Crocs not selling to Costco -- but its customers are?
Looking to set the record straight, Crocs issued a press release:
We have not sold Crocs-branded products to Costco nor have we authorized any of our customers to sell our products to Costco; however, we have discovered instances where we believe our products were being sold indirectly to Costco and we promptly terminated those relationships upon learning of that behavior. We are continuing to take aggressive measures to prevent this from happening.
Well that settles it, right? End of story? Hardly. Think about it: Crocs' retailers aren't selling stuff to Costco on the cheap because it's been flying off the shelves. If they could sell it at retail prices, you have to think they'd do that.
So Crocs isn't selling stuff to Costco: but the presence of its products in those stores is indicative of a glut of product at the retail level. And that's hardly bullish. Why would those retailers reorder when they can't sell what they got without Costco?
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Reader Comments (Page 1 of 1)
3-06-2008 @ 9:39PM
Used2LuvCrocs said...
Seems like not such a good investment anymore, it has definitely peaked as a company and a fad. Used to sport mine everywhere, but now it's not cool anymore and I look like an idiot.
3-07-2008 @ 10:44AM
pdm said...
Crocs wants to keep us paying top dollar. Who needs them?
3-07-2008 @ 3:40PM
Veronica said...
Why don't they just sell them to Costco? I see them at Dillard's and Dick's Sporting goods for $9.99 on clearance. I think selling to Costco would help. They are so greedy! Bad move!
3-07-2008 @ 5:08PM
K said...
I just bought my croc's @ costco not 2 weeks ago for $21.99.
3-09-2008 @ 12:22AM
Sheffield said...
The company has guided 25% growth for the next three years so to assume the worst is ridiculous. The company had plans to open other specialty stores because demand is healthy. Also the current price point won't break the bank for the average consumer.
There are some ridiculous correlations being made about CROX and the demand of its products because its is being offered by Costco. In fact Costco do not carry products that won't sell. The fact that Costco specifically mention Crox is because the products are popular and are selling.
Having Crox at Costco in fact improved exposer however it is clear from the statement that Crox never intended to sell to Costco and in fact doesn't need to.
3-10-2008 @ 2:50PM
Canadian Croc lover said...
The truth about how Costco sometimes gets goods from Tier 1 manufacturers (like Crocs) is through diverters - people who buy goods under the false pretense of selling them at their "retail" location. These goods are then sold in a block to chains such as Costco. Costco can live on 18% of margin so they are willing to buy accordingly...
It is not about if retailers have excess inventory but rather those attempting to buy one-off blocks of inventory for their own gain.
That is how real Crocs can make their way to Costco without the company actually doing the selling.
Canadian Croc lover
3-11-2008 @ 6:08AM
Mary said...
I live in Washington State and I bought Crocs at Costco 2 weeks ago. I don't know where they got them but they were surely there, and they were about ten dollars cheaper then I have seen them else where
3-11-2008 @ 6:32PM
AverageConsumer said...
Sheffield, the "average consumer" doesn't need to be paying $35 or MORE on shoes that wear out in less than 6 months of constant use. I thought my Crocs were awesome and I'd wear them forever, until the straps broke, lost all tread to the point of my foot being able to feel small pebbles, and the croslite eventually did nothing for the awful smell. Oh, and DO NOT wear these without socks, or if you plan on going anywhere near water. If water gets inside the shoe and you're barefoot, YOU WILL slip and fall because your foot shoots around inside the shoe.
BUT none of that got me to stop wearing them. It wasn't until my doctor told me to stop because they were hurting my lower back. What's up with that?!?
All around: Expensive, misleading, poor quality, very poor customer service = bad outlook in a tightening economy.
3-13-2008 @ 5:52PM
ADELE ROBERSON said...
5,786,593
cOX sHS TRADED 3/13/08.. aND THE STOCK IS UP.iT IS OBVIOUS THERE ARE A LOT OF BUYERS.
3-14-2008 @ 2:04PM
WhatACroc said...
Perhaps uninformed buyers. Look at the trend, it peaked last Oct-Nov and has been steadily going down ever since. Get out if you can still make a profit, otherwise have fun riding the downward spiral. It may have hit it's floor, but when you bank on it, that's when the floor usually drops out.
There is nothing to suggest this product has any long-term viability. As fads come, they also go. Don't take my word for it, they were calling it over when the stock dropped 36% in November, and now it's less than 50% of what it was after that drop.
With Wal-Mart and Payless selling knock-offs for 1/3-1/4 the price, people will start to jump ship and go for price instead of name-brand. Besides, the knock-offs don't seem to have any problem getting to the shelves, the camoflauge styles were in Payless months before Crocs could start selling them. This is just a sample of their problems as a company. It makes me sad when investors buy into all the hype just so some insiders can "pump" up the price and then "dump" their shares.
3-18-2008 @ 11:29AM
John Adams said...
9 million shares trade 3/17/08, and the stock dropped 12.5%. It's obvious there are a lot of sellers.
3-25-2008 @ 7:47PM
Samurai_Stockholder said...
Zac:
That's pretty lame logic and shows you aren't familiar with retail distribution.
What's happening is called parallel trading. That's were very popular items, like CROCS, are intentionally over ordered by authorized wholesalers or retailers and then the "excess" (my quotes) inventory is diverted to unauthorized retailers.
This parallel business only happens with products that are in very high demand.
Costco has to pay a huge premium to get Crocs in their stores; an added distribution tier and double transportation costs.
Costco is willing to pay this premium because of the strong demand for Crocs.
It has absolutely nothing to do with having a glut of inventory in the pipeline. It's called parallel trading.
Do your homework Zac, before posting. You really should pull this article. It's embarrassing.
3-26-2008 @ 5:53PM
Mike Brady said...
SOUNDS LIKE A CROC TO ME.
3-27-2008 @ 12:17PM
Ninja_trader said...
Samurai,
Um, Zac got it right.
Why would retailers intentionally over order when they have to turn around and sell their own inventory at clearance rates? Do your homework and go into a few stores, you'll see piles of these "very popular" Crocs on deep discount. (At least you will in Colorado, the home of Crocs)
Don't buy into this "demand" they seem to think is out there for Crocs, check it out yourself. The Crocs craze started in Colorado about 4 years ago when it was a smaller company, it peaked about 1 or so years ago nationally, and now it is on the decline. All the research I need is going to the mall or walking outside and counting the number of Crocs I see. I don't see as many as I did about a year ago on kids, adults, everyone. For one simple reason: Fashions ALWAYS go out of style.
Wishing on a star that demand has remained at previous levels is a pipe dream that the marketing department of Crocs cooked up. This fad is slowing and the company is no longer relevant. They're just trying to squeeze the last nickel out of as many investors as they can.
Next time Samurai, learn about the history of a company. I'm sure there's a lot of parallel trading going on elsewhere, but just because it seems like that's what's going on here doesn't make it a reality.