Crocs, Deckers disappoint; footwear stocks fall

AP News
Posted: Feb 24, 2012 11:03 AM
Crocs, Deckers disappoint; footwear stocks fall

Shares of footwear companies traded mostly lower Friday as Crocs Inc. and Deckers Outdoor Corp. both provided first-quarter earnings forecasts below Wall Street's expectations.

Crocs, known for its clogs, said Thursday that it foresees first-quarter earnings between 24 and 26 cents per share. But analysts surveyed by FactSet had expected higher earnings of 30 cents per share.

Crocs' stock dropped $1.46, or 7.1 percent, to $18.96 in morning trading. The shares have traded in a 52-week range of $14.20 to $32.47.

While the guidance was soft, Sam Poser of Sterne, Agee & Leach remains upbeat on the Niwot, Colo., company. The analyst said in a client note that check-ins with retailers indicate that Crocs first-quarter revenue will top Wall Street's view. The company gave a revenue guidance of $263 million to $268 million for the quarter. Analysts expect $268.8 million.

Poser explained that the first quarter will probably be an investment period for Crocs, as it continues to shut down underperforming kiosks and enter large retailers.

The analyst maintained Crocs' "Buy" rating.

Deckers, whose brands include UGG and Teva, also issued a lackluster outlook for the first quarter. The Goleta, Calif. company said it expects its first-quarter profit to be down by half, implying earnings of about 25 cents per share. Analysts had predicted much higher earnings of 63 cents per share.

Deckers said it is paying more for the sheepskin used in its UGG products and is contending with increased costs for new stores.

Credit Suisse's Christian Buss reduced Deckers to "Neutral" from "Outperform" and lowered its price target to $91 from $127, saying in part that commodity costs are squeezing the company's profit margins more than expected.

Shares of Deckers tumbled $10.67, or 11.8 percent, to $79.54. The stock has traded between $72.78 and $118.90 over the past year.

Elsewhere in the sector, Steven Madden Ltd.'s stock fell 50 cents to $42.12. Shares of Wolverine Worldwide Inc. shed 34 cents to $37.99, while Skechers USA Inc. dipped 3 cents to $12.59.