Crocs(CROX) Prnewswire·2025-02-28 14:31Core Viewpoint - Crocs, Inc. has faced significant investor losses due to disappointing financial results for Q4 and FY 2024, primarily attributed to the performance of its HEYDUDE operating segment, leading to a class action lawsuit regarding the company's disclosures about sales practices [1][3][7]. Financial Performance - On October 29, 2024, Crocs announced a decline in HEYDUDE revenue, projecting a decrease of 6% to 4% for Q4 2024 compared to the previous year, and a 14.5% decline for FY 2024 [7]. - The company revealed that it had excess inventories in the market and acknowledged having shipped too much product in 2022 and 2023 [7]. Management Statements - CEO Andrew Rees previously assured investors that wholesale customers were managing their inventory prudently and that Crocs would not force inventory onto them [2]. - However, it was later disclosed that much of HEYDUDE's revenue growth was due to aggressive stocking of wholesalers, not actual retail sales [4][5]. Class Action Lawsuit - A class action lawsuit has been filed against Crocs, alleging that the company misled investors by concealing the true nature of its revenue growth from the HEYDUDE segment [3][8]. - The lawsuit focuses on the period from November 3, 2022, to October 28, 2024, with a lead plaintiff deadline set for March 24, 2025 [3]. Revenue Growth Misrepresentation - Crocs management admitted that a significant portion of HEYDUDE sales in Q2 and Q3 2022 was "pipeline fill," indicating that these sales did not reflect immediate retail demand [5]. - The company later disclosed that pipeline fill during 2022 amounted to $220 million, leading to a lowered revenue growth outlook for HEYDUDE [6].