Colorado-based Crocs Inc. stock has lost 90 percent of its value since last October, and the company predicts its shoe sales in the U.S. will decline by 20 percent this year.
So what happened? Company officials blame the economy.
"A sharp downturn in mall traffic, and retailers becoming more and more cautious with the frequency and quantity of their reorders, negatively impacted our business during the second quarter," said Crocs CEO Ron Snyder during a conference call with analysts on July 25.
But Crocs also face an image problem, especially among young consumers who see them as an old-person's shoe.
"They're comfortable, but they're stupid. They're ugly," said Ashley Dixon, of Wichita, Kan. "They're big and foamy ... why did they even make them?"
That's a harsh assessment, but one that Crocs knows is out there. The company recently released a television advertisement showing a man screaming at a blue Crocs shoe and asking, "Why are you wearing these? Why? Why? Why?"
"A lot of people believe it's the end for the company.... I don't think so," said Wedbush Morgan Securities analyst Jeff Mintz. "I think they have a viable strategy now." Mintz's company was involved in Crocs' initial public stock offering in 2006.
Crocs hired marketing expert Adam Baker in May. Baker used to work for Nike. The company is making new shoes that look almost nothing like its brightly colored clogs. And Crocs plans to tailor its lines to the stores where they're sold. So, the Crocs you see at Macy's will be different from those at REI.
Mintz says the company needs to regain the confidence of investors and prove that Crocs are more than just a passing fad.
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