2023 ‘Off to a Great Start’ Led by North America Momentum – Sourcing Journal
After reporting record results in 2022, Crocs has hit the ground running in 2022.
“The quarter is off to a great start,” said Crocs CEO Andrew Rees during a session today at the UBS Global Consumer and Retail Conference in New York City. “And 2023, while there is much uncertainty in front of us, is also off to a great start. That great start is really driven a lot by innovation and new product introductions.”
In 2022, Crocs Inc. achieved about $3.6 billion in revenues, an increase of about 53.7% over 2021. Crocs brand revenues were $2.7 billion, up 19% on a constant currency basis. Hey Dude revenue for 2022 exceeded initial expectations and reached $986.2 million for the full year. (The figure includes the period in 2022 before Crocs acquired the brand.) In Q4, Crocs Inc. revenues were $945.2 million, up 61.1% from the same period last year.
While Crocs was a major beneficiary of the comfort trends that took root in footwear throughout the pandemic, Rees said the company has managed to sustain that momentum, even as more people return to offices and live events. Thus far in Q1, demand for the Crocs and recently acquired Hey Dude brand is still strong, he said.
In particular, DTC sales perfomance in North America surpassed the brand’s initial conservative outlook, which expected more consumer resistance.
“It is clear the consumer, while they may be overall worried about the recession, worried about interest rates, worried about rising energy costs, are still buying in the footwear category,” Rees said. “The footwear category is doing well. And in particular, they are still buying Crocs and Hey Dude.”
Rees echoed statements from the company’s fourth quarter earnings call last month and said Crocs is focused on sandals, international growth and innovation in both product and marketing.
During the presentation, Rees, noted the new product innovations and collaborations that are drumming up excitement in 2023, such as the Salahe Bembury x Crocs Pollex slide, the Crocs Brooklyn flip and the Hey Dude Sirocco sneaker. He also highlighted marketing campaigns centered on Hello Kitty & Friends x Crocs and the Houston Livestock Show and Rodeo.
“We believe a strong start to the year is being fueled by significant new product introductions and collaborations, factors that add visibility to maintaining good performance throughout 2023,” wrote Baird analyst Jonathan Komp in a note recapping the presentation.
While the company’s clog business makes up the majority of sales for the brand, Rees also highlighted the continued push into the sandal market. In 2022, clogs were 77% of brand revenues, sandals were 12% and Jibbitz grew 27% to become 8% of brand revenues.
“[The sandal category] provides the consumer another entry into the Crocs brand,” Rees said. “So a consumer that might not think that clog is for them can get buy into the Crocs brand experience, our comfort benefits and the incredible value that we offer, through purchasing a sandal.”
The encouraging update comes as some other footwear retailers and brands report a similarly upbeat consumer as of late. Skechers CFO John Vandemore also noted strong consumer trends during a session at the UBS conference. Caleres president and CEO Jay Schmidt noted in a call with analysts this week that sales in the Famous Footwear channel were slow at the start of Q4 but picked up in mid-December and exceeded expectations in the last six weeks of the quarter. Dick’s Sporting Goods’ CEO also noted this month that the chain’s strong Q4 results highlighted a healthy consumer that wants to keep spending on active and wellness.