Does a 20% Cost Increase For CROX Matter?

06/02/08 05:52PM EDT
While most of the free world has never heard of the Rocky Mountain News, it has proven to be just about the most reliable general news organization on Crocs (through the Colorado angle). Earlier today, the RMN noted that Crocs is believed to rely on a DOW product that is about to implement a 20% price increase. While Crocs is very 'hush hush' about the secret formula for its Croslite material, the RMN noted that a patent issued in 2006 shows a polymer called Engage - sold by DOW - as a key ingredient.

Quite frankly, out of any footwear company in the industry, I'm least concerned about Crocs' cost pressures given that a stabilization of revenue will do more than any input cost increase. Also, I'm in the camp that the juice on the SG&A and capital intensity side of this model can more than offset any resin pressure.

No, I'm not making a bull call here. Not yet at least. But with the stock near $10 it's on my list.

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