Fed’s Powell opens door to potential rate cuts at Jackson Hole
Investing.com -- Shares in Crocs (NASDAQ:CROX) sank by more than 17% in early US trading on Tuesday after the shoe seller tempered its full-year revenue guidance due to weakness at its Hey Dude casual footwear brand.
Crocs said it now expects to report annual revenue growth of around 3% versus the prior year in 2024, at the bottom end of its previously forecast of between 3% to 5%.
Sales at its Hey Dude division, which Crocs acquired in 2021, are seen falling by approximately 14.5%, compared to an earlier estimate for a decline of 8% to 10%.
In the quarter ended on Sept. 30, Hey Dude's direct-to-consumer sales decreased by 9.3% to $91 million, while wholesale revenues slumped by 22.9% to $113 million.
For the current quarter, Hey Dude sales are tipped to be down 4% to 6%, although the drop is expected to be partially offset by 2% growth at the eponymous Crocs brand. Group-wide, revenues are projected to be flat.
Chief Executive Officer Andrews Rees said in a statement that he remains confident in the "long-term trajectory" of the brand. In August, the company had flagged a "challenging" demand environment around Hey Dude, adding that it planned to significantly accelerate marketing investment in the second half to "drive more [...] heat" around the segment.
"While we are seeing early green shoots from these actions, Hey Dude's recent performance and the current operating environment are signaling it will take longer than we had initially planned for the brand to turn a corner," Rees said.
In a note to clients, analysts at Stifel said the "[a]cknowledgment of an elongated [Hey Dude] turnaround is discouraging."
Yet solid demand at the Crocs label helped push adjusted net income up by 6.8% year-on-year to $214 million, outpacing estimates of $186.6 million, according to Bloomberg consensus forecasts. Revenue also expanded by 1.6% to $1.06 billion, compared to expectations of $1.05 billion.