Investors shed their Crocs

DENVER -- Shares of Crocs Inc. plummeted 43 percent Tuesday after it lowered earnings forecasts amid sluggish sales, which prompted some analysts to wonder if consumers are tiring of the shoe manufacturer's colorful plastic clogs.

The company also will close a manufacturing plant in Quebec City, Canada, eliminating 600 jobs, reduce discretionary spending and the use of airfreight and delay unnecessary infrastructure spending, Chief Executive Officer Ron Snyder said Tuesday.

"The shortfall in our top line was primarily attributable to weaker-than-expected domestic sales due to the challenging retail environment," he told analysts during a conference call. "In addition, colder-than-normal temperatures across much of the U.S. have delayed the start of the spring season, which has impacted sales of sandals and other open-toed footwear throughout the industry."

Some analysts who follow the company lowered outlooks and ratings in wake of the announcement.

In a note to clients, Wedbush Morgan Securities analyst Jeff Mintz downgraded Crocs' stock from a "strong buy" to a "hold." He said he was concerned about potential weakness in core products, which are styles of clogs, and margins.

"We believe these sales are at risk of significant decline as consumers, especially in the U.S., begin to move away from the style that defined Crocs," Mintz wrote.

The cut in guidance likely was triggered in part by inventory problems. Crocs last year had difficulty meeting demand, which probably led to stores over-ordering and ending up with high inventory levels, he said.

However, Mintz added, international sales should keep the company's revenue growth in the double digits this year.

JPMorgan analyst Robert Samuels said the announcement was "a stunning fall" that he believes represented a "significant mismanagement of expenses."

"We stick by our belief that there is a place in the current footwear market for Crocs as a brand but would recommend staying on the sidelines until macro pressures, inventory issues and record short interest play out," he wrote to clients.

It is a difficult setback for the 6-year-old company that sells a colorful variety of shoes made of a proprietary closed-cell resin material and featuring holes scattered across the top and around the toe.

After the market closed Monday, Crocs, based in Niwot about 30 miles north of Denver, lowered its first-quarter forecast to a range of a loss of 5 cents to break-even earnings per share, down from previous guidance of 46 cents per share.

Excluding a $16 million charge related to closing its Canadian manufacturing plant, Crocs forecast net income of 8 cents to 13 cents per share. Analysts surveyed by Thomson Financial had predicted a profit of 45 cents per share.