A securities class action has been filed against Crocs, Inc. (CROX) on behalf of a class of all persons and entities who purchased or otherwise acquired Crocs common stock between November 3, 2022 through October, 28 2024. This case has been filed in the USDC – DE.
The complaint alleges that during the Class Period, Defendants misled investors by concealing the fact that the strong revenue growth exhibited by the Company’s HEYDUDE brand following its acquisition in February 2022, was largely driven by a conscious decision on the part of Crocs management to aggressively stock its third-party wholesaler pipeline with HEYDUDE products, regardless of the level of retail demand being experienced by those wholesalers. Defendants pursued this overstocking strategy despite assurances to investors by Defendant Andrew Rees, the Company’s Chief Executive Officer, that Crocs would not “play the game of forcing inventory into [wholesalers] and getting them overstocked.” As a result, unbeknownst to investors, the Company reported HEYDUDE revenue numbers in 2022 that were not indicative of actual retail demand for HEYDUDE shoes and, over the longer term, were entirely unsustainable. Moreover, after the Company’s retail partners began to destock this excess inventory, Defendants further misled investors by concealing that waning product demand for HEYDUDE shoes would further impact the Company’s financial results.
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.