Subject category:
Finance, Accounting and Control
Published by:
Darden Business Publishing
Version: 22 May 2024
Revision date: 4-Jun-2024
Length: 18 pages
Data source: Published sources
Share a link:
https://casecent.re/p/196067
Write a review
|
No reviews for this item
This product has not been used yet
Abstract
This case introduces Andrew Rees, CEO of Crocs, Inc, who is facing a challenge following the COVID-19 pandemic. Crocs had performed exceptionally well during the pandemic lockdowns: core product revenue had almost doubled to USD2.3 billion in 2021. The market had seemed pleased, lifting the company's share price from USD40 in January 2020 to a record USD180 in November 2021. Crocs' recent acquisition of HEYDUDE, a casual footwear maker, was supposed to be another great step forward. Yet on May 25, 2022, the share price was 74% below the recent high, sitting at USD49 per share. Rees did not see any reason for such a dramatic turn in a short time, and he was concerned that a drop of this magnitude could indicate changing investor expectations about Crocs. At that moment, his task was one of both cognition and action-he would have to understand what was driving the shift in market perception and then he would have to respond to two audiences: a disaffected and skeptical equity market and a fearful workforce. Both these audiences needed Rees to articulate a clear strategic direction for Crocs that was based on a sound and sustainable competitive advantage. Rees's ability or inability to make that case could have discernable impact on the market's valuation and the performance of Crocs' workforce. The case links the company's financial performance and shareholder value to the company strategy. It illustrates how investor beliefs about company strategy are accounted for in the share price. It also effectively demonstrates that finance can inform strategy in the shared goal of improving shareholder value.
Industry:
About
Abstract
This case introduces Andrew Rees, CEO of Crocs, Inc, who is facing a challenge following the COVID-19 pandemic. Crocs had performed exceptionally well during the pandemic lockdowns: core product revenue had almost doubled to USD2.3 billion in 2021. The market had seemed pleased, lifting the company's share price from USD40 in January 2020 to a record USD180 in November 2021. Crocs' recent acquisition of HEYDUDE, a casual footwear maker, was supposed to be another great step forward. Yet on May 25, 2022, the share price was 74% below the recent high, sitting at USD49 per share. Rees did not see any reason for such a dramatic turn in a short time, and he was concerned that a drop of this magnitude could indicate changing investor expectations about Crocs. At that moment, his task was one of both cognition and action-he would have to understand what was driving the shift in market perception and then he would have to respond to two audiences: a disaffected and skeptical equity market and a fearful workforce. Both these audiences needed Rees to articulate a clear strategic direction for Crocs that was based on a sound and sustainable competitive advantage. Rees's ability or inability to make that case could have discernable impact on the market's valuation and the performance of Crocs' workforce. The case links the company's financial performance and shareholder value to the company strategy. It illustrates how investor beliefs about company strategy are accounted for in the share price. It also effectively demonstrates that finance can inform strategy in the shared goal of improving shareholder value.
Settings
Industry: