Crocs Inc., which just reported stronger than expected results for the first quarter, is using a tried and true DTC distribution strategy to grow its Hey Dude brand.
The comfort footwear company, which owns the Crocs and Hey Dude brands, reported strong DTC growth for both brands in the first quarter. Crocs brand DTC revenues grew 19% year over year. DTC revenues for Hey Dude, which was acquired by Crocs Inc. in early 2022, came in at $67.5 million, up 141.1% compared to the prior year.
“DTC performance was very strong in both brands in Q1,” said Crocs CEO Andrew Rees in a Thursday call with analysts. “I think that gives us tremendous confidence that our brands are in demand and consumers are seeking them out in a single branded environment.”
DTC has been a strong focus for Crocs since 2021, when the brand began slimming down on certain wholesale partnerships to focus on direct channels. In April 2021, Crocs said it was ending business relationships with some of its long-time wholesalers to prioritize key partners that could elevate the brand’s position in the marketplace.
Since the company acquired Hey Dude, executives have rolled out a similar distribution strategy. Earlier this month, FN reported that Hey Dude was cutting ties with some of its wholesale partners to focus on DTC sales.
The goal, like that of similar DTC focused companies like Nike and Adidas, is to focus on “big leadership accounts” that can elevate the brand, Rees said.
“To focus our efforts, we will continue to prioritize these strategic accounts that can elevate the brand’s position,” Rees said of the Hey Dude strategy. “We recently took steps to rationalize nonstrategic accounts that were not adequately supporting the brand. From a product perspective, we introduced several new styles as we test and learn what resonates with the consumer.”
Rees called out two Hey Dude styles — the Karina For Women and the Sirocco — which are the top-selling styles on heydude.com.
When it comes to international expansion for Hey Dude, Rees said the brand will follow Crocs’ playback there as well. That is, if Crocs is mostly direct-to-consumer in one country, Hey Dude will be direct-to-consumer as well. In rolling this out, the company will take a “test and learn” approach in 2023 in markets across Europe, Middle East, Africa and Latin America.
“The consumer love for the Hey Dude brand is exceptional, and we remain confident about realizing the full potential the Crocs playbook will have on the brand,” said Crocs CFO and EVP Anne Mehlman.
In Q1, Crocs Inc. reported Q1 revenues of $884.2 million, up 36.2% on a constant currency basis and adjusted diluted earnings per share of $2.61, up 27.3%.