Crocs' $2 Billion "HeyDude" Acquisition Has Officially Turned into a "HeyDud" (Shares Plummet 19%)

Looks like the honeymoon phase of Crocs’ HeyDude acquisition is officially over, and the divorce papers are being drawn up. Shares of Crocs took a nosedive—dropping 19%—after the comfy clog king reported less-than-stellar profits, with HeyDude acting like a dead weight on an otherwise decent quarter.

(Source: Retail Dive) 

You see, ICYMI back in 2022, Crocs thought they struck gold by dropping a girthy $2.05 billion on HeyDude, the laid-back, comfort-first shoe brand whose motto should probably be “function over fashion.” But it turns out, HeyDude has been more of a hey-dud. During Tuesday’s earnings call, Crocs execs basically admitted that their shiny new fad is the reason their sales forecasts are looking more doom-and-gloom than sunshine-and-rainbows.

(Source: Giphy) 

Which is why for 2024, Crocs is now predicting just a 3% sales increase, down from their previous 3-5% estimate - as sales for HeyDude are expected to plummet a whopping 14.5%. Meanwhile, the OG Crocs brand is cruising along with a respectable 8% growth for the year. 

(Source: New York Post) 

Thankfully, Crocs CEO Andrew Rees spared investors from unnecessary BS to try to distract from the bad news, and put it straight: “It has not gone as we would have hoped and expected,” he said. Understatement of the year, Andrew. Apparently, HeyDude’s “recent performance” and the “current operating environment” mean it’s going to take a lot longer than expected to turn this clusterf***k. Translation: HeyDude has dug itself a 6ft hole, with a shovel still in hand..

(Source: Giphy) 

To make matters worse, HeyDude has been embroiled in a lovely little lawsuit courtesy of the Federal Trade Commission. In August of last year, the FTC slapped HeyDude with a $1.9 million fine for hiding negative reviews and screwing over customers with shipping delays, canceled orders, and illegal gift cards instead of refunds. So yeah, not exactly the kind of PR that gets people flocking to your brand.

(Source: FTC) 

In contrast, Crocs itself has been riding a wave of post-pandemic success, thanks in large part to celebrity endorsements from the likes of Justin Bieber, Post Malone, and everyone’s favorite female: Sydney Sweeney. Initially sales boomed, and the brand became a go-to for anyone looking to make “arch care” and foot comfort their entire personality.

However, as it turns out, dozens of schools across the U.S. have banned the iconic rubber clogs, citing safety concerns. Why? Well you can thank your degenerate teenagers who can’t resist throwing their Crocs at each other in the friggin classroom. LOL Classic. 

(Source: Giphy) 

Still, Crocs insists these bans are “baffling,” with brand president Anne Mehlman stating that the company hasn’t seen any “substantiated data” on the rise in bans. But hey, when a school nurse says “I bet they were wearing Crocs” after every foot (or head injury), you’ve got to wonder.

At the end of the day, Crocs’ stock got rekt—dropping as much as 19%, the biggest single-day fall since April 2023. Investors are clearly not thrilled about HeyDude’s performance dragging down the company, and Crocs’ attempt to downplay the issue isn’t exactly comforting. The Crocs brand itself is still strong, but unless HeyDude can get its act together, investors might start wondering whether this acquisition was a $2 billion mistake. 

In the meantime, at least the markets up today, amirite? Thank you, Lawd. As always, stay safe and stay frosty, friends! Until next time…

PS: Before you jump on the “BTFD” on Crocs bandwagon, you might want to see how we’re already scoring big at Stocks.News. Just this Wednesday, we locked in a 64% winner—in under five hours. Want to know how we did it? Check out the details on becoming a Stocks.News Premium member (don’t miss out on the next exciting trade).

Stocks.News does not hold positions in companies mentioned in the article.