Jon Quast

Oh, all right.

Of these three companies that we're talking about, I believe that Crocs has the clearest path towards a comeback because it also has the clearest explanation of what has gone wrong.

Let me summarize it as quickly as I can.

In 2022, Crocs bought another shoe company called Hey Dude.

Sales growth was amazing for a period of time.

Then Crocs management overestimated the growth potential for Hey Dude, and it stuffed the wholesale channels full of Hey Dude merchandise.

Then, sales growth stalled, and now the company has had to work through bloated inventory at wholesale channels, and that is hurting both sales and profit margins.

It had to take a goodwill impairment charge, a significant one recently, too.

Yeah, and by a lot.

It took on debt to acquire HeyDude.

It's been paying that back down.

All of these things have been weighing on Crocs' financials for multiple years now.

But you look at it, and the Crocs brand itself is still growing internationally.

It's taken a breather in domestic markets.

They're down slightly, sales overall, but it's nothing troubling.

The margins are still really good.

The valuation is incredibly cheap, as you point out, Travis, less than seven times its free cash flow.

As you look at what it does with its profits,

It's repurchasing shares.

The share count is down about 16% over the last three years.