Shares of CROCS Inc. (NASDAQ:CROX) are getting hammered in after-hours trading.  The highly successful maker of ugly shoes that everyone still loves posted earnings:

• Revenues up 130% to $256.3 million (consensus $258.4 M);
• EPS rose more than 100% from $0.27 in Q3-06 to $0.66 (consensus $0.63);
• CROCS is also raising guidance for 2007 to $820 million to $830 million revenues ($835 million is consensus) and diluted earnings per share at $1.94 to $1.98 ($1.97 is consensus).

CROCS is introducing guidance for fiscal 2008 revenues and EPS growth of 35% to40%.  If we took a 37.5% mid-point and used the mid-pont for 2007estimates as the benchmark:

• 2008 EPS $2.71 EPS (consensus is $2.56)
• 2008 revenues of $1.134.375 Billion (consensus is $1.13 Billion).

Investors have been used to consistent "handily beating estimates and drastically raised guidance" on the shoe (and now apparel) maker.  There is nothing wrong with the numbers here per se, but after a 300% stock run it was only a matter of time before investors would start to sell even the good news or when the good news would be deemed not good enough.

CROX is trading down 16% in after-hours around $62.50, and the 52-week trading range is $17.63 to $73.75.  This was one of the stocks that closed on a new all-time high close today, and we noted that it was likely one of the mutual fund window dressing stocks as today market the year-end for most mutual funds. 

Based upon the cult following and the core audience, it would not be crazy to think that by tomorrow morning some of the analyst notes may be deeming the guidance as overly conservative despite a revenue number that some will deem as light.  We’ll know soon enough.

Jon C. Ogg
October 31, 2007

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