Glancy Prongay & Murray LLP (“GPM”), announces that it has filed a class action lawsuit in the United States District Court for the District of Delaware, captioned Shah v. Crocs, Inc., et al., Case No. 1:25-cv-00356, on behalf of persons and entities that purchased or otherwise acquired Crocs, Inc. (“Crocs” or the “Company”) (NASDAQ: CROX) common stock or call options between November 3, 2022 and October 28, 2024, inclusive (the “Class Period”). Plaintiff pursues claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).
Investors are hereby notified that they have until March 24, 2025 to move the Court to serve as lead plaintiff in this action.
IF YOU SUFFERED A LOSS ON YOUR CROCS INVESTMENTS, CLICK HERE TO INQUIRE ABOUT POTENTIALLY PURSUING CLAIMS TO RECOVER YOUR LOSS UNDER THE FEDERAL SECURITIES LAWS.
What Happened?
In February 2022, Crocs completed its acquisition of HEYDUDE, a footwear brand focusing on casual, comfortable, and lightweight footwear.
On April 27, 2023, Crocs 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. On this news, Crocs’ stock price fell $23.46, or 15.9%, to close at $124.32 per share on April 27, 2023, thereby injuring investors.
Then, on June 7, 2023, the Company revealed that over half of HEYDUDE’s third quarter 2022 wholesale revenue was the result of efforts to stock HEYDUDE products with Crocs’ major retailers. On this news, Crocs’ stock price fell $4.52, or 3.7%, to close at $116.57 per share on June 8, 2023.
Then, on July 27, 2023, Crocs admitted that its deliberate overstocking accounted for approximately $220 million of HEYDUDE’s $896 million in revenue for the period directly following the closing of the acquisition. The Company also announced that it was reducing HEYDUDE’s revenue growth guidance for the remainder of 2023. On this news, Crocs’ stock price fell $17.50, or 14.6%, to close at $102.30 per share on July 27, 2023.
On August 16, 2023, Williams Trading LLC (“Williams Trading”) significantly decreased its price target on Crocs from $145 per share, to $113 per share, due to information its primary Crocs analyst had uncovered as a result of his discussions with several HEYDUDE wholesale accounts regarding wholesaler inventory levels and the pricing for HEYDUDE products. Among other things, Williams Trading highlighted elevated HEYDUDE inventory levels at approved retailers and the “overabundance” of HEYDUDE products on Amazon.com at below suggested retail price. On this news, the Company’s stock price fell $3.79 per share, or 3.9%, from a close of $97.80 per share on August 15, 2023, to close at $94.01 per share on August 16, 2023.
On November 2, 2023, Crocs announced its financial results for the third quarter of 2023, and revealed that HEYDUDE’s “[w]holesale revenues declined 19.4% to $146.5 million following prior year pipeline fill and as our wholesale partners were more cautious on at-once orders.” As a result of the prior overstocking of HEYDUDE’s products, Crocs further slashed its 2023 HEYDUDE revenue growth guidance from between 14% and 18%, to between only 4% and 6% (even though HEYDUDE DTC sales continued to grow 14.6% during the quarter). In connection with this announcement, Chief Executive Officer Andrew Rees admitted that HEYDUDE “inventory was too high” and that the Company “is proactively lowering in-channel inventories” and “working with our strategic accounts to clean up that inventory and putting them in a strong sell-through and a more profitable position.”
On this news, the Company’s stock price fell $4.62 per share, or 5.3%, from a close of $87.41 per share on November 1, 2023, to close at $82.79 per share on November 2, 2023.
On April 16, 2024, the Company announced its separation from Rick Blackshaw, Executive Vice President and Brand President for HEYDUDE. On this news, the Company’s stock price fell $2.68 per share, or 2.2%, from a close of $123.36 per share on April 15, 2024, to close at $120.68 per share on April 16, 2024.
Then, on October 29, 2024, the Company hosted an earnings call, during which Rees disclosed that HEYDUDE revenues fell below the Company’s expectations and revealed 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.” Rees attributed HEYDUDE’s struggles to “excess inventories in the market” and admitted that “we’ve made good progress, but frankly, not quite all the progress we want to make” in resolving the inventory issue. Moreover, Rees admitted that “if you think about this sort of [20]22 into [20]23 timeframe, in retrospect, we absolutely shipped too much product[],” calling that decision “wrong” and highlighting that a lack of product demand exacerbated the issue.
On this news, the Company’s stock price fell $26.47 per share, or 19.2%, from a close of $138.05 per share on October 28, 2024, to close at $111.58 per share on October 29, 2024.
What Is The Lawsuit About?
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose: (1) the nature and sustainability of HEYDUDE’s revenue growth by concealing that 2022 revenue growth was driven, in large part, by the Company’s efforts to stock third-party wholesalers and retailers following the February 2022 acquisition of HEYDUDE; (2) that as the Company’s retail partners began to destock this excess inventory, waning product demand further negatively impacted the Company’s financial results; and (3) that, as a result, Defendants’ representations about the Company’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis.
If you purchased or otherwise acquired Crocs common stock or call options during the Class Period, you may move the Court no later than March 24, 2025 to ask the Court to appoint you as lead plaintiff.
Contact Us To Participate or Learn More:
If you wish to learn more about this action, or if you have any questions concerning this announcement or your rights or interests with respect to these matters, please contact us:
Charles Linehan, Esq.
Glancy Prongay & Murray LLP
1925 Century Park East, Suite 2100
Los Angeles California 90067
Email: shareholders@glancylaw.com
Telephone: 310-201-9150
Toll-Free: 888-773-9224
Visit our website at www.glancylaw.com.
Follow us for updates on LinkedIn, Twitter, or Facebook.
If you inquire by email, please include your mailing address, telephone number and number of shares purchased.
To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250324138296/en/
Contacts
Glancy Prongay & Murray LLP
1925 Century Park East, Suite 2100
Los Angeles, CA 90067
Charles Linehan
Email: shareholders@glancylaw.com
Telephone: 310-201-9150
Toll-Free: 888-773-9224
Visit our website at: www.glancylaw.com.
