CROX – Market expectations are for Uniform ROA expansion, but management may have concerns about revenue, demand, and inventory

• Crocs, Inc. (CROX:USA) currently trades above recent highs relative to UAFRS-based (Uniform) earnings, with an 18.6x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about wholesale revenue declines, consumer demand, and inventory levels
  
  

• Specifically, management may be concerned about sales declines in Japan and their sandals segment. Furthermore, they may be exaggerating how much changes in consumer trends are aiding them, and they may be concerned about their ability to keep inventory lean. Moreover, management may lack confidence in their ability to normalize SG&A expenses, and may be concerned about the sustainability of demand levels. Finally, they may lack confidence in their ability to grow wholesale channel revenue