Piper Jaffray Issues Highlights From Crocs (CROX) Presentation

June 10, 2009 2:43 PM EDT

Piper Jaffray issued a few notes on Crocs, Inc. (Nasdaq: CROX) after the company's presentation at the 29th Annual Piper Jaffray Consumer Conference. The firm is maintaining their Neutral rating and $3 price target although they noted a few promising things for investors to hang their hat on.

Some notes from Piper analyst Jeffrey Klinefelter:

• Management reviewed its position as the No. 3 kids brand, and top ten ranking in men's and women's, according to NPD.
  
• Rationalizing sales-cost ratio is near-term strategic focus
  
• In three years time, mgmt's goal is to get back to $750M in sales.
  
• Management committed to sales-cost realignment including: SG&A at 32% of sales or lower by end of 2010; gross margin rate improvement in 2009 and 2010 (to 47% level) will be tied directly to inventory reductions.
  
• Retail (21% of revs) and e.com (9%) increasingly important components of strategy
  
• Wholesale (71%) will likely show growth contraction in near term as company rationalizes distribution base
  
• New management will transition the Crocs operating model away from production driven toward a more traditional footwear model
  
• Review of progress to-date: 32% workforce reduction in 2008, SG&A level down 26% in Q1 vs. PY, inventory level has declined by 50%, and the company has aggressively reduced outstanding debt and improved its cash position.

Shares of Crocs are up 10% currently, after trading up 20% earlier.

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