Crocs Inc.’s shares fell 10.7% Thursday after the footwear company that acquired HeyDude earlier in the year cut its forecast despite exceeding earnings expectations.
The Colorado-based company’s second quarter revenues increased 50.5% to $964.6 Million compared to last year. Crocs’ quarterly revenue record was $732.2 million. This is an increase of 14.3% over the previous year. Hey, Dude’s second-quarter revenue was $232.4 Million, an increase of approximately 96% over 2021.
On Thursday, Crocs CEO Andrew Rees stated there was uncertainty about the future macroeconomic environment and changing consumer behavior. This led to Crocs planning for a drop in growth in the short term.
These factors have led to Rees adjusting Crocs’ earnings for the third quarter. This will allow Crocs to “prudently manage” its investments and inventory.
Investors further pressed Rees during the call. He stated that he is optimistic about back-to-school but anticipates that the impact on consumers, like inflation and high-interest rates, will cause businesses to slow down as the year progresses.
Crocs expect consolidated revenues of $3.395billion to $3.505billion for the whole year, as opposed to its previous outlook for $3.5 billion. Crocs will see a 14% to 17% increase in revenue on a constant currency basis. However, reported revenues are expected to grow from 10% to 13%. The company had previously projected upwards of 20% growth. Hey, Dude expects to earn between $850 and $890 million on a reported basis.
Rees anticipates Hey Dude to earn nearly $1 billion this year in pro forma revenue. Rees stated that the company intends to reach this goal through the brand identity, which was recently launched, and more wholesale distribution. Rees mentioned that the brand is available now at Famous Footwear and Rack Room Shoes. Crocs will be adding more doors over the next year.
Rees stated that Hey Dude is also doing brand advertising for the first time in its history. “We will continue developing consumer messaging and brand advertisement that will begin to play out earlier than 2023.”
Rees described Crocs and Hey Dude as being in “exceptional demand” in a dynamic setting.
He stated, “We remain extremely confident in our long-term growth and our ability generate best-in class profitability.”