Crocs Hits Rock Bottom

I was flipping through a magazine a few months ago and saw an ad for Uggs (you know, those big sheepskin boots that became the ubiquitous footwear of Hollywood starlets a few years ago). But the model in this particular Uggs ad, instead of being shod in big clunky boots, was lounging across the page in big clunky sandals.

I remember this moment, because it was the definitive statement that Uggs were now, finally “over.” When a trendy company has to branch into new markets to maintain its profits, you know that trend is over. And that’s what Uggs just did, move beyond the fluffy bootie into “normal” footwear. The Ugg is dead. Long live the shoe.

And Friday we watched the same thing happen to another niche shoe company:  Crocs (CROX).

You may own a pair of Crocs. I’ve been told they’re quite comfortable. But they’re stock price has just announced that your squishy neon-colored clogs are, like their sheepskin friends over at Uggs, “so last year.”

Perhaps its competition from $5 Wal-Mart (WMT) knock-offs (after all, Crocs did make the mistake of going after the comfort demographic instead of the label-conscious one. Spoiled teenagers in California care who makes their shoes, but underpaid parents in Oregon don’t really check.). Or perhaps people just got tired of wearing tires on their feet. Either way, Crocs are over. And the company’s earnings and stock price have stated as much.

CROX hit a high of $75.21 last October, but Friday the stock fell as low as $4.72, when the company announced even more abysmal guidance for its second quarter results. Crocs now thinks it will make profits of about 3-7 cents per share, from an earlier estimate of 42-47 cents per share. That’s gotta sting.

Supposedly, Crocs is launching a clothing line to make more money. I’m looking forward to seeing what kind of overall fashion sense informs a pair of rubber shoes. Perhaps, they’ll embrace the esthetic, and we’ll all be wearing bright squishy pants by next year. Hmm. That would make my laundry bills much lower.

Disclosure: None

Comments

[dad_is_board:]

Crocks, Starbucks, Krispy Kreme, Converted Organics - a smart investor should know better.

2008 Jul 27 06:30 PM

[Roger Carter:]

Stephie, aren't you being a little harsh with your "ugly" commentary on Crocs?

[Comment edited for inappropriate language - SA Editors]

2008 Jul 27 08:02 PM

[Vandelay:]

There is going to be an announcement about the lawsuit between Crocs and Holey's in favor of the latter. Holey's is the first company that produced the shoes.

2008 Jul 27 09:17 PM

[Dan Jacome:]

management can't be trusted; that's the bottom line

2008 Jul 27 11:05 PM

[User 233629:]

Quite simply, Crocs are revolting and people purchased them as part of a fad...when they noticed the looks of disgust as others stared at their feet, the decided that despite the comfort, the Crocs have got to go. Now only the most disparate of souls purchase these awful things...and they buy the Wal-Mart knockoffs since people who conciously choose to wear these things likely care less about brand recognition. Good riddance.

2008 Jul 28 12:27 PM

[booface:]

UGG is dead??? You clearly have no idea what you are talking about - take a look at Deckers stock price recently? Listen to their most recent quarterly conference call? Please do not comment on something you know nothing about.

2008 Jul 28 02:41 PM

[Illster:]

I was at Disney last weekend - every other Kid had Crocs on!

2008 Jul 28 06:26 PM

[Brummie:]

The initial shoe produced by Crocs may well be somewhat "faddish" but that doesn't change the fact that they are incredibly comfortable, far more so than the knock-offs. Speaking of which, have you heard the saying "imitation is the sincerest form of flatter?". There are knock-offs every where you look for darn near every products (consider iPod) but the discerning buyer knows the difference. Stephanie seems to limit her comments to the original shoe but fails to mention the numerous other styles that are now out there. I own 4 pair of Crocs and now it's all I wear and I'm in my 50's and like most older people, don't give a rats about fashion. I care about comfort and quality and Crocs products have both. The demise of the value in Crocs shares has nothing to do with their product line, it has everything to do with their leadership. The stock price now reflects a vote of no confidence in the CEO and rightly so. Change the leadership and see what happens to the company and don't be so narrow minded as to think your opinion on what a product looks like is what makes the difference.

2008 Jul 28 08:08 PM

[weenerdog:]

When they first came out, I sold Crocs at farmer's markets, etc, and did very well with them, everyone who tried them on, simply loved them and came back to buy more! But Crocs has the worst customer and vendor service in the world, slow, stupid, arrogant and just plain nasty, and it was a real pain dealing with them! Great product, lousy management and customer service....I love the shoes, hate the folks who make them!

2008 Jul 28 10:11 PM

[User 149584:]

Roger Carter, show some respect.

2008 Aug 06 02:29 PM

[RogerCar:]

Mattie, I'm sorry you don't agree with my sardonic post re. this author's "pile-on" philosophy when it comes to Crocs. Hey, it's easy to jump on top of the moving pile when it's in vogue to suffocate the skinny kid at the bottom.

[This comment has been edited to remove personal comments out of keeping with Seeking Alpha's request for civil discourse in all posts. -SA Editors]

2008 Aug 06 10:12 PM

[cobbgirl:]

Very poor print for this site. The author looks very unfashionable and makes very little factual reference. I just bought a fine Crocs computer bag and their new designs put her review way into the uninformed opionated. Explore, discover the company facts!

2008 Aug 17 08:23 AM