Discount shoe retailer Payless ShoeSource is now Collective Brands (NYSE: PSS), and recently acquired children's shoemaker Stride-Rite. Perhaps the split focus of trying to be both a discount and a full-price shoe store is what is causing profits to plummet. Collective Brands recently reported 2Q 2007 results. Profits dropped by 23% to just under $25 million, or diluted EPS of $0.38. Total sales were down 1%, not enough to worry, and same store sales were down 1.4%, again not enough to worry, yet. CEO Matthew Rubel blamed the downturn on weak sandal sales. Weak sandal sales in the summer? As good an excuse as any I suppose. But the fact remains the company is selling fewer shoes and making less money on those it does sell. 2Q numbers would have been even worse had the company not received $2.3 million from a lawsuit settled in its favor, and insurance payouts of $1.6 million to cover hurricane damage in 2006.

Collective Brands spent $1.8 million in 2Q 2007 on integration planning for the acquisition of Stride-Rite Shoes, an acquisition management states will have no impact, positive or negative, on earnings in 2008. Why not? What's the hold up that it will take until sometime in 2009 to figure out whether Stride-Rite was a good acquisition? $725 million of the acquisition was financed by a loan. For that kind of money in a company of this size, shareholders have a right to see what kind of bang they may or may not be getting for their investment buck.

To be fair, 2Q reporting period ended in early August, just before the big back-to-school shoe buying period. Inventory expenses was up 5.5% because the stores were stocking up in preparation for back-to-school purchases. Perhaps 3Q numbers will be more positive. Collective Brands bought back $4.6 million of its stock, 141,000 shares, in 2Q as part of a $32 million share repurchase program. This still has not helped the stock, which opened the year trading at $32.89, and now trades right around $23.20.

Payless (PSS) profits less originally appeared on BloggingStocks on Tue, 04 Sep 2007 18:25:00 EST. Please see our terms for use of feeds.

Crocs Inc. (NASDAQ: CROX) has been a true home run stock this year. Many of you have read my articles about Crocs since February and I have been recommending this stock since $15 on a split-adjusted basis. The shares are above $61, and the stock is still a buy!! Why?

I have written extensively that Crocs has surpassed the "fad-status" or the "niche-play" and is becoming a full-blown phenomenon. But to achieve phenom status, Crocs would have to develop products that go "north of the ankle." That is exactly what Crocs is doing. The company is launching a line of men's and children's apparel coming out this October. The clothing will be made from Crocs natural, proprietary resin material.

Further, the company has added several accessories to its line of products, including back packs, slosh-boots, t-shirts, etc. Crocs has also extended its branding identity by licensing its clogs and sandals to more than 100 American Universities and the NFL and NHL.

Continue reading Crocs (CROX) going north of the ankle

Crocs (CROX) going north of the ankle originally appeared on BloggingStocks on Mon, 27 Aug 2007 11:23:00 EST. Please see our terms for use of feeds.