👉 Background: Crocs is the footwear equivalent of a mullet - not particularly attractive, but extremely popular. It offers the comfort element and more recently specialised in major collabs (J Biebs, Bad Bunny and even Pringles), which has seen it regrow its cult following.
👉 What happened: Crocs has beat its quarterly growth expectations with its sales jumping 15% across the business, including a big jump in its Jibbitz revenue too.
👉 What else: But, there is one part of the business that is dragging its feet - Hey Dude. This is the (also) ugly-shoe company, which was acquired by Crocs in 2022. Hey Dude suffered a 17% drop in sales last quarter. And Crocs is expecting Hey Dude’s revenue to decline a further 10%.
💡Diversification is a common strategy for companies looking to expand their market presence…and reduce dependency on a single product line.
💡Crocs knows all-too-well what can happen when your on-trend brand isn’t popular anymore. It suffered this fate in 2016 before rising from the ashes. And this is one of the reason why Crocs acquired Hey Dude for $2.5 billion, to diversify their brand portfolio.
💡While “functional footwear”, like Hey Dude, was booming during the pandemic, not all of these brands have continued to see success. Think about AllBirds, another comfy shoe that was less-ugly, which has seen its market cap drop from $4 billion USD to just $100 million USD. So now, Crocs will have to work extra-hard to bring Hey Dude back to its former glory.
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