Uggs cedric

I was flipping through a magazine a few months ago and saw an ad for Uggs (you know, those big sheepskin boots that became the ubiquitous footwear of Hollywood starlets a few years ago). But the model in this particular Uggs ad, instead of being shod in big clunky boots, was lounging across the page in big clunky sandals.I remember this moment, because it was the definitive statement that Uggs were now, finally “over.” When a trendy company has to branch into new markets to maintain its profits, you know that trend is over. And that’s what Uggs just did, move beyond the fluffy bootie into “normal” footwear. The Ugg is dead. Long live the shoe.And Friday we watched the same thing happen to another niche shoe company: Crocs.You may own a pair of Crocs. I’ve been told they’re quite comfortable. But they’re stock price has just announced that your squishy neon-colored clogs are, like their sheepskin friends over at Uggs, “so last year.”

Perhaps its competition from $5 Wal-Mart knock-offs (after all, Crocs did make the mistake of going after the comfort demographic instead of the label-conscious one. Spoiled teenagers in California care who makes their shoes, but underpaid parents in Oregon don’t really check.). Or perhaps people just got tired of wearing tires on their feet. Either way, Crocs are over. And the company’s earnings and stock price have stated as much.CROX hit a high of $75.21 last October, but Friday the stock fell as low as $4.72, when the company announced even more abysmal guidance for its second quarter results. Crocs now thinks it will make profits of about 3-7 cents per share, from an earlier estimate of 42-47 cents per share. That’s gotta sting.

Ugg boots maker Deckers reported first-quarter earnings Thursday that fell short of consensus estimates and sent shares tumbling over 25% during Friday’s trading session. The revised guidance of 14% year-over-year revenue growth and earnings that management believes will fall 9% to 10% next year has caused us to lower our fair value estimate for the firm to $73 per share (click here to learn more about our DCF valuation process). However, with $52 per share representing the lower end of our fair value range, we’re growing more constructive on the firm’s shares. We use a margin-of-safety band to capture the risk surrounding our fair value estimate of firms in our coverage universe.For the first quarter, sales increased 20% to $246 million, while earnings per share fell 59% to $0.20. Yet, Ugg brand sales only grew 6.5%, and Teva, the company’s sandal giant, saw sales dip 1% compared to the first quarter of 2011. Higher input costs pressured gross margins, which fell to 46% from 50% in the same quarter last year. Though these numbers were expected, we think guidance is what investors are really worried about.