Crocs slashes profit and sales outlook; shares drop

By Alexandria Sage

LOS ANGELES (Reuters) - Crocs Inc (CROX.O), maker of the popular, brightly colored plastic shoes, slashed its earnings and sales outlook on Monday, citing fewer retail orders and costs from a Canadian factory closure, sending its shares down 27 percent.

The fast-growing company, which warned of challenges in the U.S. marketplace, expects first-quarter results ranging from a loss of 5 cents to nil per share, versus its earlier forecast of earnings of 46 cents per share.

Analysts, on average, expected earnings of 45 cents per share, according to Reuters Estimates.

"Retailers in general are planning more cautiously, and therefore, we did not experience the level of at once business we originally expected," said Chief Executive Ron Snyder in a statement. He called the U.S. retail environment "increasingly challenging."

Crocs shoes have moved from fad to lifestyle item and the company experienced robust sales momentum since it began selling the shoes in late 2002. But over the past year, it has had a string of bad news, including reports of slowing business.

Consumers have complained the shoes can get caught in escalators and cause injuries, and one of its patents was recently ruled invalid by the European Union.

The Niwot, Colorado-based company sees first-quarter revenues in the range of $195 million to $200 million versus an earlier outlook of $225 million, below the average Wall Street expectation of $223.3 million.

To cut costs, Crocs decided to shutter its Canadian manufacturing operations and consolidate production at lower-cost, company-owned and third-party facilities.

The charges will amount to about 13 cents per share in the first quarter, it said.

For fiscal 2008, earnings are expected in the range of $1.54 to $1.64 per share, including closure costs, below its previous forecast of $2.70.

Wall Street, on average, expected $2.64 per share.

Revenue for the full year is forecast rising between 15 percent and 20 percent over 2007. Crocs previously said it expected revenue of $1.16 billion, an increase of 37 percent.

As of Monday's Nasdaq closing, the shares have lost more than one-half of their value since January 1, as investors fretted over 2008 growth prospects.

On Monday, the stock closed at $17.79, down 16 cents, on Nasdaq, and fell to $13 after-hours.

The company also said its board approved the repurchase of 5 million common shares in addition to 1 million shares announced in November.

(Reporting by Alexandria Sage, editing by Andre Grenon/Jeffrey Benkoe)