CROCS Shoots Down Rumors
Originally Published In the News March 6, 2008 8:15 PM
Comments from Costco’s CEO have been the latest news to hammer the shares of CROCS, Inc. (CROX-NASDAQ). Traders construed the news to mean that overstock inventory was flooding retail, and took the stock hard the past two trading days since the news was disseminated. But CROCS is fighting mad about it:
Crocs Inc. shot down speculation Thursday that its colorful funky footwear with scattershot holes will be sold by Costco Wholesale Corp.
The Niwot-based shoe manufacturer has found some cases where it believes its products were sold indirectly to Costco, Chief Executive Ron Snyder said.
“We have not sold Crocs-branded products to Costco nor have we authorized any of our customers to sell our products to Costco,” Snyder said in a statement. “We are continuing to take aggressive measures to prevent this from happening. I want to reiterate that Costco is not an authorized dealer of Crocs products.”
Snyder’s statement came a day after Richard Galanti, chief financial officer of Issaquah, Wash.-based Costco, told analysts that his company buyers are seeing more brands they historically could not access.
“Somebody just the other day mentioned huge availability in the apparel, things like name-brand jeans and name-brand women’s apparel and Crocs and the like,” Galanti said.
He declined to describe any business relationship involving Crocs. “I’m not suggesting we are or not with them (Crocs) .... All I’m suggesting is that there’s more ... stuff out there,” he said. AP
Clearly someone does not believe the forward earnings estimates on CROCS; the stock is trading at only 6x. If the number is good a bounce to 10x will line your pockets, but traders are shooting first and will ask these questions after licking their wounds. Of course, if the stocks trades at one times revenue further downside would come into play. Which valuation metric are you hanging your hat on?
Crocs Says No to Costco
AP
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