Crocs Inc. generated more than $1 billion in Q2 revenues on 12 percent constant-currency growth. The company increased its annual revenue guidance to surpass the $4 billion mark, but its share price plummeted more than 14 percent on July 27. There is some concern about sales of its Heydude brand slowing down. The two key reasons—cautious bookings from wholesale partners who are managing inventory levels closely and limited at-once capability at its warehouse. Additionally, the company is working to shutdown to some “gray market” selling of Heydude styles on Amazon by distributors that has hurt the brand’s average selling prices.

In Q2, the two footwear businesses reported total revenues of $1,072,367,000 versus $964.6 million. Direct-to-consumer revenues rose by a reported 26.0 percent but wholesale revenues (+0.2%) were essentially flat. Gross margin increased by 630 basis points to 57.9 percent, ebit rose by 29 percent year-over-year to $277.2 million, and profit was up by 32.5 percent to $212.4 million for the period ended June 30.

Crocs’ brand revenues increased by 15 percent in constant currency to $833 million. North America brand sales rose by 12.5 percent to $474.6 million. At Heydude, d-t-c sales increased by 30 percent to $90.6 million but wholesale revenues were down by 8.4 percent to $148.8 million against a pipeline fill in the year-ago quarter. Due to the opening of strategic U.S. wholesale accounts and elimination of non-strategic accounts in 2022, the group contends the brand’s wholesale comparable sales will be challenging in FY23. In Q2, the Heydude brand moved to the eighth-most popular brand from 15^th a year ago, according to data from Circana, and is a top casual brand for U.S. men and women.

With the results, Crocs updated its FY23 guidance. The company is now forecasting 12.5 to 14.5 percent total revenue growth with the Crocs brand up 12 to 13 percent and Heydude increasing by 3.5 to 7.5 percent on a pro forma basis and by 14 to 18 percent on a reported basis, down from up mid-20s in early June.