Investors, like consumers, in Colorado and elsewhere appear eager to snap up a piece of Crocs Inc., the Niwot shoemaker set to trade its stock publicly for the first time Wednesday.
“It’s on our hot list,” said David Menlow, president of IPOFinancial.com in New Jersey. “The company is growing by leaps and bounds.”
Crocs, known for its funky, brightly colored footwear popular among beach-goers and hospital workers, on Tuesday will price 9 million shares between $13 and $15 apiece.
Typically, shares begin trading the day after a price is set.
Crocs, which will trade under the ticker CROX on Nasdaq, plans to sell 4.5 million shares. Its current shareholders will sell another 4.5 million, raising a combined $126 million, after expenses.
Proceeds will repay debt and expand the company’s production capacity, which at times has failed to meet demand.
The offering comes a week after the hot initial stock sale for Denver’s Chipotle Mexican Grill, which doubled its share price to $44 on its first day of trading. Chipotle shares closed Friday at $46.55.
As many as 10 U.S. companies will stage initial stock sales this week, raising an estimated $1.9 billion, said Francis Gaskins, president of IPOdesktop.com.
None of those IPOs are as sought-after as Crocs, he said.
“I think the shoes are ugly, but this could be one of those funky, worldwide products that catches on,” said Gaskins, who expects the stock to begin trading well above the initial price. “They have unpredictable growth, but investors will pay for potential future earnings.”
For the nine months ending Sept. 30, Crocs earned $12.6 million on $75 million of revenue, up from a net loss of $627,000 on $8.1 million of revenue during that period in 2004.
Despite the rosy numbers, Crocs faces a host of challenges.
The company holds several patents for its design, but cheaply priced imitators have emerged. It has a limited operating and earnings history, something that often makes investors skittish, Gaskins said.
Crocs’ management team is relatively unproven, and the company has struggled to accurately track sales growth, which could increase expenses, according to securities filings.
A majority of Crocs revenue comes from a handful of niche products, so if the shoes’ popularity wanes, earnings could stumble, filings state. Even so, Crocs is going global. The company has registered its name for trademark throughout Europe, Japan, Mexico and elsewhere.
Crocs, launched in 2002 by a trio of Boulder entrepreneurs, designs, manufactures and markets footwear for men, women and children.
It uses a so-called “closed-cell resin material” that is lightweight, molds to the user’s feet and is odor-resistant, according the Crocs’ website. The shoes retail for $30 to $60 a pair.
Richard Polk, owner of Boulder’s Pedestrian Shops, said the demand for the shoes “is unlike anything I’ve seen in 30 years.”
“It’s amazing,” said Polk, who estimates he sells 5,000 pairs a month during the summer.
Crocs will have an estimated market value of $529 million.
Staff writer Will Shanley can be reached at 303-820-1260 or wshanley@denverpost.com.
