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The Company designs, manufactures and markets footwear for men, women and children under the crocs brand.
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millionairefools (99.50) Submitted: 3/19/08 3:29 PM : Start Price: $20.55 CROX Score: -57.16
The good(1) No single customer accounted for 10% or more of our revenues for the year ended December 31, 2007.(2) In 2007, international sales accounted for approximately 48% of total revenues in 2007, compared to 32% in 2006 and 7% in 2005(3) As of December 31, 2007, the backlog, which consists of open orders, was approximately $145.4 million. This is a heartening that this exists, as this explains the inventory issue to a good extent(4) Share re-purchase of about 500k shares at $47.75 - not a huge buyback, but better than none(5) Their gross margin continues to improve(6) During 2007, we expanded our manufacturing capacities at the facilities we operate in North America and opened a new manufacturing facility in Brazil. Companies on their way out or under operating pressure rarely open new manufacturing facilities.The bad(1) "We do not have long term contracts with any of our retail customers, and sales to our retail customers are generally on an order-by-order basis and are subject to rights of cancellation and rescheduling by the customer." - volatility, meet my stock(2) Only one diffrentaitor (and not completely patented) - 2 patents http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=25&f=G&l=50&co1=AND&d=PTXT&s1=crocs&OS=crocs&RS=crocshttp://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=25&f=G&l=50&co1=AND&d=PTXT&s1=crocs&OS=crocs&RS=crocsThe risks(1) "Post acquisition, we continue to protect the formula by using confidentiality agreements with our third-party processors and by requiring our employees who have access to the formula to execute confidentiality agreements or to be bound by similar agreements concerning the protection of our confidential information. Neither we nor Crocs Canada have attempted to seek patent protection for the formula" - WHAT? Why not? That is the only thing you make money off?(2) One manufacturer in China produced approximately 56% of the third-party footwear products. Contained regional issues with out-sized effects, meet my stockElephant in the roomBallooning inventories, A/C receivablesHere's something interesting though. The breakdown of inventories (in millions of dollars) 2007 vs. 2006...Finished goods: 225, 79WIP goods: 3.3, 0.45Raw Materials: 20.4, 6.8You can see, Work-in-progress and Raw Material inventory is ballooning too. And, that is considered a good sign. This means that the company expects the inventories to move soon, else they wouldn't be hoarding raw materials and smoking their chimneys on.ConclusionAssuming a 0% growth, the current income will pay me back the market cap in 8 years.Not many growth stocks can offer such safety. I'll take it.
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millionairefools (99.50) Submitted: 3/19/08 4:07 PM
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All this information is from http://www.sec.gov/Archives/edgar/data/1334036/000104746908002093/a2183219z10-k.htmAnother point I want to add is..."Is Crocs a fad?" - Yes, if comfort is a fad.Fads are usually localized and spread slowly across the globe. Anything that spreads like wildfire is not a fad, it is a sustainable growth.
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AresFinancial (98.89) Submitted: 3/19/08 5:33 PM
"ConclusionAssuming a 0% growth, the current income will pay me back the market cap in 8 years.Not many growth stocks can offer such safety. I'll take it."Assuming this FAD, highly copied, rubber shower shoe will maintain current income is laughably ridiculous. IT IS OVER! Pump and dump. Go get a mullet and a barbwire tatoo if you think there is NO movement in fashion. CROX will not be around in eight years and making such bad calls neither will your money.
millionairefools (99.50) Submitted: 3/19/08 5:48 PM
Fair enough.Answer these questions for me...(1) What is a fad?(2) How is CROX exhibiting behaviour of a consumer fad? Was it a market fad, yes. Is it a consumer fad now? IMO, debatable.I would love to be proven wrong.
AresFinancial (98.89) Submitted: 3/19/08 9:59 PM
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1. A fad is something that becomes very popular with a small group of people for a short period of time. It is unpredictable, short lived, and without social, economic and political significance. ie CROX"How is CROX exhibiting behaviour of a consumer fad?"Duhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh, can you go to the mall and see all the CROX knock offs? They are going to be giving them away with a $5 Happy Meal "I would love to be proven wrong"You have:Start Price: $20.55 CROX Score: -20.30
millionairefools (99.50) Submitted: 3/19/08 10:30 PM
I disagree on all 3 counts.1- A necessary but oft-overlooked signs of fad are...(a) Network effect - People want to own something because they see other owning it(b) Idea effect - You like the idea of owning it more than the owning the item itself2- I don't see these with Crocs. It has a differentiator and that is comfort. Anyone will pay $15 more for it to be "just right". No one wears BECAUSE Crocs are hip or cool, they wear it because it is comfortable.3 - In your hurry to point my losses to me, you didn't notice my period - 5 years.This would be my last reply to you, abit-whatever, because I am not enjoying discussing this with you because of your Jim Cramer know-it-all yeah-I-am-a-d*ck attitude.
ChineseInChicago (82.66) Submitted: 3/21/08 2:10 AM
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CROX does not file a patent because like CocaCoal does not file for a patent - to do so you need to reveal the formula which is the last thing CROX/CocaCola want to do. I do agree that CROX is a good buy now.
millionairefools (99.50) Submitted: 3/21/08 3:37 PM
That's an great point, ChineseInChicago!I had never realized that patenting has its own interesting traps.Thanks!
AresFinancial (98.89) Submitted: 3/22/08 2:33 PM
ChineseInChicago,You have made 48 stock picks 32 have LOST money. I recommend you do the OPPOSITE of whatever you were planning to do. You picked CROX outperform at $41! A 59% loss, take a hint. "I do agree that CROX is a good buy now."Again, since you think this, do the opposite.
cubanstockpicker (73.79) Submitted: 4/17/08 11:11 AM
ok, what the heck is the formula for a rubber shoe with holes in it and rounded oval tip that makes bigger sizes look like clown shoes. Oh thats the formula. Phew, thank God they're keeping that a Secret.
cubanstockpicker (73.79) Submitted: 4/17/08 11:15 AM
milli,rising inventories is not a good thing. And on top of that, it is a fad. Its also very selective. I have sneakers on now, and they are way comfortable. They also have no holes in it and keep my feet clean.Crox, if you wear them without socks, between sweat and just plain walking your feet get dirty and exposed to bacteria growth. If you wear them with socks the socks get dirty.
timedata2 (58.42) Submitted: 5/03/08 6:33 PM
Thx for the great info. There are definitely risks b/c CROCS products are unique and don't really blend in. People could become self-concious about wearing them in public. However, you are seeing Crocs and "Crocs-like" shoes so much now it is unlikely. I do believe if CROCS can leverage the advantages of their Cros-Lite material into different types of footwear, apparel and other products, this could be a huge winner. Unfortunately, most CROCS models look very similar and only cannibilize each other. CROCS should make some DIFFERENT models that appear more mainstream to capture larger potential markets
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