Tuesday, September 26, 2006

Calls of Note Part 5

- Piper Jaffray is positive on Crocs (NASDAQ:CROX) following recent travel with co CEO,
Ron Snyder, that reaffirmed firm's thesis that diversification remains key to LT growth. The company is actively expanding its product portfolio, observing strict supply chain management, building sufficient capacity, and reinvesting strong cash generation in long-term business processes and brand marketing.

Firm's 2H FY06 and FY07 estimates are unchanged, however, they maintain an upward bias given early signs of strong retail and consumer acceptance of fall styles including the Mary Jane, Prima, and Islander and strong initial order flow for both the NCAA and Disney product - all of which offset seasonality tied to Crocs' heritage spring styles.

They estimate the company will add roughly 1,000 net new doors during FQ3, including ~200 doors through West Coast boardsport retailer Tilly's and mall-based retailer, The Walking Company. The acquisition of Marshall Field's (MAY) by FD/Macy's also provides a foray into roughly 400 Macy's East and West locations.

By year-end, the firm expects capacity to near 3.5M units/month progressing toward 4M units/month into early 2007.

Expects NT catalysts to support CROX shares including: strong FQ3 results, improved visibility surrounding sell-throughs and reorder potential, capture of additional floorspace at key accounts, NCAA & Disney product introductions, and capacity & supply chain improvements.

Maintains $40 tgt.

Notablecalls: Check out my comments on CROX couple of weeks back. The trade is working out nicely and will keep doing so over the next weeks.

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