Crocs fall out of fashion on Wall Street despite 130 per cent rise in revenues

There was no skipping or jumping yesterday for the makers of Crocs, the resin shoes known for their comfort if not aesthetic elegance. No sooner had they issued their more-than-decent third-quarter earnings figures after the close on Wednesday than investors delivered their own judgement on the shoes, and it wasn't pretty.

In after-hours trading on Wall Street, the Colorado-based company's once high-stepping stock dropped by nearly a quarter, and yesterday it slumped 36 per cent to a gloomy $47.74.

Call it the Halloween effect or perhaps an investor backlash after months of soaring fortunes for Crocs that have long confounded many on Wall Street since it was publicly listed early last year. Whatever the reason, the Street deemed the latest numbers on Crocs to be impressive, but not impressive enough.

The company reported revenue rising 130 per cent from the same quarter last year to $256.3m (£123.3m). The number, however, was a little shy of the $258.4m that analysts had been hoping for. Meanwhile, it set its earnings-per-share estimate for 2007 at $1.94 to $1.98, again not quite as stellar as Wall Street's expectations of $1.97 per share.

With international sales still rising quickly, particularly in Europe, the company may be suffering from a greater exposure to seasonal swings. It was partly to respond to consumers' concerns about chilly feet in winter that the company released a new Croc model in August featuring a faux-fur lining.

"I think the stock has been trading as a momentum stock. What we're seeing here is a reversal of that momentum," said Jeff Mintz, the vice-president of research at Wedbush Morgan Securities. But he remains mostly upbeat about the shoe-maker. "Everyone focuses on how ugly the product is, but people love the product because it's so comfortable. When it comes to footwear, that's the most important thing to most people."

It is not the first time Crocs have tripped with investors, however. In August, the share price suffered a brief dip after news reports emerged about fans getting their Crocs snarled in moving escalators.

The company's chief executive, Ron Snyder, offered reassurance. "Our year-to-date performance has been marked by significant gains in sales and earnings, robust international expansion, a number of high-profile licensing agreements and the continued build-out of our global infrastructure," he said.

Another analyst following the sector, Elizabeth Montgomery of Cowen & Co, agrees that Crocs can quickly regain its footing. "Typically, when you have a footwear style that gets adopted by soccer moms it tends to stick around for a long time, and that's what has happened with Crocs," she told Investors Daily. "I don't think it's a fad any more."