Newspaper article The Christian Science Monitor

Crocs Stumble: Anatomy of a Fad or a Rebound?

Newspaper article The Christian Science Monitor

Crocs Stumble: Anatomy of a Fad or a Rebound?

Article excerpt

Crocs, the candy-colored foam clogs, have narrowly avoided going the way of the pet rock or mood rings. The company, which has teetered on the edge of bankruptcy this year, last week reported a $30 million loss for the second quarter of the year, against a $2 million profit in the same period a year ago. But that result was much better than investors had expected, and the general market view was that the company will now find a way to survive. The company's stock soared on Monday. But no analysts interviewed expect Crocs to return to its lofty heights, since the perfect storm that drove its early corporate success - a comfortable-but-ugly shoe fad married to a peaking stock market - has dissipated. Like the mortgage models that didn't allow for the possibility that property prices could ever fall, Crocs and its investors assumed double digit growth was assured - and the company borrowed and expanded accordingly. Croc's shares debuted at $13 in 2006, surged to $70 at their height at the end of 2007 and today, can be picked up for about $6 (an interactive graph of the stock's performance is here.) While analysts say that a market for its shoes will persist - probably among the nurses, cooks, and other people who spend a lot of time on their feet - the boom times are over. Part of the reason is on display at Sports Experts, a busy shoe store in a Montreal shopping mall. A few racks of Crocs - the clunky hole-filled shoes adopted by boaters that went mainstream when the likes of Jack Nicholson and Brad Pitt started wearing them - had no takers. "We don't sell a lot of these anymore. There's not a big demand," says Olivier Brunet, a store employee. In their heyday nowhere were Crocs more popular than in Quebec, where they were born. This year, some Montreal stores canceled their orders. Busts are part of a cycle That was always in the cards, says McGill University marketing professor Robert Soroka. But, he notes, "Crocs had a longer life cycle than a typical fad." He says the smart thing for the company to do would have been to anticipate a loss of interest for its main product - and gotten to work on a replacement. …

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