Crocs (NASDAQ: CROX) is one of BloggingStocks writer Georges Yared's favorite stocks. While I congratulate him on the stock's strong performance, I'm very skeptical about the company future growth prospects. I agree wholeheartedly with Kevin Kelly's assessment that the stock is "priced for perfection".
In a much-read May post, Georges wrote that "Crocs is the next Nike": "Crocs has also begun to go north of the ankle with a new line of T-shirts, backpacks and many other neat, innovative products. To become a full-grown multi-billion dollar market cap company, Crocs must include product variation and innovation. This company appears poised to do exactly that."
And therein lies the problem: In order for Crocs to be a buy at this level, investors need to count on the successful introduction of new products. I'll be the first to deliver a mea culpa when I'm proven wrong, but I think Crocs is very likely to fail with its new products. Crocs just isn't really a strong brand. The Crocs shoes are wildly popular but this is a one-trick pony. The company could hardly be considered cool, and I just don't see Crocs expanding successfully into other fashion products the way that companies like Diesel and Nike have. This isn't a company that makes high-performance footwear worn by top athletes. These are strange-looking sandal-shoes that my dad wears. Nike catapulted into the stratosphere in part because athletes like Michael Jordan wore Nike's, and the brand became a symbol of athleticism and hipness -- something we all aspire to. Crocs stands for what exactly?
We'll see what happens with Crocs. But for now, I think the odds are in favor of this being the next L.A. Gear or fanny pack, not the next Nike.
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Reader Comments (Page 1 of 1)
8-15-2007 @ 8:44PM
Andrew Horowitz said...
Test
8-15-2007 @ 8:46PM
Andrew Horowitz said...
Wonderful job assessing the obvious. Mr. Yared has done well in buying but has not afforded any opportunity to see the other side. You, though, put up a post after the stock tanks 20%? Thanks... Where were you at $60?
Come on! We have been pounding the table on this one.
Please do not quit your day job....
see: (written July 20th with several follow ups)
http://www.thedisciplinedinvestor.com/blog/2007/07/20/crocs-is-a-short2/
8-15-2007 @ 11:07PM
Jason said...
Another obvious misguided piece trying to label Crocs as a fad and saying they make one shoe. Do you guys even bother to research the expanding product line? Do you know what a conference call is? Would you even think of bothering to listen? You take the energy to write this stuff, but would you take the energy to do some channel checking? To label this company as a one trick pony is pretty insulting. Go put that on Heely's. Why don't you compare the last earnings reports from both companies?
8-16-2007 @ 8:07PM
Gareth said...
i think what the writer is trying to say is that unless CROX brings on Michael Jordan to do endorsments, this company will not end up being a carbon copy of Nike.
8-16-2007 @ 7:22AM
Jane Blake said...
Crox is a dangerous shoe for kids...I support the schools banning them. Being a former educator, they would fall in the same category as wearing your drawers at half mast. I know kids...don't invest in them!
8-16-2007 @ 9:43AM
Eric said...
The only innovation Crocs has is Croslite. All the other company the have do nothing except Jibbitz. Fury Hockey is nothing in the hockey market. Exo mean nothing.Bite is small player in the Golf.Ocean minded is same as all flip flop company. Billabong is stronger then Ocean Minded in Flip flop as volume and it more a Big brand.
8-16-2007 @ 1:31PM
Sarah said...
I don't work for Crocs but I do know that those who first thought they were ugly have changed their mind due to the comfortable nature of the shoe. Now the real ugly shoes are the ones that hurt your feet! Croslite is an important discovery and will revolutionize the sports world of padding. How many of us soccer, lacross and football moms well know how much the equipment stinks. There is a whole world waiting out there for sweet smelling sports equipment and Crocs has the the only patton for making it. Sounds like this stock is going places to me. I see Crocs as being a staple in the wardrobe similar to blue jeans. They are a lot cheaper and there is a need for many colors to go with various looks. $30. is not expensive in this day and age of consumer consumption. Those buying knock-offs soon realize that there is a difference and that why not buy the real thing....we're not talking about a Louis Vitton purse, we are talking about a $30 pair of shoes. Everyone can buy the real thing!!
8-17-2007 @ 4:56PM
Ed Kennedy said...
From the looks of thestock market response these shoes have caught on. They are really comfortable practical too.I am diabetic and haven't been able to wear this type of shoe for a long time. No,I don't think they are a fad.Many doctors don't think so either.Keep them coming.I love the money
9-17-2007 @ 12:35PM
borisb said...
looks like you are missing the progress of the new products. the global shoe market is $150 Billion, and CROX is pressing an estimated 50 styles, and the 2 original styles are still growing year over year despite canibalization from the new 48 styles. The shoe market is so big leave the messy clothing business to Nike and Underarmour.