Dive Brief:
- Footwear retailer Crocs on Thursday reported first-quarter revenue of $884.2 million, a nearly 34% year-over-year rise for the three months ending March 31. The company attributed the growth to its brand strength and new product introductions.
- Revenue for the Crocs brand rose 19% year over year to $648.8 million, while revenue for the company’s HeyDude brand rose nearly 105% year over year to $235.4 million. Crocs acquired HeyDude early last year for $2.5 billion.
- Crocs reported a Q1 gross profit of $476.3 million, net income of $149.5 million and $125.7 million in cash. The company also said it has $550.7 million in available borrowing capacity.
Dive Insight:
Crocs’ solid first-quarter performance led the company to raise its Q2 and full-year guidance.
For the second quarter, the company expects revenues to grow to $1.03 billion to $1.05 billion, up 6% to 9% from the same time last year. And for the full year, Crocs expects its revenue to rise to $3.95 billion to $4.05 billion. For the full year, consolidated revenue growth for Crocs is forecast to reach 11% to 14% compared to 2022.
CEO Andrew Rees called the first quarter results “exceptional” in an earnings announcement and said new clog and sandal introductions at the Crocs brand are seeing strong response.
"The HeyDude brand is gaining momentum and experienced outstanding DTC growth," Rees added.
HeyDude reported $167.9 million in wholesale revenue and $67.5 million in DTC revenue for the quarter. Company-wide DTC revenue grew 33.5%. Crocs’ overall revised, higher guidance for the next quarter and the full year reflects “our confidence in our ability to continue to gain market share, deliver best-in-class profitability, and generate strong cash flow,” Rees said.
Crocs’ full-year guidance also includes capital expenditures of $165 million to $180 million. The expenditures are mostly aimed at expanding distribution capabilities, including a new HeyDude distribution center in Las Vegas that is scheduled to open this year, along with new technology systems for the brand and an expansion of corporate facilities to support the company’s growth.
Together, Crocs and HeyDude reached a record $3.6 billion in revenue in 2022. Crocs completely revamped the HeyDude brand shortly after acquiring it. The revamp included new logos, messaging and marketing, along with a new tagline: “Good to Go-To.” Crocs aspires to make HeyDude a billion-dollar brand by next year, Retail Dive previously reported.
In a Thursday note, Wedbush analysts led by Tom Nikic said that HeyDude's brand strategy is progressing. HeyDude has begun selling through many of Crocs' wholesale partners, which now make up 50% of the brand's revenue through that channel. HeyDude is also entering new categories, like casual sneakers, and testing new international markets starting in Europe.
“The Crocs brand has seen success with its frequent collaborations which create a halo effect and momentum,” analysts with Jane Hali & Associates said in a note earlier this month ahead of the earnings announcement. “As shoppers trade down, both brands are well-positioned to benefit from the current environment.”
Crocs, which is best known for its popular clog shoes, also benefits from residual pandemic fashion trends that saw consumers embrace more casual and comfy clothes and shoes, the analysts said. “Clogcore is a fashion trend. Shoes that were once seen as ‘ugly, uncool’ are now at the center of comfort fashion.”
However, the analysts did note one area of concern. While the company sold 27 million pairs of shoes in Q4, a nearly 21% increase from the previous year, they sold at $23.95 per pair, a nearly 7% decline.
