After Slow Hey Dude Sales, Here’s How Crocs Inc. Plans to Grow Its Newest Brand

In the third quarter, Hey Dude revenues were down 8.3 percent.

Hey Dude just had another rough quarter, but Crocs Inc. is optimistic it can strengthen its recently acquired brand through a tried and true playbook.

In the third quarter, Hey Dude revenues were down 8.3 percent to $246.9 million, with wholesale revenues down 19.4 percent due to wholesale partners being more cautious on at-once orders.

In a call with analysts, Crocs CEO Andrew Rees said the company is currently developing a new retail strategy for Hey Dude based off of the current one in place for the Crocs brand. That plan involves strengthening strategic wholesale partnerships in the family channel, sporting goods sector, mall-based specialty channel and larger regional chains. It also involves exiting accounts with smaller and less essential wholesale partners. Hey Dude is also beginning to test different markets in Europe for an eventual international expansion and is opening several outlet locations.

“We’ll use an approach that is consistent with our Crocs playbook, go direct to markets where we are direct for Crocs and utilize distribution partners in markets where we are with Crocs,” Rees said.

When Crocs Inc. acquired Hey Dude, the brand was sold in about 1,300 doors, many of which were regional and smaller mom-and-pop accounts. Since then, Rees said Crocs Inc. has pulled out of 600 of these accounts.

“We’ve really extended the brand into large national chains,” Rees said. “We see the Hey Dude brand essentially being sold almost everywhere that the Crocs Brand is sold … we’re talking about family footwear, we’re talking about sporting goods, we’re talking about mall-based specialty, and then also some super regional chains.”

In other words, whereas Hey Dude previously focused more on getting enough supply to fill demand and landing on as many shelves as possible, the model is now designed to keep demand slightly ahead of supply, bolstering brand heat.

“We are certainly cutting supply into the wholesale arena to ensure that supply is pegged at or below demand,” Rees said. “That is a demand-based environment.”

According to Piper Sandler’s 46th semi-annual survey this spring, Crocs and the Crocs-owned Hey Dude brands are seeing momentum among teens. Crocs and Hey Dude nabbed the sixth and seventh top spots in preferred footwear, respectively. Year-over-year, Crocs gained about 30 basis points of mindshare and Hey Dude gained 50 basis points.

For the full-year, Crocs Inc. expects Hey Dude revenues to grow between about four to six percent on a reported basis.

“As I reflect on where we are as a brand, I remain as confident in the long-term opportunities as I was when we acquired Hey Dude,” Rees said. “We believe that the brand’s versatility, the products easy on- and off-nature, iconic silhouettes, and the permissions into new categories and regions remain unparalleled.”