HeyDude will aggressively expand on the outlet strategy that’s proven successful for sister brand Crocs, with the opening of 30 throughout 2024.
That’s a big jump from the opening of five Hey Dude outlet stores in the back half of last year. It’s part of a distribution refinement strategy that began in 2023 and also included exiting several mom-and-pop retailers in favor of larger accounts and the end to matching gray market pricing in favor of full-price selling online.
“We’re taking a focused approach to how we allocate inventory by account and expect to see more evidence of account and channel segmentation as we move throughout the year,” Andrew Rees, CEO of parent Crocs Inc., said during an earnings call Thursday.
That showed in the brand’s quarterly results.
HeyDude sold 7.4 million pairs of shoes in the fourth quarter, which was down 18% and driven by the decision to exit several retailers, according to Crocs Inc. CFO and future Crocs brand president Anne Mehlman.
HeyDude revenue fell 18.5% on a year-over-year basis to $228 million.
Even with the quarterly decline, HeyDude ended 2023 with total revenue of $949 million, which was up 6% from the prior year. The increase was driven by direct-to-consumer, which jumped 18.9%. Wholesale was down 1.3%.
SES file photo.
Store Expansion
On the outlet front, Rees said the company is so far “pleased” with the five HeyDude outlet stores opened last year.
“… We’re in the early days of implementing our outlet retail strategy for the HeyDude brand, leveraging Crocs’ successful retail playbook,” Rees said.
Crocs Inc. uses its outlet locations to sell both discounted discontinued or overstocked items, in addition to full-price items, including those exclusive to the outlet channel.
The HeyDude outlet store openings this year will occur throughout the year, Rees said.
“For context, retail is roughly one-third of our North American business for the Crocs brand, and it’s highly profitable,” Rees said, adding that the same potential exists for HeyDude.
The Crocs brand counted 201 outlet stores and 84 full-price locations at the end of 2023, according to the company’s annual report.
Financials and Outlook
Crocs’ store count indicates a large potential runway for HeyDude to grow as the brand continues to expand awareness.
Rees said HeyDude, which Crocs bought in 2022 for $2.5 billion, gained “substantial market share” in the fashion casual space, with overall brand awareness improving in 2023.
In the fourth quarter, Crocs Inc. total revenue rose 1.5% in constant currency to $960 million. Net income was $253.6 million, up from $137.7 million in the year-ago period.
The company reported record annual revenue of $3.96 billion, up 12% in constant currency. Net income for Crocs Inc. in 2023 was $792.6 million, up from $540.2 million in the prior year.
Crocs Inc. is forecasting its revenue in 2024 to increase between 3% and 5%, largely driven by the 4% to 6% projected growth for the Crocs brand.
HeyDude revenue in 2024 is expected to be flat to up slightly, which assumes the wholesale channel, while improving on a quarterly basis, will end down for the year.
