Will Crocs see its final days?
Posted on July 16th, 2009
After selling like hotcakes, the heat has died down and Crocs are suddenly not selling anymore.
They first appeared in 2002, and their design was mocked by the fashion world but they sold 100 million pairs in the next seven years. They were worn by former president George W. Bush, Aerosmith lead singer Steven Tyler and a million other people.
And yet, they are in trouble now.
It looks like the end of Crocs might finally be here. It boasted of a profit of $168.2 million in 2007, but a year later the company found itself struggling with debt, according to The Washington Post reports.
The company lost $18.5 million in 2008 and slashed roughly 2,000 jobs and scrambled to find money in order to pay its million debts. It is now stuck with surplus of shoes, and even its auditors wonder if it can stay afloat.
Now, the company has until September to pay off its debt.
The company had expanded to meet demand. In 2006, it sold shares to the public where it was able to raise more than $200 million in the biggest stock offering in shoe history. It ramped up manufacturing to keep up with demand. Unfortunately, recession hit the economy and the financially pressed customers cut back on their spending, and not only that, people started their Crocs at the back of their closet and somehow weren’t wearing them anymore.
Damon Vickers, an investment fund manager at Nine Points Capital Partners in Seattle said “The company’s toast. They’re zombie-ish. They’re dead meat and they don’t know it.â€
So will Crocs finally see its last days?
Unless they can come up with some drastic measures and rise fund, they might as well be. Like the reports say, they have until September of this year to pay off its debts.
