Things to look for Crocs earning Feb 19

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Crocs scheduled the Q4 2007 earning report on Feb 19. Couple things I anticipated and will pay attention to:

1) I don’t think this will be a strong quarter due to seasonality: it’s winter in Europe and Japan, and in winter they don’t wear Crocs as the American do.

2) Inventory: if the 1) holds, the inventory (classics and Cayman) they built up last quarter will not reduce dramatically. The managment also said in last CC they expect those inventories to ship for Spring 08. This is not good news.

3) Cash flow: they will not have cash flow statement in press release; they will have it in the 10-Q, 10-K afterwards. But don’t expect too much from it. As I said in my earlier post titled “stock option helped Crocs cash flow”, this magic will not work any more now that the stock is beated down.

The expectation is much lower than 3 months ago. Many people have given up on them, including respected Oppenheimer funds. Another lawsuit in New York regarding the escalator incident. The stock trades at 16 times 2007 earning. While I think a PE of 45 three months ago is a bubble, this PE of 16 seems reasonable for a (fashion) footwear company. Everyone will get the rebate check in the May and buy the Crocs (not the iPod), right?

Seriously, I am looking to exit the Crocs positions and get something more solid (less hype).

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