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Consumer scepticism is pulling the shoe firm Crocs, Inc. (CROX) down
As of market close today, CROX shares were down 3.8%. There was no specific announcement from CROX that prompted the sell-off.
Because Crocs is an apparel firm, shoe buying may suffer if a recession occurs and people tighten their belts.
A consumer mood index is backward-looking and is not a trustworthy instrument for predicting whether or not difficult economic times are coming. When the Consumer Confidence Expectations Index was this low in March 2013, the stock market was preparing for a big rally. From March through the end of December 2013, the S&P 500 gained 22%.
Nonetheless, conditions have changed since over a decade ago and inflation, particularly in energy prices, appears to be influencing consumer behaviour. Wardrobe expenditure might be especially sensitive if customers begin looking for methods to conserve money by postponing new clothing purchases.
CROX sales increased 18.5% year over year in the first quarter of 2022, or over 44% when the recent acquisition of casual footwear company Hey Dude is factored in. CROX's full-year 2022 sales are expected to be about $3.5 billion, implying that the company will maintain its double-digit sales growth rate this year (the Crocs brand grew at least 20% compared to 2021).
But that was a few months ago and economic conditions in the United States are swiftly shifting. The Federal Reserve raises interest rates in an attempt to combat inflation. CROX will have an opportunity to prove its projection correct when it reports on Q2 2022, which is expected in late July or early August. Meanwhile, CROX's stock is trading at only 4.1 times one year forward projected profits, underscoring the risks associated with a weak economy. If the firm meets its growth targets, this might be the finest offer among shoe companies right now.
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Alpha Alliance Capital PR Manager Tarra Chua