Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Are Investors Over the Crocs and Uggs Fads?


It looks like Wall Street's fashion sense may be improving.

Today is a bad day for anyone who invested in the long-term potential of appalling shoe fads.

Deckers Outdoor Corp. (DECK), which sells the much-hated but reputedly comfy Ugg brand of boots, is getting slammed by investors today, after the company's earnings release. The stock is down over 11.5% at midday.

The company actually earned its highest profit ever, far more than expected by analysts, most of whom must be flabbergasted at the company's continued ability to convince women to wear big, unflattering sheepskin boots with no arch support. Analysts give Deckers an average rating of outperform.

Crocs (CROX), another fashion felony that won't go away, also beat earnings expectations. Net profit rose 18%. Even so, Crocs shares are down 7.7%.

If earnings are in line, why the sell-off? Is Wall Street spurning these companies based on fashion taste?

Both companies' outlook for the next quarter earnings and the coming year isn't very good. In the case of Uggs, to the chagrin of fashionistas, sales aren't going to come down much (seasonally). Margins will be significantly hurt by a jump in the price of sheepskins. And the company is looking to add customers. New England Patriots quarterback Tom Brady is now hawking Uggs to, of all people, men. If that catches on, there might be some hope for the fuzzy boot.

In the case of Crocs, revenues are expected to slide. The company suffered during the recession because, well, it sells $30 flip-flops. Sales have recovered slowly since then, but it looks like they won't for long.

If the hypothetical Wisdom Tree Footwear Fad ETF existed, this would be bad news.

Twitter: @vincent_trivett
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Featured Videos