As of 1:25 p.m. ET, Crocs shares had fallen 3.8%. The stock had performed worse than the market overall, and s&P 500 stocks were down 1.1% for comparison.

What went down

No specific financial news from Crocs led to the stock drop. The likely cause is yesterday’s CPI (consumer price index) report from the Bureau of Labor Statistics. During the month of June, inflation increased by 9.1% over the previous year, the most significant increase since 1980.  

Consumers are adjusting their spending habits as the cost of living climbs sharply. In May, retail sales showed resilience (according to the U.S. Census Bureau), but the economic picture is rapidly changing.

It could be bad news for shoe companies like Crocs if discretionary spending on apparel and clothes pulls back.

So what?

It wasn’t all bad news for Crocs, though. The company announced recently that it had obtained judgments against USA Dawgs and Double Diamond Distribution for making knockoffs of Crocs’ foam clogs. Even though it is a minimal monetary consideration, Crocs’ patent on its footwear designs is protected.

Despite some turbulence in consumer spending this year, Crocs is likely to remain in growth mode. Besides expanding its Crocs brand, the company recently acquired the casual footwear brand Hey Dude, which is growing rapidly among younger buyers.

Currently, the market cannot see Crocs’ long-term potential due to inflation. Shares trade for just 4.4 times one-year forward expected earnings.