CROX: bull case, bear case

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I decided to take some CROX off the table. Too much controversials on the stock after yesterday’s earning report. Here are some of the bull case and bear case.

Bull case
Management is optimistic on the international expansion, and new products (jibbitz, Bite, OceanMind etc.), but which company’s management is not bullish on their company’s growth prospect?

Analysts fell the valuation is more attractive now, mostly from PE, 2008/9 growth rate point of the view.

Bear case
Revenue sequentially decline: Q4 2007 vs. Q3 2007 ($224 m vs. $256 m), this is reverse of trend compared to 06. Crocs out of fashion in the US?

The inventory problem persists. It went up about $50 to 60m from Q3 2007. The Solesunited program has donated a million pairs of shoes to Africa. I like the charity work and sharing, and appreciate the innovativeness of such program. But on a second thought, the company must think the “solesunited” program is better than dumping Crocs to Wal-Mart or Target, which I agree. It shows the company’s inventory program is real. I am not worried about the one million pairs of Crocs (worth about $8 million by cost). But is this the way forward to sell Crocs in the US? Is that because Crocs is out of fashion, they have to go to the “charity” to add a new flavor on it?

I decided to take Cramer’s advice this time: when things are uncertain, take the money off the table.

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