Crocs shares melt on big loss, dour outlook
SAN FRANCISCO (Reuters) - Crocs Inc (CROX.O) posted a deep quarterly loss on Wednesday as sales of its once-trendy, colorful plastic shoes plunged and it racked up high restructuring costs, sending its shares down 37 percent in extended trading.
The former Wall Street darling also outlined several new measures to slash costs and streamline the bloated company, including shutting a Brazilian manufacturing plant and reducing capital expenditures for next year by 50 percent from 2008 levels.
"They've built an infrastructure over the last few years to handle what they though was a $2 billion company," said Sterne Agee analyst Sam Poser. "Now they'll have $500 million maybe."
Launched in Colorado in 2002, Crocs' quirky, bright and comfortable resin clogs quickly attracted a cult following and, within three years, the brand began attracting notice around the country.
People who spent time on their feet, whether doctors or cooks, cited their comfort, and parents bought them for their kids because of their fun colors and ease slipping on and off.
But the novelty of the original Crocs clogs has since waned and Crocs has branched out its business into new styles. The weak U.S. economy has further crimped demand and hampered investor interest in the stock.
"This is a good solid kids business. The adult part, the full lifestyle brand? Who knows?" said Poser, who tracks footwear companies, but does not cover Crocs specifically.
Since hitting a lifetime high of $75.21 in October of last year, Crocs shares have shed more than 97 percent of their value, closing at $1.90 Wednesday on Nasdaq.
Also on Wednesday, Microsoft Corp (MSFT.O) founder Bill Gates reported a 5.6 percent passive stake in Crocs, amounting to 4.7 million shares, as of November 3.
BIG LOSS
In its third quarter ended September 30, Crocs had a net loss of $148 million, or $1.79 per share, compared with a net profit of $56.5 million, or 66 cents per share, a year earlier.
It was not immediately clear whether that was comparable to the 2 cents per share in profit expected, on average, by analysts polled by Reuters Estimates.
In August, Niwot, Colorado-based Crocs estimated quarterly earnings of 1 cent to 5 cents per share.
Results included a $70 million charge related to inventory write-downs, including products in certain colors expected to be marked down.
The company has been trying to cut back its infrastructure to be more in line with its future growth prospects. Its inventories, which fell 36 percent in the quarter, have been out of line with sales in recent months. Continued...
