Crocs, Inc. just turned in strong quarterly earnings, despite its Heydude brand continuing to see declines in both wholesale and DTC revenue. For the company as a whole, DTC revenue increased 6.8% and wholesale fell 4.6% in the fourth quarter, but much of that decrease stemmed from Heydude’s losses.
- The comfort footwear brand, which Crocs bought in 2022, saw wholesale revenue drop 28% in Q4 and DTC fall 9% compared to the year before.
The upside is that Crocs moved to make Heydude’s sales more profitable by pulling back on price matching, which involves lowering prices to keep up with competitors. As a result, the average sales price for e-commerce jumped 15%.
The company also shed a sizable amount of Heydude’s inventory in 2023, dropping 38% from last year and 6% from the third quarter.
“We made good progress in the fourth quarter towards returning our Heydude brand to a pull-market position resulting in improved gross margins and healthy inventory levels exiting the year,” CEO Andrew Rees said in a statement.
Rees also told investors this week that Crocs sold too many Heydude shoes into the market in the second half of 2022 and the early part of 2023, and that it has since “gone through the process of cleaning up our account base.”
“We had too many accounts with too much inventory kind of competing against each other,” he said. “And so I think we got real clarity on who our strategic partners are.”
Crocs’s namesake brand, meanwhile, saw growth across the board and a welcome shift from wholesale to DTC. Q4 revenues from DTC increased 12% and wholesale increased 7.3%, and average sale prices were up 12%, “led by both channel and product mix,” CFO Anne Mehlman told shareholders.
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