Faruqi & Faruqi, LLP Securities Litigation Partner James (Josh) Wilson Encourages Investors Who Suffered Losses Exceeding $100,000 In Crocs To Contact Him Directly To Discuss Their Options
If you suffered losses exceeding $100,000 in Crocs between November 3, 2022 and October 28, 2024 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310).
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NEW YORK, Jan. 23, 2025 /PRNewswire/ — Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Crocs, Inc. (“Crocs” or the “Company”) (NASDAQ: CROX) and reminds investors of the March 24, 2025 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
Faruqi & Faruqi is a leading national securities law firm with offices in New York, Pennsylvania, California and Georgia. The firm has recovered hundreds of millions of dollars for investors since its founding in 1995. See www.faruqilaw.com.
As detailed below, the complaint alleges that the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (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.
In February 2022, Crocs completed its acquisition of HEYDUDE, a footwear brand focusing on casual, comfortable, and lightweight footwear. As is relevant here, the Company reports HEYDUDE sales in two segments: direct-to-consumer (“DTC”) sales; and wholesale sales (which include sales to major retailers). Even though HEYDUDE was only acquired by Crocs in mid-February 2022, HEYDUDE accounted for approximately 25% of the Company’s total revenues in 2022.
Investors began to learn the truth about the nature and unsustainability of HEYDUDE’s revenue growth on April 27, 2023, when Defendant Rees revealed during the Company’s first quarter 2023 earnings call 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, the price of Crocs common stock declined $23.46 per share, or nearly 16%, from a close of $147.78 per share on April 26, 2023, to close at $124.32 per share on April 27, 2023.
On July 27, 2023, Defendant Rees admitted that Crocs’s deliberate overstocking accounted for approximately $220 million of HEYDUDE’s $896 million in revenue for the period following the closing of the acquisition on February 17, 2022. Defendant Anne Mehlman, the Company’s Chief Financial Officer at the time, also announced that Crocs was reducing HEYDUDE’s revenue growth guidance for the remainder of fiscal 2023, to a range between 14% and 18%—substantially lower than previous guidance revenue growth in the mid-20s—effectively acknowledging that much of HEYDUDE’s purported growth was based upon Defendants’ decision to overstock wholesalers.
On this news, the price of Crocs common stock declined $17.50 per share, or nearly 15%, from a close of $119.80 per share on July 26, 2023, to close at $102.30 per share on July 27, 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, Defendant 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 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.
Then, on October 29, 2024, investors learned more about HEYDUDE’s prospects when the Company reported its financial results for the third quarter of 2024. During the accompanying earnings call, Defendant 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 price of Crocs common stock declined $26.47 per share, or approximately 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.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Crocs’ conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
To learn more about the Crocs class action, go to www.faruqilaw.com/CROX or call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310).
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