Dive Brief:
- As other retailers experience slumping sales, Crocs, Inc. reported revenue of $964.6 million for the second quarter, up 51% compared to 2021, according to a Thursday press release.
- The Crocs brand saw a revenue increase of 14% to $732.2 million, while the Heydude brand saw a 96% increase to $232.4 million, per the release. Across the company portfolio, DTC revenue grew 23% and wholesale jumped by 80.6%.
- While the retailer’s operating income increased 27% to $248 million, it saw operating margin decrease from 30.5% to 25.7% “due to increased air freight and Heydude acquisition and integration expenses.”
Dive Insight:
Crocs is breaking quarterly records as other retailers announce layoffs and struggle with excess inventory.
“The consumer demand for both our brands is exceptional and we expect both brands to gain market share in this dynamic environment. We remain incredibly confident in our long term growth and our ability to generate best-in-class profitability,” CEO Andrew Rees said in a statement.
The company’s third quarter expectations are also high, anticipating revenue to grow 46% to 53% year over year. However, it still expects a $15 million operating margin impact from air freight and the retailer also lowered its full-year revenue expectations. For 2022, Crocs now expects between 47% and 52% growth year over year.
Other footwear brands aren’t experiencing the same success as Crocs. Sustainability-focused shoe brand Allbirds — which once touted a billion-dollar valuation — laid off 8% of its global corporate workforce last week. The company's most recent quarterly report included a net loss increase of more than $8 million.
An outlook survey from the industry group Footwear Distributors and Retailers of America in July showed 87% of shoe company executives expect weaker sales in the third and fourth quarters of this year. Additionally, two-thirds of those surveyed planned to pause hiring over the next few months and about half anticipated shoe prices to fall over the next six months.
Crocs previously broke an annual revenue record in 2021 with $2.3 billion and noted it expects $6 billion in revenue by 2026. The company acquired the Heydude brand for $2.5 billion in December of last year, and then revamped the brand’s image this July. The smaller brand is helping drive the strong results at Crocs, with Heydude outperforming expectations. According to Wedbush analysts, Crocs' Q2 beat was "primarily driven by the recently acquired Hey dude brand," which almost doubled its sales year over year.
