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What’s Next, Crocs (CROX)? Squishy Pants?

Posted July 25, 2008

“Perhaps its competition from $5 Walmart knock-offs. 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.” — Stephanie Grimmett

by Stephanie Grimmett

Baltimore — (TFN):  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 today we watched the same thing happen to another niche shoe company:  Crocs (CROX:Nasdaq).

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 Walmart knock-offs (afterall, 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 today 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.

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Posted by Stephanie Grimmett · Filed Under US Stocks and Markets 

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