Kessler Topaz is investigating potential claims on behalf of purchasers of Crocs, Inc. (NASDAQ: CROX) ("Crocs") common stock between August 4, 2022 and October 28, 2024, related to potential violations of the federal securities laws.
Crocs, designs, develops, manufactures, markets, distributes, and sells casual lifestyle footwear and accessories for men, women, and children under Crocs and HEYDUDE Brand in the United States and internationally. Our investigation is focused on whether Defendants misled investors by concealing the fact that the strong revenue growth exhibited by the company’s HEYDUDE brand following its acquisition in February 2022 was driven primarily by a channel stuffing scheme in which Crocs aggressively stocked its third-party wholesaler pipeline and generated revenue that was not indicative of actual retail demand for HEYDUDE shoes and was unsustainable.
Investors began to learn the truth about the nature and unsustainability of HEYDUDE’s revenue growth on April 27, 2023, when, during the company’s first quarter 2023 earnings call, Defendants revealed that much of HEYDUDE’s revenue growth in 2022 was attributable to efforts to stock the company’s wholesale partners with HEYDUDE products and was not necessarily indicative of actual downstream retail sales.
Then on November 2, 2023, Crocs announced its financial results for the third quarter of 2023 and revealed that HEYDUDE wholesale revenue declined 19.4% year-over-year. On this news, the price of Crocs common stock declined $4.62 per share, or more than 5%, from a close of $87.41 per share on November 1, 2023, to close at $82.79 per share on November 2, 2023.
On October 29, 2024, Crocs reported its financial results for the third quarter of 2024. On the companion earnings call, Defendants explained that, “HEYDUDE revenues contracted 17%, slightly below our expectations” for the third quarter, and disclosed that “HEYDUDE’s recent performance and the current operating environment are signaling it will take longer than we had initially planned for the business to turn the corner.” Furthermore, Defendants downwardly revised the company’s outlook for HEYDUDE for the remainder of 2024, “lowering our revenue range from down 8% to 10% to down approximately 14.5% based on lower than previously assumed sellouts in both wholesale and digital.” Additionally, for the fourth quarter of 2024, Defendants told investors that Crocs expected further sales declines rather than the growth that had been promised, stating: “we expect revenue to be down between 4% and 6% in the quarter, below the former implied range of up low to mid- teens.” On this news, the price of Crocs common stock declined $26.47 per share, or nearly 20%, from a close of $138.05 per share on October 28, 2024, to close at $111.58 per share on October 29, 2024.
If you have any questions or would like to discuss this investigation, please contact Kessler Topaz Meltzer & Check, LLP: Jonathan Naji, Esq. (484) 270-1453 or via e-mail at info@ktmc.com, or fill out the form below.