DENVER — Boulder homemaker Sheri Schmelzer and her entrepreneurial husband have the Midas touch. A year ago, the Schmelzers started a basement business called Jibbitz to sell mini faux flowers, buttons and other accessories for Crocs, the wildly popular footwear.
On Tuesday, Crocs Inc. agreed to buy the family-run business for $10 million with a pledge to pay an additional $10 million if future earnings goals are met. Not a bad return on an investment that began as a way to amuse the Schmelzers’ three children.
“We’re a perfect fit,” Sheri Schmelzer said of Crocs and Jibbitz. “We’re just going to settle into what happened here and grow the company.”
The Schmelzers carved out a niche in the marketplace and capitalized on their creativity, said Ron Snyder, Crocs president and chief executive officer. He called the “homegrown business” a market leader.
Crocs was founded in 2002 in the small community of Niwot about 30 miles north of Denver, selling unusual shoes made of a closed-cell resin material that feature holes punched across the top and around the toes. They come in every color of the rainbow. Some call them ugly; fans swear by their comfort.
The acquisition was a logical move because it will enable Crocs to control a piece of the business popular with children, said Michael Atmore, footwear group editorial director of Conde Nast Publications’ Fairchild Fashion Group.
“They have to believe that this business is pretty strong,” he said. “I think these little charms really connected with kids because we’ve seen a lot of this.”
Video: Wall Street loves Crocs' stock Although there are untapped markets for Crocs, he said, the question in many minds is what happens when people tire of the shoes.
“What’s next?” Atmore asked.
Candace Corlett of New York consulting firm WSL Strategic Retail said Crocs are a staple among workers who are on their feet a lot such as nurses and chefs but not a must-have in the fashion world.
“I think they have sort of a cultish kind of following,” Corlett said. “I just wonder ... if their shopper the kind of person who wants to decorate their Crocs?”
It was a little more than a year ago when Sheri Schmelzer, 41, was playing around with ways to decorate her children’s Crocs and decided to plug the holes with “anything that I could find that was cute.” She selected items with the help of her children — Riley, 4, Julian, 6, and Lexie, 8.
Jibbitz (which she says is derived from her nickname referring to someone who talks too much) was launched last year through a Web site. Demand grew and the family moved the operation into office and warehouse space in Boulder, and it added manufacturing in China.
Today, Jibbitz has 42 employees and plans to look for a separate warehouse soon, Sheri Schmelzer said.
From February to August, the company grew from $200,000 in monthly revenue to $2 million in monthly revenue, she said. The acquisition will enable them to expand the product line.
In addition to the acquisition, Crocs has agreed to endorse Jibbitz products while Jibbitz will gain access to Crocs’ distribution and retail network. Sheri Schmelzer will remain in her job as chief design officer while Rich Schmelzer, 40, will stay on as president.
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