Crocs lowers outlook as HeyDude reports worse-than-expected decline

Crocs has reported better-than-expected sales and profit for the third quarter, but management has revised its outlook down due to the continued decline of its HeyDude brand.

The company’s consolidated revenues increased 1.6 per cent year-on-year to $1.062 billion, with direct-to-consumer sales growing 4.4 per cent and wholesalers revenues contracting 1.4 per cent.

For the Crocs brand, revenues were up 7.4 per cent to $858 million, including a 2.1 per cent improvement in North American sales and a 15.5 per cent increase in international revenues.

Meanwhile, HeyDude’s revenues decreased 17.4 per cent to $204 million, worse than the expected decline range of 14-16 per cent.

“We have sharpened our strategy around HeyDude as we work to create higher brand relevance through our product and marketing initiatives,” said CEO Andrew Rees.

“While we are seeing early green shoots from these actions, HeyDude’s recent performance and the current operating environment are signaling it will take longer than we had initially planned for the brand to turn a corner,” Rees added.

On the bottom line, Crocs’ net income increased to $199.8 million from $177 million in the year-ago period.

The company expects fourth-quarter revenues to be flat to slightly up, with the Crocs brand up about 2 per cent and HeyDude down 4-6 per cent.

For the full year, revenues are forecast to increase 3 per cent, at the lower end of prior guidance of 3-5 per cent. The Crocs brand is projected to grow 8 per cent versus growth of 7-9 per cent prior, and HeyDude to be down 14.5 per cent from 8-10 per cent prior.

Crocs acquired casual footwear brand HeyDude in December 2021 for $2.5 billion.

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