Crocs stock takes hit as Heydude outlook darkens

BROOMFIELD — Crocs Inc. (Nasdaq: CROX) topped analysts’ sales and earnings projections in the third quarter, but the Broomfield footwear company’s stock was crushed Tuesday morning — down more than 17% in early trading — over concerns that the Heydude brand turnaround is flailing. 

The company posted quarterly sales of $1.06 billion and adjusted diluted earnings per share of $3.60, up year over year and beyond Zacks Consensus Estimates.

The problem remains that Heydude, which Crocs bought for $2.5 billion in 2021, continues to underperform. Crocs previously told investors that it expected the brand’s sales to be down between 8% and 10% for the full 2024 fiscal year. This week, the year-over-year revenue projection was adjusted to a decline of about 14.5%.

“We have sharpened our strategy around Heydude as we work to create higher brand relevance through our product and marketing initiatives,” Crocs CEO Andrew Rees said in a prepared statement. “While we are seeing early green shoots from these actions, Heydude 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. While we are resetting our full-year outlook for Heydude, I remain confident in the long-term trajectory of the brand.”

Heydude’s third-quarter sales were $204 million, off 17.4% from the same period last year.

On a conference call with investors and analysts to announce the Heydude acquisition in late 2021, Crocs officials were bullish on Heydude’s ability to quickly add revenue to the company’s balance sheet, predicting $1 billion in sales from the Heydude standalone division by 2024.

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