Crocs’ HeyDude segment saw Q1 revenue decline 12%, pressuring margins and offsetting strong cash flow from the core brand.
Crocs (NASDAQ: CROX) reported a 12% decline in HeyDude segment revenue for the first quarter, extending a trend that led to a $737 million impairment charge last year. The struggling brand, which accounts for 18% of total revenue, trails the core Crocs brand by 15 percentage points in gross margins, weighing on overall performance.
The core Crocs brand, contributing over 80% of revenue, continues to generate strong free cash flow. Direct-to-consumer sales grew 13% in Q1, improving profitability as the company shifts away from wholesale. International revenue now represents 55% of segment sales, up from 51.5% year over year, with growth in China and India offsetting North American saturation concerns.
HeyDude’s wholesale channel collapsed, with sales down 25% as Crocs works to reduce excess inventory. The brand’s struggles contrast with the core brand’s resilience, keeping investor focus on a potential turnaround.