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.











Reader Comments (Page 1 of 4)
9-20-2007 @ 10:58AM
kluji said...
This article in defense of crocs & escalators has no substance. Some grandfather? And the part about the shorts being wrong? hello, im sorry, they said that against the "shorts" in Crispy Creme and also against the "shorts" in Tasr . Give it time, they will be right!
9-20-2007 @ 11:04AM
Japippy said...
Re: the adverse reporting of Crocs; I'd have to disagree with the adversity as I've heard of other problems with shoes. Shoelaces get stuck in the grids, loose soles get sucked up and can cause much damage, and even these young kids with the "GANGSTUH" pants that drag on the ground, can cause irreversible problems if caught in an escalator grid.
On the plus side, boating enthusiasts love to see people entering their yachts with Crocs on and many a podiatrist who is dealing with diabetics has been suggesting Crocs as an alternative shoe to their wardrobes because of their comfort and support and ability to NOT BLOCK proper blood flow. Jim Petersen
9-20-2007 @ 11:05AM
K Mac said...
I feel CROCS will suffer a period of low performance and here is why. There has been, and will continue to surface, additional negitive comments on the safety of the product. In addition, consider the seasonality of the outdoor use of the shoes and if indeed we are in for a rcecession, CROCKS will surely become an item that millions of households will not purchase.
9-20-2007 @ 11:16AM
Werner Egli said...
I bought a pair of Crocks in July. I've recently put them aside for good: I've had a number of near falls while wearing them. Walking on hard surfaces, the front tip catches and pitches me forward (instead of the tip slipping forward). I'd thought that practice would remedy this problem, but NO.
No such problem with any other shoes I've worn
9-20-2007 @ 11:23AM
JJ said...
LOL you shorts on here are absolutely pathetic! Accusing Mr. Yared of providing no substance is a joke. What "substance" do you guys have? Amazing international growth? Oops, that doesn't help you. Best margins in the industry? Uh oh, not that one. A new hit with the Mammoth? Oh darn, that doesn't help either. I dare you guys to short with every penny you have and hold through earnings.
9-20-2007 @ 12:56PM
borisb said...
its interesting how the article circulation was timed. the shares had sloped down for 4 trading days and the news began around 4pm monday, giving the "fear factor" 19 hours to stew and slam the stock for some dip price gravey in the 54s/55s on tuesday morning to either go long or short cover on more favorable terms. Blatant price manipulation.
9-21-2007 @ 8:56AM
Monica said...
I just started to hear all about these croc and escalator numbers and would like to put out there, as many times as I can, that if anyone is to ask me I will let everyone know that when your child gets their foot stuck in the side of the escalator and you and your child are scared to death - then give your statement! How many of you that don't believe this have had it happen to you? My son did and he was already scared of the escalator (his own thoughts - not mine) and was only standing still! He was not even near the edge! I think it is terrible to blame the children. Not all children run crazy on these escalators! His foot was sucked into the side and it would not let loose. His big toe was hurt and his foot was in pain but he did manage to get lose before he reached the bottom. Without thinking he tried to pull out his croc shoe, that he loves, and could have had his hand also in trouble. Thank God Grandma pulled his hand back and stopped him. I have pictures of his foot. I have pictures of the crocs. I have it all on record at the resort we were staying at in Orlando, FL. There were many people who witnessed this happen. It was very scary. (Not to mention it ruined the meeting I missed and the day we had planned in Orlando!) -- I just want to say I never believed this stuff happened on escalators either. I could not believe this happened to my son. We were all shocked. I also want to say I have told many people to buy crocs because I think they are the most comfortable shoe I have ever had, but if there is a problem with this shoe and being on an escalator I think children and their safety should be considered first. I also want to say that I do agree with those of you who have made comments about tripping. Anyone who does wear crocs knows that they do, as you're walking along, all of a sudden stop you dead in your tracks and you trip forward. Don't believe me - then you haven't worn them! I do think crocs are very comfortable but I also think children and safety should be most important.
9-21-2007 @ 9:01AM
Monica said...
One more little thing to add. My sons crocs were only two weeks old. Nothing hanging loose anywhere.
9-23-2007 @ 8:21PM
Dixie4641 said...
I love my crocs and I will not part with them. Kids have accidents with flip flops, teddy bears, loose sweaters and parent-held leashes. Another overreaction.
9-23-2007 @ 8:40PM
Felix said...
They are shoes people. I can remember when I was a kid and used to get my toes "bit" by the escalators when I wore flip flops. Did anyone write a report about how flip flops are bad for escalators and a kid in Tennessee got injured by one? No. Because they are shoes and not some miracle. I highly doubt that crocs are the reason for people getting injured on escalators. It's probably mostly kids under 10 and they would have been injured anyway. Besides, it's not like they were dragged through the belt or something.
9-23-2007 @ 8:40PM
Tori said...
Monica, your son's Croc had to be touching the side for it to be pulled down into the crack of the escalator, otherwise it would not have happened. So, saying he wasn't even near the edge isn't feasible. Yes, people need to be aware that the soft material is susceptible to such occurrences, but that doesn't make the shoe any less of a hot ticket. If you like them you like them, if you don't you don't, just don't wear them on an escalator! I have never suffered the tripping problem in mine (I probably just jinxed myself) and I love them, they used to be orange, guess I need a new pair. I hate escalators because I have seen an accident on one. It was completely the mothers fault for not paying attention to her two young children wrestling on it. The youngest got the skin on his arm caught in the side crack, well I won't describe the rest. I am always aware of where I, and my son, stand on an escalator and he is always still!
9-23-2007 @ 8:44PM
Cathy said...
I love my Crocs, someone bought a pair for me and once I found out how comfortable they were I went out and bought 4 more pairs, all different style and colors and I recommend them to all my friends.
9-23-2007 @ 8:44PM
Marks Mom said...
I have to say that just this week, my son and I were on an escalator and as we approached the bottom, the front of the shoe got sucked into the side edge of the escalator. It LUCKILY just tore the Croc, and left black greese all over the front BUT I was warned by my husband not to let him step off the elevator by himself regardless of what shoe he was wearing. He has told me numerous times that kids don't fully understand escalators and by them not paying attention ANYONE'S foot can get sucked in. What I think is the Hoopla over Crocs is EVERY KID YOU SEE IS WEARING THEM
so when it happens, parents and grandparents want to blame the shoe. Has there ever been such a shoe epidemic that when you go to the mall you see every kid in a rainbow of Crocs and nothing else?
My own shoes have been stuck into the escalator a few times and I don't wear crocs. What all parents should do is just be careful when getting on and off escalators. Pick the child up at the bottom.
9-23-2007 @ 8:50PM
Rita said...
Many years ago our son caught his tennis shoe in the escalator at Disney World. We had to physically pull his foot out tearing a hole in the shoe. I never thought about sueing anyone and he still wears tennis shoes.
9-23-2007 @ 8:50PM
mj said...
I wear them, only these are sold by Avon. I love them. I'm a diabetic, and they do help my feet. I have neuropathy, and my feet hurt all the time. These shoes are comfortable. Not to mention I can throw them in the washer and get them clean in minutes.
9-23-2007 @ 9:09PM
Pam said...
#15, Rita... Exactly!!! We had all sorts of things happen to us and NEVER thought of suing. Today's young people want an EASY way to make millions, from someone's sorrows. It's wrong!!!
9-23-2007 @ 9:20PM
Bob Vachon said...
I purchased my first Crocs last fall. I now have five pairs including a pair for diabetics which I love. I will continue to wear my crocs as they are great. Everyone needs to take care with any kind of footwear whether it is tongs, sandals, slippers, open toe shoes, etc. By the way, I always use the strap. the knock on Crocs is just that--a Croc.
9-23-2007 @ 9:54PM
jaiewhitefeet said...
crocs are ugly anyways. do ya'll not catch on to this, the only people who wear them are old ladies and kids with no choice. i'll be glad when people stop wearing them. they are worse than uggs.
9-23-2007 @ 9:22PM
maria said...
Crocs brand is great. People refer to all shoes of that style as "crocs". There are so many companies making a version of the "crocs" but the quality is poor. I think if there is a problem it should be noted if it was a Croc brand or another company.
9-23-2007 @ 9:32PM
Cozetta M Pierce said...
I am 44 years old & had not only my flip-flops, but a pair of tennis shoes caught on an escalator. Granted, the design of escalators has changed, but I still get queasy if I have no choice but to get on one.
By the way, I still can't wear flip-flops to this day, LOL!!!