Crocs "disappointed" the street by reporing EPS of $0.66, but that's in line rather than an actual decline. Still, I'm feeling the bite as the stock is down more than $11 from the shares I picked up an hour ago. I'm holding, though. Why?
• Crocs "executed several important initiatives that have strengthened our operating platform, namely the opening of a new 320,000 square foot European distribution facility that will allow us to better support our future growth in the region," CEO Ron Snyder said. The buildout of this facility is key, and obviously the cost cut into the Co's bottom line. Not a whole lot different from Google's mass hiring of engineers in Q2, and that led to a big selloff of stock by the street. GOOG has rebounding rather nicely since then, I'd say.
• Raised guidance for Q4. "For the year ending December 31, 2007, Crocs raised its guidance. The Company now projects revenues to range from $820 to $830 million and net income per diluted common share of between $1.94 and $1.98."
• Raised guidance for 2008. Snyder: "The Company also introduced fiscal year 2008 guidance. Crocs currently anticipates revenues and net income per diluted share toincrease between 35% to 40% over the projected 2007 levels. Mr. Snyder concluded, "Our year-to-date performance has been marked by significant gains in sales and earnings, robust international expansion, a number of high-profile licensing agreements, and the continued build out of our global infrastructure. Even as we achieve record results and reach important objectives in our financial, strategic, and operational development we are confident that we are positioned well for continued growth in 2008."
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2 comments:
Ouch, i was long CROX too, this slows things down considerably momentum wise. CROX will exceed its old highs but my guess is that it takes quite a while, maybe not till early '08.
I was lucky enough to be able to bail at $62.3 AH. At least i feel lucky right now. We will see tomorrow. I will keep an eye on CROX for reentry at some point but i feel no rush to rebuy right now.
It seems like they ran into logistical limitations. Growing a company internationally and setting up all the necessary distribution and hiring so many people is not easy or quick to put together. I think you gotta hand it to them that their SG&A percentage of revenue and gross margins are still quite impressive despite difficulties managing this super fast growth. Although this may seem like a failure to some investors, Croc's performance in international growth is very enviable.
Possibly some people are going to be upset and feel like they were mislead by company guidance. I dont know, i know holding through earnings is always risky and there are unknowns.
You were far wiser than I was. I saw the AH price and thought, well, Baidu struggled after hours for a time, so why wouldn't Crocs bounce back.
Of course, that was not an apt comparison. I should've got out at 60+ when I had the chance. One thing I'm learning recently is that once a Co raises guidance (at earnings or in the middle of a quarter), if the stock pops, take the profit.
CROX met the high end of its revised guidance and got crushed. Tells me that we're not in a bull market any more. This isn't exactly a bear market, either, but the winners are those of us who take profits ASAP instead of the ones who get left holding the bag.
CROX is my worst deal of the year, but I'll profit from the lesson eventually.
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