the actual impact of the special and other non-core items. By their very nature, special and other non-core items are difficult to anticipate with precision because they are generally associated with unexpected and unplanned events that impact our company and its financial results. Therefore, we are unable to provide a reconciliation of these measures.
Management uses non-GAAP results to assist in comparing business trends from period to period on a consistent basis in communications with the board of directors, stockholders, analysts, and investors concerning our financial performance. We believe that these non-GAAP measures are useful to investors and other users of our condensed consolidated financial statements as an additional tool for evaluating operating performance and trends. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.