Crocs Gets Stomped

Updated from Oct. 31

Wall Street's high expectations left Crocs(CROX) skinned Thursday, with shares plunging 30% after the shoemaker's raised guidance wasn't viewed as good enough.

Crocs said late Thursday that its third-quarter profits more than doubled, topping estimates. Moreover, the maker of colorful resin clogs lifted both its revenue and profit targets for the full year.

But the company's revenue and new outlook for the year disappointed, sending shares tumbling. The stock recently was down $25.18 to $49.57.

The Niwot, Colo., company posted third-quarter earnings of $56.5 million, or 66 cents a share, up from $21.5 million, or 27 cents a share, a year earlier. Analysts, on average, expected earnings of 63 cents a share.

Revenue rose to $256.3 million from $111.3 million the prior year. While that was above Crocs' guidance of $240 million to $250 million, it missed analysts' target of $258.4 million.

Prior to Thursday's plunge, Crocs had seen its shares grow more than triple since their February 2006 IPO as traders bet that its wildly popular shoes are a huge growth story rather than a fleeting fad. The momentum had grown stronger of late, with the stock rising 74% since the start of the third quarter.

But Crocs also has a 21% short interest, according to Yahoo!, and is subject to big declines, as in Thursday, when the company is viewed as making the slightest misstep.

For the year, Crocs said it now sees revenue of $820 million to $830 million, up from its prior forecast of $810 million to $820 million. Analysts, however, were looking for 2007 revenue of $835.7 million.

Crocs anticipates full-year earnings of $1.94 to $1.98 a share, compared with its previous guidance of $1.89 to $1.93. Wall Street targets earnings of $1.97 a share.

Looking ahead, Crocs forecast 2008 earnings and revenue growth of 35% to 40% over projected 2007 levels. That implies earnings of $2.62 to $2.77 a share, and revenue of $1.11 billion to $1.16 billion.

Analysts are looking for 2008 earnings of $2.56 a share on revenue of $1.13 billion, according to Thomson.

>To order reprints of this article, click here: Reprints