Crocs bought a little-known Italian shoe brand. Wall Street doubted it, but teens have been quietly obsessed with it for years.
Crocsannounced in December it was buying shoe brand Hey Dude, shares slumped 12%.
- But the brand — known for its comfortable, lightweight
shoes— has legions of diehard fans.
When Crocs announced in December it was buying Hey Dude, Wall Street had doubts.
The stock immediately plunged 12% as investors questioned why Crocs was dropping $2.5 billion on a little-known Italian shoe company.
But Crocs perhaps knew something investors didn't: Hey Dude, a brand known for its comfortable, lightweight shoes that arrive in biodegradable packaging, has been quietly amassing legions of Gen Z fans.
According to Piper Sandler's latest biannual survey of US teens, Hey Dude ranked among teens' top 10 favorite shoe brands for the second survey in a row. Back in 2019, Hey Dude ranked 54th among the teens surveyed — by 2020, it had jumped to 17th. In December, Piper Sandler called Hey Dude one of the fastest-rising brands it tracks, according to CNBC.
Crocs CEO Andrew Rees told CNBC at the time that buying Hey Dude was a way to "add another brand, which has its own icon," rather than diversify away from Crocs' ubiquitous clog.
The Hey Dude acquisition closed in February, and Crocs said then that it expects the brand will bring in roughly $750 million in revenue in 2022. Crocs plans to build Hey Dude into a $1 billion brand by 2024 by expanding its US distribution, expanding its global customer base, and adding new products to its lineup, the company said in an investor presentation.
In January, UBS analysts wrote that Crocs' 2022 outlook should boost investor sentiment, since "it should show the market CROX is not buying Hey Dude because its core Crocs business is slowing."
So, what makes Hey Dude so popular?
Hey Dude, founded in 2008 by Alessandro Rosano, began with a single style, a slip-on shoe called the Wally.
Hey Dude's fans say its shoes are lightweight, supportive, and comfortable — much like Crocs — and made with sustainability in mind. The shoes are made using recycled cork, plastic, and leather, and they're sent to customers in packaging made from cornstarch.
Hey Dudes are sold online and at national retailers like Journey's and Buckle. The Wally and the women's alternative, the Wendy, costs $60 while the brand's more expensive boot styles cost between $80 and $90.
It seems as though part of the brand's popularity can be attributed to TikTok — the platform is home to hundreds of videos customers showing off their collections of Hey Dudes.
@alondrardz_ After so long #fypシ #foryoupage #heydudeshoes ♬ i hate u slowed - xxtristanxo
Some fans have shared videos of their bridal and groomsmen parties wearing Hey Dude shoes at their wedding, while others have started customizing the upper part of the shoe with leather patches or brand logos.
@bellesandshotgunshells #crownroyal #crownheydudes #heydudeshoes #heydude #custom #customheydudes #smallbusiness #PonderWithZion #MAKEYOURMOVE #fyp #boutique ♬ Touch Down - MUFF
Many of the videos are tagged with US states like Florida or Texas, which makes sense: Crocs' Rees told CNBC in December that 95% of the company's sales are within the US and that the "nucleus" of Hey Dude's popularity is in the Midwest and the South.
"It has not spread to the coast as much as some other companies would and that's our opportunity," he said. "We think it has far more potential both here in the US and also globally."
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