Amid a surge in popularity, casual footwear brand Hey Dude is following the example of its parent company, Crocs Inc., and cutting ties with some of its wholesale partners.
The brand announced the move in a letter sent this week to an undisclosed number of retailers. The letter — which was posted to the Shoe Dogs United group on Facebook and viewed by FN — was signed by Sean Finucane, Hey Dude’s SVP and general manager of North America. It stated that the brand’s wholesale distribution strategy “is best served by distorting our efforts to retailers who are aligned with our brand strategy and desired positioning in the marketplace.”
The letter further said it had determined to end its wholesale relationship with impacted retailers and terminate any sales agreements. All open purchase orders were to be cancelled beyond May 10, 2023.
In a statement sent to FN, a brand spokesperson confirmed the move, saying, “We remain in deep gratitude to these partners for their past investment in Hey Dude. Our brand has seen incredibly strong growth over the last year, and as we manage the brand in the U.S. marketplace, a key driver of that is a prioritized distribution model. This recent shift in strategy enables us to focus on our digital, direct-to-consumer business, while continuing to prioritize key wholesale and retail partners that are aligned to this strategy and can elevate the brand’s position in the marketplace.”
In recent years, Hey Dude has grown at a meteoric pace. In 2022, its revenue exceeded initial expectations, reaching $986.2 million for the full year, according to Crocs, which closed its acquisition of the label last February. And Crocs CEO Andrew Rees has confidently predicted that Hey Dude will surpass $1 billion in sales in 2023.
Fueling its business is a strong consumer following. In LEK Consulting’s second annual Brand Heat Index, the company surveyed 4,000 U.S. consumers age 14 to 55, and found that Hey Dude was the “hottest” casual brand among both men and women. And its fans were multigenerational, according to the report. Hey Dude was No. 1 among millennial and Gen X women, and No. 2 for Gen Z women. It ranked No. 1 for men in all age groups.
After Hey Dude was purchased by Crocs, many in the industry speculated that the brand would shift to a more direct-to-consumer (DTC) distribution model, the same way that Crocs did in 2021, to maintain more control over its brand image, distribution and pricing. Those suspicions grew in March 2022, when Hey Dude confirmed that it was bringing its sales teams in-house to align its “culture and talent with Hey Dude’s long-term, strategic goals.”
At the time, a spokesperson for the brand said it would continue to operate in the independent retail channel and work with “strong and differentiated independent retailers that will elevate the Hey Dude brand and allow us to deepen connections with our consumers.”
During the height of the pandemic, a number of major brands, including Crocs and Nike, drastically cut back on their partnerships with independents and prioritized their own DTC channels. Lately, though, market analysts have questioned that decision in light of slowing e-commerce sales numbers. Regarding Nike, in particular, Williams Trading analyst Sam Poser said in a note to investors in March that the sneaker giant’s growth in its direct business “is not sustainable” and a renewed focus on its wholesale arm might be necessary in 2023.