Crocs Bets on Sandals to Fuel Growth After Hitting Record 2022 Revenues
Shares for Crocs were up 4.4% at market close on Thursday after the footwear brand posted record yearly results touting high consumer demand globally for the brand.
The Broomfield, Colo.-based company reported revenues in the fourth quarter of $945.2 million, an increase of 61.1% from the same period last year. For the full fiscal year, net revenue was a record $3.6 billion, an increase of 53.7% over 2021.
By brand, Crocs brand revenue for the year were $2.7 billion, increasing 19% on a constant currency basis. And at the Hey Dude brand, which the company has now owned for a full year, revenue for 2022 exceeded initial expectations and reached nearly $1 billion on a pro forma basis.
During the fourth quarter, Crocs said it sold 27 million pairs of shoes, an increase of 20.8% over last year, with an average selling price of $23.95, a 6.8% decline on a reported basis.
For the full year, clogs were 77% of brand revenues, sandals were 12% and Jibbitz grew 27% to become 8% of brand revenues.
Looking forward, the company expects another year of robust revenue growth in 2023. CEO Andrew Rees said on the company’s earnings call on Thursday that Crocs is focused on three long-term growth drivers moving into 2023 – sandals, international and innovation in both product and marketing.
“Sandals, an important growth initiative for Crocs, allowing us to extend into the adjacent $30 billion global sandal category, where we believe our molded technologies, accessible price points, strong go-to-market will allow us to compete effectively in a relatively fragmented market,” Rees told analysts on the call.
“The category also provides an additional entry point to the Crocs brand for consumers who may not choose to engage with the clog,” the CEO continued. “We know our sandals resonate with consumers since satellite consideration is now on par with that of clogs. And we already have a sizable $310 million sandal business.”
Within sandals, Rees noted that Crocs has refined its focus on four subcategories: Everyday, Style, Street/Sport and Adventure. According to the CEO, the Everyday category offers broad-reaching classics for everyone and includes its personalizable slides, two straps and flip flops. The Style category is female-centric, trend-driven and includes styles such as the Brooklyn, Crush and MegaCrush. The Street/Sport category is rooted in street style with a focus on men’s styles and includes its new Echo and Mello franchises. Finally, the Adventure category has functional design for the whole family and includes our All-Terrain and Swiftwater franchises.
“We’re incredibly confident in sandal growth in 2023, given planned newness and a significant increase in marketing allocated to sandals and the strong Crocs brand trajectory in important sandal markets such as India and Southeast Asia,” Rees said. “With respect to newness in our Style category, we’re planning additional height and new uppers in our popular Brookland franchise. In our Street/Sport category, we continue to use innovative technology in our Mello franchise, and we’ll launch a new flip during the year.”
With all this in mind Rees noted that sandals are expected to be Crocs fastest growing product category in 2023, reaching approximately $400 million in sales.
As for what the company expects for the full fiscal year 2023, the company released new guidance on Thursday. The company expects revenue growth of 10% to 13% compared to 2022, resulting in full year revenues of approximately $3.9 billion to $4.0 billion at current currency rates.
“2022 was a transformational year as we integrated Hey Dude, but the Crocs and Hey Dude brands enter 2023 with incredible strength and momentum,” Rees added. “I’m confident in our brands, our team and our demonstrated ability to deliver sustainable growth, profitability and shareholder value.”
