By now it’s no secret that CROX stock failed. After it issued horrendous 2Q 08 preliminary results and full year guidance yesterday afternoon (refer to MarketWatch for more details). I don’t want to dive into the numbers and add salt to injury. I traded the stock last year until this Feb. when I realized it was time to sell. Besides my doubts on its financial and fashion, I could not understand why a company claims its success from logistics got “inventory” problem. For fashion retailers excessive inventory is a common problem but it’s also the worst. There are many factors account for the quick bust of CROX, some will argue those kinds of stocks always fail. Over the years I have seen Travel Zoo, OverStock, Hansen (drink), Jones Soda, Heelys. I think fundamental reason is that their business is not sustainable, because of its fickle fashion nature, or flawed business model.
Catalyst for the fall
The short sellers, esp. the naked short sellers. Short sellers have been bashing this baby since its IPO in early 2006. They have been losing money until Nov. 1 2007 when CROX 3Q 07 missed street expectation. After that it’s obvious there is not much risk, esp. considering SEC recently started banning naked shorting on Fannie/Freddie and 19 primary brokers. In other words, SEC was saying go naked shorting oil, coal, retailers,…we will not prosecute you.
How often do you mark to market?
