Crocs -- as the fad is wearing off, so is the stock

Posted Nov 13th 2008 2:00PM by Melly Alazraki
Filed under: Major Movement, Earnings Reports, Crocs Inc (CROX)

I could never really see the charm in those horrid Crocs Inc. (NASDAQ: CROX) plastic footwear, so I never joined in the hype and wasn't part of that fun ride that Crocs shareholders enjoyed for a while. Crocs went public almost three years ago in February 2006. The stock has since split 2:1 in June 2007, peaked at $75.21 in October 2007, and yet today it trades under a dollar.

Crocs problems haven't started with the current economic slowdown; cheap knock-offs hurt sales and competitors marketed similar products. Not to mention the bad publicity Crocs had to manage following some injuries caused by Crocs getting caught in escalators.

On Wednesday, though, the maker of those colorful clogs posted a deep quarterly loss due to high restructuring costs. Third-quarter net loss amounted to $1.79 per share, but excluding items, Crocs posted a loss of 53 cents per share, compared with a net profit of 66 cents per share a year earlier. It totally missed analysts estimates of a profit of 2 cents per share, according to Reuters Estimates. Worse than the loss was the fact that sales fell 32% in the quarter to $174.2 million, also below analyst estimates.

While sales actually grew by 14% in Asian markets, it's likely they'll follow European and American sales plunge. Indeed, Crocs issued fiscal fourth-quarter profit and revenue forecasts that fell far below Wall Street expectations. The fad, the novelty that was Crocs has been wearing off. Add to that the dismal global economic situation and there's no telling what will be the end of Crocs.

CROX shares are plunging nearly 50% today to 96 cents, down from a 52-week high of $46.80 as the stock lost over 97% of its value year-to-date.

Tags: clogs, crocs, crox, earnings, inthenews

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Reader Comments (Page 1 of 1)

11-13-2008 @ 3:27PM

Iridium said...

I don't understand how sales can be up in Asia. After all Crocs are just Asian shower sandals with a heel strap.

Crocs were also ridiculously overpriced. They could have sold for $5 a pair with huge margins.

A factory in China tried to sell me shower sandals right before Crocs came out. They were going to sell them to me for $.75 a pair landed. I could make quite a profit selling them for $2.50 wholesale. Let alone the $15 wholesale price for Crocs. I showed them to a few buyers but they laughed and said "why would I buy those".

Anyone that paid $30 for a pair of Crocs is a complete imbecile. You bought a pair of shower sandals that cost the company somewhere around $.75 to land in a US warehouse. With that kind of margin you can really say that Crocs is run by people that would make those running GM look like financial geniuses.

Yes Crocs are very comfortable but all they need to do to stay in business is lower the price. I guess greed wins out over sound business.