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Crocs shares tumble on revenue forecast

By Joyzelle Davis, Rocky Mountain News (Contact)

Published November 12, 2008 at 5:29 p.m.
Updated November 13, 2008 at 12:50 p.m.

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Microsoft co-founder Bill Gates increased his stake in Crocs to 5.6 percent, with a holding worth $8.9 million.

Photo by Robert Sorbo / Afp/Getty Images

Microsoft co-founder Bill Gates increased his stake in Crocs to 5.6 percent, with a holding worth $8.9 million.

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Crocs Inc., the maker of colored clogs, plunged in Nasdaq trading today after it predicted a wider loss than analysts had estimated and forecast revenue that also trailed expectations.

Crocs tumbled 68 cents, or 35.8 percent, to $1.22 at 12:45 p.m. Mountain time. The Niwot-based company’s shares plunged 95 percent this year before today.

Earlier story:

Crocs on Wednesday reported a third-quarter loss of $148 million as the one-time high-flying maker of colorful plastic clogs wrote down unsold inventory as U.S. and European demand sputtered.

But the company's recent woes haven't deterred Microsoft co-founder Bill Gates from increasing his stake to 5.6 percent in the shoemaker.

Gates, through his Cascade Investment and Bill and Melinda Gates Foundation investment vehicles, increased his existing stake to 4.7 million shares as of Nov. 3, according to a Securities and Exchange Commission filing. Gates' holding was worth about $8.9 million as of Wednesday's closing price. Cascade didn't return a call for comment.

The Bill & Melinda Gates Foundation owned 1 million shares of Crocs at the end of June, according to an SEC filing.

Niwot-based Crocs swung to a loss of $1.79 a share for its quarter ended Sept. 30, compared with net income of $56.5 million, or 66 cents, a year earlier. Sales fell 32 percent to $174.2 million, far below the average that analyst Thomson Reuters forecast of $256.3 million.

Crocs has been trying to scale back its inventory to realign with the slumping consumer demand. The company's loss in the quarter included one-time charges of $104 million reflecting the declining value of its business, and Crocs issued a fourth-quarter financial forecast far below Wall Street expectations.

"2008 has obviously been a very tough period. We're dealing with one of the most challenging global economic and retail environments in some time," said Crocs CEO Ron Snyder.

Crocs recorded a $70 million charge in the latest quarter from writing down the value of inventory and expected losses on inventory purchase commitments. The company took an asset impairment charge of $36.1 million that included a write-off of excess equipment and tooling. Crocs recorded a $2.5 million restructuring charge from the closure of Canadian manufacturing and distribution operations.

The firm reported a loss of $14.6 million from unfavorable currency exchange rates, and increased its provision for returns and allowances by $19.5 million from a year earlier.

Crocs, which already has laid off 75 workers largely in Colorado and shuttered its 600-employee Canadian manufacturing operations, anticipates the tough times will continue. The company now expects to generate sales of $100 million to $120 million in the fourth quarter and a diluted loss per share of about 50 cents to 65 cents. Analysts had expected a narrower loss of 6 cents per share on revenue of $185.7 million.

The company plans to close its manufacturing facility in Brazil during the fourth quarter and said it will slash capital expenditures by 50 percent next year from 2008.

Crocs shares on Wednesday closed at $1.90, roughly one- fifth its split-adjusted IPO price.

Staff writer James Paton contributed to this report.

Comments

  • November 12, 2008

    8:06 p.m.

    Suggest removal

    SteveC writes:

    Ummm, maybe demand is down because they are so freaking ugly?

  • November 12, 2008

    8:11 p.m.

    Suggest removal

    BenchBoss writes:

    What SteveC said. Never bought a pair. Never will. Talk about hard lessons in over-expansion and over-estimating a fad.

  • November 12, 2008

    9:07 p.m.

    Suggest removal

    DallasKing94 writes:

    Ugly, look like duck's feet.
    Ugly. That's why it's a loss.

  • November 12, 2008

    10:05 p.m.

    Suggest removal

    joggle writes:

    If we weren't facing such a steep recession I'd be happy. We need all the jobs we can get (I think).

  • November 12, 2008

    10:50 p.m.

    Suggest removal

    angryman1n writes:

    So what it the message here?

    When times get tough, the cute stuff goes away. People want real shoes. OR, could it be because people finally realized they are paying $20+ for poorly fitting, plastic shoes.

  • November 12, 2008

    10:55 p.m.

    Suggest removal

    chickenlittle1234 writes:

    yeah, they're ugly, but I like 'em. Of course, I've certainly never been called a fashionista, either. But losing $148 million in a quarter? Yikes.

  • November 13, 2008

    3:26 a.m.

    Suggest removal

    expetrbiltdrvr writes:

    I am surprised that the tree huggers aren't protesting crocs yet. When they wear out they will end up in landfills just like the plastic bags from the supermarket. Because they are a fad that is way past it's time there will be millions if not billions of them discarded for somthing else.I am sure that they will not biodegrade like the bags,probably last longer than those bags. The realization that the envirnmentalists have an agenda and will do or say whatever it takes to get their way is more evident than ever. Why protest one thing and not all the others things that are associated with it. The bags are plastic,the shoes are plastic, new cars are plastic but you never hear about all the other plastics going to the dump on a daily basis. If your going to protest something make sure you have covered all the bases and not just your particular agenda because you look like a fool when the other things that are related to your cause arent disapearing

  • November 13, 2008

    5:23 a.m.

    Suggest removal

    River_Bolden writes:

    Crocs!
    totally ugly.

  • November 13, 2008

    9:04 a.m.

    Suggest removal

    Sharlyn writes:

    Crocs ugly? You betcha, ever put them on, it's like walking on marshmallows! I don't like the shoe, but love the flip flops. They may get thrown away because someone gets tired of them, but they don't wear out. They are about the best thing in the world to walk the dog in. You have to remember what they were created for...boat shoes. And then they caught on, people loved them because they are sooooo comfortable. So what are you supposed to do when you're a small business owner and demand for your product grows. Scale down! The company pursued the American dream and the economy and fad appeal shot them down. Even if you're not a Crocs fan, it's still sad that our economy is so bad that more and more people are losing their jobs!

  • November 13, 2008

    9:32 a.m.

    Suggest removal

    hdfresh writes:

    Yeah they are losing money due to the shoes being really ugly I agree but also of the lawsuits pending. You hear stories of the crocs getting caught on escalators, the plastic on the shoe melting and so forth.

  • November 13, 2008

    11:27 a.m.

    Suggest removal

    Coltgm56 writes:

    UGLY!! This is not a suprise. Bury them with the platform shoes and leisure suits. That is really toxic waste!!! Enough said.

  • November 13, 2008

    11:28 a.m.

    Suggest removal

    philvysor writes:

    Crocs deserves everything that happens to them. I hope the whole company goes under.

  • November 13, 2008

    8:13 p.m.

    Suggest removal

    vendari01 writes:

    Of course Crocs are ugly. Ever seen a pretty pair of comfortable women's shoes, or a comfortable pair of fashionable ones? The two requirements are incompatible, and we've convinced women that it's better to look hot, no matter the physical cost. Anybody remember the Earth shoe? Probably not...