Ten Thousand Crocs Stores Globally?

Friday night, my family and I were in New York, and we took the time to visit the Crocs (CROX) store located on Spring Street in SoHo, New York.

We own a significant position in Crocs, which I purchased in 2008 at an average price below $2. I often post about CROX on my investment blog.

The stock price, which dipped to a low of $0.89 in late 2008, is now trading above $18. In April 2010, I wrote about why I thought CROX could reach $20. Since the stock is currently trading near my price target, one might think that the potential upside for CROX stock price has evaporated.

I don’t think so, and I am writing this post to explain why.

This visit allowed me to figure out how big the Crocs retail opportunity really is.

We were stunned by the number of people shopping and buying at Crocs|SoHo. We were impressed by how well the products displayed on the shelves. The staff was friendly, and the store looked immaculate. My wife bought a pair of Ularoo, and my son and I each bought a pair of Ocean Minded Nomad Rover. All in all, we spent more than $300 in the store.

We observed other interesting things while roaming through the store.

  • We saw some people you would expect to see at an Apple store trying on and buying Hover sneakers.
  • We asked an employee to describe how busy the store is throughout the year. He said the store is crazy busy most of the time. Totally nuts, he said.
  • My wife, who is from Europe, noticed many Europeans shopping in the store during our visit.
  • Most of the other shoe stores on Spring Street were empty. Crocs was jam-packed with customers.

As I watched happy faces walk around the store to find what they were looking for, I was reminded one more time about how unique and powerful this brand is.

I think management is up to something with that retail concept. Since the company has the highest margin in the footwear industry, it is in a great position to exploit commercial real estate opportunities that are becoming available as traditional retailers pare back their businesses in the face of mounting pressure from Internet retailers.

Crocs management has made a big push on the retail front, and the company will be operating 400 stores by the end of 2010. The stores allow the company to merchandise the depth of Crocs’ more than 250 styles. In my opinion, looking at the store we visited, there is no reason to believe the company can’t expand its retail footprint to more than 10,000 stores globally. Why not?

When you overlay Crocs’ retail opportunity with its aggressive global Internet business initiatives and a solid turnaround in its wholesale division, the Crocs story holds promise for the next ten to twenty years.

The road will be bumpy at times, but there is so much Big Mac in this investment thesis that as a family, we have decided not to pare down our position

Written by Michael Bigger. Follow me on Twitter and StockTwits.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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