NEW YORK — Shares of Crocs Inc. plunged as much as 47 percent after the shoe company cut its second-quarter profit and sales outlook and an analyst downgraded the stock.
“It brings up serious questions about their business model,” said Keri Spanbauer, a retail analyst at Minneapolis- based Thrivent Financial for Lutherans, which manages $73.2 billion of assets.
With U.S. consumers tightening spending, Crocs’ brand isn’t strong enough to command prices four times those of its imitations, Spanbauer said. At Nordstrom Inc. stores, Crocs sell for $24.95 to $69.95 each. Similar clogs sell for as little as $5 on Wal-Mart Stores Inc.’s Web site.
Crocs expects profit between 3 cents to 7 cents per share for the second quarter, much lower than the 42 cents to 47 cents per share previously forecast. Analysts polled by Thomson Financial estimated a profit of 41 cents per share for the second quarter.
Crocs fell $3.86, or 43 percent, to $5.09 in Nasdaq Stock Market composite trading, the biggest decline since April. That’s down 93 percent from the stock’s record high of $74.75 in October. Crocs late Thursday lowered its forecast for the second quarter and 2008, saying domestic sales have softened.
Baird analyst Mitch Kummetz downgraded shares of the Niwot-based company to “Neutral” from “Outperform” and cut his price target to $5 from $21, which implies downside of around 44 percent to Thursday’s closing price of $8.95.
Kummetz said his “Outperform” rating was based on his belief that fundamentals weren’t really as bad as the stock price reflected. So far this year, the stock has lost 75.7 percent of its value.
But Kummetz said demand for the company’s core product has slowed, compounded by softness in the retail sector.
Kummetz acknowledged that Crocs’ core business had softened, but said he was still surprised by the magnitude of the second-quarter miss.
“With the outlook as bad as it now is, the fundamentals really are that bad, and we see no catalyst to reverse the trend in the stock,” Kummetz wrote in a client note.
The Associated Press and Bloomberg News contributed to this report
