Crocs Slashes Guidance. It Has Stopped Price Matching Amazon.

Earlier, Crocs, which has the brands Crocs and HeyDude, posted third-quarter adjusted earnings per share of $3.25, higher than Wall Street’s call for $3.10, according to FactSet, and ahead of the $2.97 in the year-ago quarter. Revenue of $1.05 billion beat the $1.03 billion analysts expected.

The company, which has the brands Crocs and HeyDude, expects fourth-quarter adjusted per-share earnings of $2.05 to $2.35; analysts had forecast $2.78.

For full-year 2023, Crocs expects consolidated revenue growth of 10% to 11%, down from 12.5% to 14.5%, and adjusted earnings per share of $11.55 to $11.85, down from $11.83 to $12.22. 

The company lowered growth expectations for the HeyDude brand as well.

On an earnings conference call, CEO Andrew Rees told investors that management had changes its digital pricing strategy in September.

“Specifically, we made the decision to stop price matching with the gray- market goods [products from unauthorized dealers] that are selling on
Amazon,
forfeiting near-term sales to prioritize long-term market health.”

“While this will hinder sales growth in Q4 and possibly into the first half of next year, we believe this will set us up for a much cleaner marketplace as we move throughout 2024, as well as protect the brand,” he added.

Management also spoke about the path forward for HeyDude, which includes a focus on bettering digital capabilities and building an outlet retail strategy.

Crocs acquired the HeyDude brand in February 2022. At the time, Crocs said the deal “adds a second high-growth, highly profitable brand to the Crocs portfolio.”

In a note, Wedbush analyst Tom Nikic had a mixed reaction to the report. His rating on the stock is Outperform and has a price target of $96.

“We continue to believe that the shares are too cheap…and are encouraged by strength at the core brand, but the stock will likely languish until we get evidence that HeyDude has bottomed,” he wrote.

“We’re not throwing in the towel, but we concede that management has a long hill to climb in order to regain investor trust.”

Write to Emily Dattilo at [email protected]