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Story about Crocs (CROX) and escalators is a crock!

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The beauty of the Internet is that news and events can circulate globally in a matter of minutes. The bad news about the Internet is news and events can circulate globally in a matter of minutes. Just ask Crocs (NASDAQ: CROX) about the latter statement. The stock has suffered over an Associated Press article that is frankly -- a crock.

The gist of the AP article was that Crocs harmed a few children on escalators. As a father of five and a grandfather of two, I get kids. I also get kids' accidents. I have spent my fair share of time in emergency rooms with sports-related and household type injuries with my children! The AP article strongly suggested that the Crocs shoes worn by little children was the cause of their unfortunate accidents by catching their toes or feet in the teeth of the escalator. Some have required medical attention including suturing wounds or a broken foot.

To outright blame the Crocs shoes for these accidents is both unfair and pretty easy to do. It certainly has caught the attention of the concerned parents of the world and will cause some to rethink a possible purchase. Everyday life carries risks and of course, as parents, we strive to minimize those risks. If not Crocs shoes, then whose shoes are absolutely, guaranteed safe and escalator proof? None.

The case can be made that with the gripping action of the proprietary resin material in Crocs shoes that thousands, if not millions of potential accidents have been avoided. The case can be made that millions of potentially sore back incidents have also been avoided by wearing Crocs shoes. There is massive amounts of anecdotal evidence that wearing Crocs shoes helps those with lower back conditions. I have not heard if medical science has proven this case, it's just anecdotal.

The story of Crocs has been an overwhelming success.The revenue and earnings numbers have been stunning since the February 2006 IPO. The short sellers have gotten annihilated in this stock as they have never believed the strength of this company. The well-placed AP story has given comfort to the shorts, yet the last four days volume traded has not been extraordinary. That fact alone indicates that institutional shareholders are not selling or paying much heed to the escalator story ... nor should they.

Georges Yared is the CIO of Yared Investment Research.

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Last updated: November 10, 2009: 06:54 PM

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