Thomas Weisel out on Crocs (NASDAQ:CROX), saying that channel checks point to a December-weighted quarter behind a surge of holiday sales.
Firm's checks at key retailers, in international markets and with Crocs direct channels suggest Crocs (both classics and new styles) were an extremely popular gift item this holiday season. All channels reported very strong sales in December and sparse inventory positions at key retail channel partners suggest demand exceeded supply. As expected, firm believes December strength offset both natural and buyer-imposed seasonality in October and early November.
During 4Q, firm found new distribution of Crocs in Macy's (former Marshall Fields doors), Tilly's and Belk department stores. Also incremental to business in 4Q was distribution of Collegiate and Disney licensed products. Firm believes this net new revenue was offset by retailers whose merchandising strategy de-emphasized Crocs during the 4Q period. Their checks found a seasonally smaller representation of Crocs in certain sporting goods retailers and in many European stores.
Despite a big December, firm saw evidence of unmet consumer demand: In mid-December, their checks found Crocs online business to be out of stock on certain items and some indications that it was swamped by order volume. In late December, they noticed inventories at many retailers were very lean, particularly in the week following Christmas. As such, firm believes upside in the quarter may have been capped by: 1) a surge in online orders that exceeded fulfillment capacity; 2) retailers that failed to order enough product to meet holiday demand; and 3) late-December blizzards in Colorado that caused missed shipping days, limiting Crocs' ability to chase business.
Firm remains comfortable with their above consensus ests for both Q107 and 2007.
Notablecalls: Not actionable but good to know category. Although I must say the stock looks like it wants to move higher. TWP usually covers stuff in greater detail than other firms.
Firm's checks at key retailers, in international markets and with Crocs direct channels suggest Crocs (both classics and new styles) were an extremely popular gift item this holiday season. All channels reported very strong sales in December and sparse inventory positions at key retail channel partners suggest demand exceeded supply. As expected, firm believes December strength offset both natural and buyer-imposed seasonality in October and early November.
During 4Q, firm found new distribution of Crocs in Macy's (former Marshall Fields doors), Tilly's and Belk department stores. Also incremental to business in 4Q was distribution of Collegiate and Disney licensed products. Firm believes this net new revenue was offset by retailers whose merchandising strategy de-emphasized Crocs during the 4Q period. Their checks found a seasonally smaller representation of Crocs in certain sporting goods retailers and in many European stores.
Despite a big December, firm saw evidence of unmet consumer demand: In mid-December, their checks found Crocs online business to be out of stock on certain items and some indications that it was swamped by order volume. In late December, they noticed inventories at many retailers were very lean, particularly in the week following Christmas. As such, firm believes upside in the quarter may have been capped by: 1) a surge in online orders that exceeded fulfillment capacity; 2) retailers that failed to order enough product to meet holiday demand; and 3) late-December blizzards in Colorado that caused missed shipping days, limiting Crocs' ability to chase business.
Firm remains comfortable with their above consensus ests for both Q107 and 2007.
Notablecalls: Not actionable but good to know category. Although I must say the stock looks like it wants to move higher. TWP usually covers stuff in greater detail than other firms.
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