HeyDude, Crocs shares are falling 15% today despite better-than-expected results. đ¤
The footwear company reported adjusted earnings per share of $3.59, topping the $2.98 expected. Revenues rose 11.2% YoY to $10.72 billion, outpacing the $1.044 billion consensus view.
Looking ahead, the company expects full-year 2023 earnings of $11.83 to $12.22 per share and revenues of $4.00 to $4.065 billion. Wall Street expected $11.57 per share on $4.019 billion in revenue.
On its surface, everything looked great. However, it ran into problems when walking through its HeyDude brand numbers. The company acquired the casual footwear brand for $2.5 billion nearly 1.5 years ago, and growth is already beginning to slow. đģ
Overall revenues grew just 3%, while wholesale revenue fell 8.4% to $148.8 million. Direct-to-consumer (DTC) sales did rise 30% YoY, but that wholesale weakness caused the company to lower its full-year revenue growth guidance from the mid-20% range down to 14% to 18%. đ
CEO Andrew Rees told analysts that the company’s wholesale partners are “pretty cautious on the back-half of the year,” citing three primary reasons: caution about overall consumer spending, overstock in some other brands, and a lack of good history with HeyDude in the second half of the year.
As a result, the company is shifting toward a more direct-to-consumer approach as it uses for its Crocs brand. But that transition will take time. âąī¸
Given the slowing growth, investors pushed shares of $CROX to new year-to-date lows. If the company is going to maintain its significant premium over other footwear brands, it will have to deliver premium sales and earnings growth. And today’s earnings cast doubt on its ability to do that. đ
