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There was a time a few years ago when it seemed that the only people on the planet not wearing a pair of Crocs — those quirky, brightly colored rubber clogs — were hard-core fashionistas and Somali nomads. Actually, even Somali nomads were probably wearing them. President George W. Bush had at least one pair. So did Rosie O'Donnell and George Clooney. As well as, oh, about 2 billion children. Sales at the Colorado-based company climbed from a meager $24,000 in 2002 to more than $847 million in 2007. When Crocs went public in February 2006, it raised $208 million — the largest shoe-firm IPO in market history.

Then fortunes turned. Demand for Crocs, which are named after a crocodile because they can be worn on both land and in the water, began to cool in early 2008. Throw in the global downturn and sales tumbled 15% to $721.5 million in 2008, leading to a loss of $185 million, following a profit of $168 million a year earlier. Its share price plummeted from a high of $74 in November 2007 to a low of just $1.05 last November. It was, says John Duerden, Crocs' chief executive, "the perfect storm."

Crocs' journey from hot to not is a familiar tale. Reinventing yourself from a one-hit wonder into a profitable, long-term company has to be one of the biggest challenges in business. Plenty fail. Remember Beanie Babies? LA Lights? Slap-on bracelets? Duerden, 68, who joined Crocs in March from the London-based brand consultancy Chrysalis Group, says he can help Crocs avoid disappearing altogether and turn the company into "a financially stable company and brand."

The crucial first step is to lower costs, inventory and manufacturing infrastructure to levels more in line with demand. Overzealous production had left the company with millions of dollars' worth of unwanted stock by mid-2008. Some of the work was already under way: Crocs has shed 32% of jobs since 2007, shuttering factories, paring its distribution network and cutting its inventory in half over the past couple of years. That's helped nudge Crocs' stock close to $7, but for it "to move higher, [the company] ultimately needs to become profitable," says Mitch Kummetz, a senior research analyst at Wisconsin wealth-management firm Robert W. Baird. New cuts aim to bring a return to positive earnings in 2010.

At the same time the firm must keep hold of its core fan base while opening up new product lines. Millions still love the standard resin shoes but plenty of people despise them, too. Duerden says he receives hate mail from nonplussed members of the public; others use the website ihatecrocs.com to vent. But Crocs is confident there's a deep pool of demand for its shoes. Despite the slowdown, the firm has sold around 120 million pairs so far this year, largely to the core demographic of suburban families, across more than 100 countries.

But while keeping its followers in clogs will be vital, broadening Crocs' appeal through a range of different styles is no less important. Take Swatch. The Swiss firm made its name flogging bold, plastic wristwatches in the 1980s. "Like Crocs, Swatch was very faddish, slightly gaudy, plastic and cheap," says Rita Clifton, chairman of global brand consultancy Interbrand in London. When fashions changed, Swatch faced a similar challenge: How could it build on that early success and appeal to a wider market? It now offers a range of metal, plastic and even Tiffany watches. "They've meta-morphed their brand over time and have a broader base of appeal," says Clifton.

For its part, Crocs has been steadily moving into other styles and materials over the past two years, from high-heeled shoes with a velvet finish to a khaki houndstooth men's loafer, both made out of resin. The hope: that a parent outfitting their kids in clogs will pick up a few more. "It's about persuading people to put the shoe on. We need to continue to evolve [our shoes]. And sometimes that might mean looking nothing like a Croc," says Duerden.

• Tara Kelly / London
• If the ubiquitous rubber clogs are to dodge the fate of past fad products, their maker will have to diversify