Shares for Crocs Inc. dipped 10.7% on Thursday as the footwear company, which completed its acquisition of Hey Dude earlier this year, cut its forecast despite beating earnings expectations.
In the second quarter, revenues for the Colorado-based company rose 50.5% compared to the same time last year to $964.6 million. By segment, Crocs saw record quarterly revenues of $732.2 million, an increase of 14.3% compared to the same period last year. Revenue for Hey Dude was $232.4 million for the second quarter of 2022, up approximately 96% compared to 2021.
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Crocs CEO Andrew Rees said on Thursday during the company’s quarterly earnings call that uncertainty around the future macroeconomic environment and changing consumer behavior led to the planning for a dip in growth at Crocs in the short-term.
Given these factors, Rees has adjusted the earnings for the third quarter for Crocs, which he said will allow the company to “prudently plan and manage” its inventory and investments.
Pressed further by investors on the call, Rees added that he is “very optimistic” for back-to-school but anticipates that impacts on consumers like high interest rates and inflation will cause business to soften as the year progresses.
Looking ahead, Crocs now anticipates consolidated revenues of $3.395 billion to $3.505 billion for the full year, whereas its prior outlook called for about $3.5 billion. For the Crocs segment, the company expects about 14% to 17% revenue growth on a constant-currency basis, or 10% to 13% growth on a reported basis. The company was previously modeling upwards of 20% growth. For Hey Dude, the company expects about $850 to $890 million on a reported basis.
Rees expects Hey Dude to reach nearly $1 billion in pro forma revenues this year. Rees said the company plans to achieve this through its newly launched brand identity and the addition of more wholesale distribution. The executive mentioned that the brand is now available at Famous Footwear, Rack Room Shoes and Academy Sports. Crocs will add more doors as the year progresses.
“We are also doing some brand advertising for the first time in Hey Dude’s history,” Rees said. “And we will continue to develop consumer messaging and brand advertising that will start to play out earlier in 2023.”
Rees described both Crocs and Hey Dude and having “exceptional” demand in a dynamic environment.
“We remain incredibly confident in our long term growth and our ability to generate best-in-class profitability,” he said.