Despite Hey Dude Miss, Analysts Say New Products Are Galvanizing Crocs’ Growth
Crocs Inc. shares fell today after the shoe company cut its outlook for its Hey Dude brand, but the clog maker is finding broader success as it diversifies its product range.
The market had a negative reaction when Crocs downgraded its outlook for full-year growth at the Hey Dude brand, citing wholesale slowdowns. The hit came even as Crocs posted a record quarter that beat sales and earnings expectations and raised its full-year outlook.
More from Footwear News
Despite the stock slump, analysts were overall upbeat about Crocs’ growth trajectory moving through the rest of the fiscal year, with some highlighting a positive consumer reaction to new products and categories.
“The Crocs brand seems to be maintaining its momentum, and we’re encouraged by the sequential acceleration in North America, with easier compares ahead,” wrote Wedbush analyst Tom Nikic in a Thursday morning note. “We’re also encouraged by the strong DTC growth at both brands, as well as the solid margin beat.”
While the company is probably best known for its Classic Clog shoes, Crocs Inc. has recently begun doubling down on its category expansion strategy. This includes releasing variations on its classic clog style as well as entering more meaningfully into new categories like sandals. For example, Crocs recently launched a new Mellow slide collection and is also investing in the streetwear-obsessed fan with its Echo collection. Crocs executives also called out the Dylan and Siren silhouettes as strong growth drivers for the brand.
Stifel analyst Jim Duffy said in a note that selling trends and Crocs’ DTC strength suggests “favorable reception to new product.”
Sandals, a key area of focus for Crocs, grew 34 percent in Q2. In a presentation to analysts, Crocs said its molded technologies and accessible price points allow it to effectively compete in the $30 billion global market for sandals.
Crocs expects sandals to grow 29 percent to about $400 million in 2023. In 2022, sandals accounted for about $310 million in revenues.
Baird analyst Jonathan Komp attributed Crocs’ lift in average selling price in Q2 to its diversification among clogs, sandals and Jibbitz, the latter of which grew grew 13 percent in the quarter. Crocs last month teamed up with 3D e-commerce platform Obsess to launch a virtual Jibbitz shopping experience.
In a note prior to the earnings release, Komp said he was “encouraged by signs of sustained North America strength, including positive response to sandals, other new products, and marketing.”
Collaborations are another strong area of growth for Crocs. Just this week, it partnered with MSCHF on a viral knee-high yellow boot worn by Paris Hilton for a campaign, and also generated buzz with its Barbie-themed collab. Crocs highlighted similar projects with Salahe Bembury, who was recently named the creative director for his Crocs x Pollex Pod collection, and the Satisfy x Crocs Classic clog.
In an earnings preview, Williams Trading analysts Sam Power said that new products like the Dylan clog, the Mega Crush clog and sandal and collaborations were performing well, with demand typically outpacing supply.
“Crocs sales, especially the new sandals are strong,” Poser wrote earlier this week. “At the same time, new collaborations and new product offerings going into this year’s back-to-school selling season and for spring ’24 are compelling.”
Best of Footwear News
Sign up for FN's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
