Crocs Snaps Back After Tough Spell

Shares of Crocs Inc. started a slow climb last Thursday after spending eight trading days in the penalty box on the warning that its third-quarter earnings would miss expectations.

According to analysts, the growth story at the firm remains intact, even as its U.S. retail and Europe wholesale hit bumps due to poor  merchandise planning and timing.

Sterne Agee analyst Sam Poser called it “a fixable execution problem, but not a demand problem.”

He added, “We are confident the 30 percent increase in future orders is reflective of continued demand for the new Crocs styles. Our channel checks indicate a strong support of the new products being offered in both fall and spring. We expect the stock will recover a bit more in mid-January and get back in the area of recent highs around the time of the first quarter earnings call in April 2012.”

John McCarvel, president and CEO of Crocs, said in a call with analysts, “We view the shortfall more as an execution issue versus a broad judgment call by consumers about our brand. We continue to be confident that Crocs can compete successfully in Europe on a year-round basis, but our near-term expectations have come down based on current conditions and our backlog.” He added the firm has hired a new directing manager in Europe and restructured its Europe office to reduce ongoing costs there.

In the third quarter, Crocs earned $30.2 million, or 33 cents a share, a 21 percent increase from $25 million, or 28 cents, in the previous year. Sales advanced 28 percent to $274.9 million, from $215.6 million a year ago.

The firm now expects fourth-quarter revenue to be in the range of $200 million to $205 million, and earnings per share to be between 3 and 5 cents.  

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