Crocs Inc to buy casual shoemaker Heydude for US$2.5bn
One analyst, Zachary Warring at CFRA research, has described it as a large deal for Crocs and suggested it may make investors nervous – albeit on Christmas Eve there’s no price action in New York to test the assertion
Crocs Inc is buying privately-owned HEYDUDE for US$2.5bn, as the rubber clogs maker capitalises on the pandemic-driven demand for casual footwear.
Some US$2.05bn will be paid in cash plus US$450mln worth of Crocs shares, issued to HEYDUDE chief executive and founder Alessandro Rosano.
HEYDUDE, founded in Italy in 2008, is known for its lightweight casual shoes and some 43% of sales come from online platforms.
Crocs expect HEYDUDE to generate US$570mln in revenue this year, and, it will be “immediately accretive”.
Andrew Rees, Crocs chief executive, described the new addition as a “high-growth, highly profitable brand”.
“We believe HEYDUDE’s casual, comfortable, and lightweight products are aligned to long-term consumer trends and are a perfect fit for Crocs,” Rees said.
The customer trends highlighted somewhat euphemistically by Rees is, of course, the unprecedented shift to work-from-home amidst the Covid-19 pandemic – which has seen consumers favour comfort over style.
In 2020, Crocs saw a record US$1.39bn of revenue, and this year is forecast to show 62%-65% of further growth to over US$2.25bn.
Rees indicates that Crocs will now use its market position to drive HEYDUDE sales further.
He has also noted that HEYDUDE has avoided production constraints – seen elsewhere in the industry – due to factory closures in Vietnam because its footwear is predominantly made in China.
“We intend to leverage our global presence, best-in-class marketing, and scale infrastructure to build upon HEYDUDE’s strong foundation and create significant shareholder value.
“We truly admire the business that founder Alessandro Rosano has built and are honored to welcome the HEYDUDE team to Crocs.”
Rosano, meanwhile, added: “We are proud of the brand we built and are honored to become a part of Crocs, a company perfectly positioned to take HEYDUDE to the next level.
“We have long admired the Crocs business and are excited to have them bring HEYDUDE’s comfort, craftsmanship, and style to consumers globally.”
One analyst, Zachary Warring at CFRA research, has described it as a large deal for Crocs and suggested it may make investors nervous – albeit on Christmas Eve there’s no price action in New York to test the assertion.
“I think in the short-term it will have an impact on margins as they merge and streamline processes,” Warring said in comments quoted by Reuters.
Read More: Crocs Inc to buy casual shoemaker Heydude for US$2.5bn