Crocs stock drops despite rise in consumer demand

Yahoo Finance Live checks out footwear brand Crocs' lurching stock amid a boom in consumer demand.

Video Transcript

BRIAN CHEUNG: Let's move on to another Triple Play. My play on this Thursday afternoon is Crocs. The foam shoemaker-- keep it together, folks-- taking a spill after also cutting its forecasts for revenue. Management saying that demand for Crocs, as well as its Hey Dude shoes, remain exceptional. Margins, however, under pressure as higher costs took a bite-- do you get it?

DAVE BRIGGS: Yeah, I do get it.

BRIAN CHEUNG: Out of its revenues.

DAVE BRIGGS: You're on fire, too, man.

BRIAN CHEUNG: For what it's worth, revenue is up 50%. That's great, right? But when the cost of goods sold goes up 90%, that's bad. So that's the story.

DAVE BRIGGS: That's some good math.

BRIAN CHEUNG: Yeah.

PRAS SUBRAMANIAN: I thought Crocs were sort of recession resistant, right? They're pretty cheap. Kids always need them. Adults maybe need them. I might even buy a pair myself. Why is it do you think that, kind of, you're not feeling that little bit of a guidance kind of cut here? What's going on here?

BRIAN CHEUNG: Well, I mean, there was a guidance cut, but for what it's worth, I mean, we were actually just talking about this during the break. The margins on these shoes are already remarkably high, right?

DAVE BRIGGS: Astronomical.

BRIAN CHEUNG: It does not cost a lot to make that foam shoe. So even though the margins are getting a little bit more compressed, it doesn't mean the company is going to be losing money. But you have to remember, look, this is all about unit sales and also the cultural value of it as well. There's a reason why they're doing collaborations with, let's say, Margaritaville, right? To keep the cultural relevancy up. I mean, we were just talking about your kids love to collect the Jibbitz--

DAVE BRIGGS: Jibbitz.

BRIAN CHEUNG: --that they put onto the Crocs, right? That's a big--

DAVE BRIGGS: Also, the kids now, they go to summer camp with kids from all over the country. And the number one thing they trade now is Jibbitz. They go into the Crocs if you don't know what those are.

BRIAN CHEUNG: It's the Pokémon cards of--

DAVE BRIGGS: It is.

BRIAN CHEUNG: --the generation, yeah.

DAVE BRIGGS: And those Crocs were lost in a paddleboarding incident. There were tears for three to four hours at home. You're pro Croc.

BRIAN CHEUNG: I am pro Croc, so I have a pair. And they're great to just kind of whip around onto the beach, right? You just hose them down after you get back from the beach. You can put them into sport mode, just put that strap down. When you're in 4 by 4 mode, I feel like I could run a marathon. I mean, I really.