More shoe news
Crocs Co.’s stock took a hit on Wall Street on Tuesday, falling nearly 19% in intraday trading as sales of the company’s Hey Dude brand continued to decline.
The Broomfield, Colorado-based footwear brand said its consolidated sales for the third quarter of fiscal 2024 were $1.062 billion, an increase of 1.6% from the same period last year. This beats the company’s forecast last quarter, when it expected sales to decline 1.5% to increase 0.5% year-over-year.
Net income for the quarter was $199.8 million, up from $177 million in the year-ago period, and diluted earnings per share were $3.36, an increase of 17.1% from $2.87 in the year-ago period.
By business segment, the company reported that direct-to-consumer sales revenue increased 4.4% in the third quarter, while wholesale revenue decreased 1.4%.
Revenue from the Crocs brand once again led the strong performance, with third-quarter sales up 7.4% to $858 million. These results reflected a 7.7 percent increase in direct-to-consumer sales to $463 million and a 7.1 percent increase in wholesale sales to $396 million in the same period.
Hey Dude brand revenue in the third quarter decreased 17.4% to $204 million, reflecting a 9.3% decrease in DTC to $91 million and a 22.9% decrease in wholesale to $113 million. I’m doing it.
On Tuesday’s earnings call, Crocs CEO Andrew Rees told analysts that while the company is encouraged by early positive indicators regarding Hey Dude’s turnaround, recent results and current He said the business environment suggests it may take longer than originally anticipated. Business is about to turn the corner.
“We remain confident in the long-term potential of the brand and the visible green shoots provide positive reinforcement for our opportunity,” Rees said. “I am extremely proud of our team and the urgency with which they executed on our well-honed strategy.”
The CEO said the company will prioritize Hey Dude’s brand health starting in September 2023, cleaning up channel inventory while right-sizing its account base and creating premium outlet stores that showcase the best expression of the brand. He said he had “changed direction” to building a group.
“Since then, we have increased our ASP (average selling price), closed more than 50% of our accounts, improved our inventory turnover to four times a year, and opened 29 premium outlet stores,” Reese said. said. “Furthermore, we have invested in talent across our brands, while accelerating our investments in the marketplace to drive higher rents and relevance and increase brand heat. We strongly believe that this is the right decision to build a solid foundation for high growth.”
story continues
Williams Trading analyst Sam Poser further highlighted Hey Dude’s business in a note Tuesday. “Today’s weakness is due to the lower fiscal 2024 Hey Dude revenue outlook and the recognition that North America is more involved in stabilizing and turning around the brand than previously expected,” Poser wrote. Ta. “While we believe the shift from performance-based marketing to brand-based marketing is the right thing to do for the brand’s long-term success, it is causing short-term pain.”
Poser added that while the marketing shift is “the right thing to do,” Hey Dude is unlikely to realize revenue growth until the second half of 2025. “Due to poor retail performance, wholesalers are taking a much more cautious approach. Spring 2025 orders exceeded previous expectations,” Poser said. “The current underperformance and cautious approach has led management to call FY2025 the year of stabilization.”
Looking ahead, Crocs expects fourth-quarter revenue to be flat to slightly up compared to fourth quarter 2023, with the Crocs brand expected to grow approximately 2% and the Heydude brand expected to grow in the fourth quarter. It is expected to decline by 6% to 4%.
Given this year’s performance so far, the company is lowering its outlook for fiscal 2024. The company now expects overall revenue to increase approximately 3% in 2024 compared to 2023, which is at the lower end of its previous guidance of 3% to 5% sales growth.
Crocs brand revenue is expected to grow about 8 percent for the year, compared with previous growth of 7 to 9 percent. Revenue for the Hey Dude brand, previously down 10-8%, is now expected to decline by approximately 14.5%.
Best of Footwear News
Sign up for FN’s newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
