CROX REMINDER: Kessler Topaz Meltzer & Check, LLP Urges CROX Investors with Losses to Contact the Firm

RADNOR, Pa., Jan. 28, 2025 /PRNewswire/ -- The law firm of Kessler Topaz Meltzer & Check, LLP informs investors that the firm has filed a securities fraud class action lawsuit against Crocs, Inc. (NASDAQ: CROX) ("Crocs" or the "Company") on behalf of investors who purchased or otherwise acquired Crocs common stock between November 3, 2022, and October, 28 2024, inclusive (the "Class Period").  This action, captioned Carretta v. Crocs, Inc., et al., Case No. 1:25-cv-00096, was filed in the United States District Court for the District of Delaware.

Important Deadline Reminder:  Investors who purchased or otherwise acquired Crocs common stock during the Class Period may, no later than March 24, 2025, move the Court to serve as lead plaintiff for the class. 

If you suffered Crocs losses, you may CLICK HERE or copy and paste the following link in your browser: https://www.ktmc.com/new-cases/crocs-inc?utm_source=PR&utm_medium=link&utm_campaign=crx&mktm=r 

You can also contact attorney Jonathan Naji, Esq. of Kessler Topaz by calling (484) 270-1453 or by email at [email protected]. 

DEFENDANTS' MISCONDUCT

Before the beginning of the Class Period, in February 2022, Crocs completed its acquisition of HEYDUDE, a footwear brand focusing on casual, comfortable, and lightweight footwear.  The Company reports HEYDUDE sales in two segments: direct-to-consumer ("DTC") sales; and wholesale sales (which include sales to major retailers).  Despite the fact that HEYDUDE was only acquired by Crocs in mid-February 2022, HEYDUDE accounted for approximately 25% of the Company's total revenues in 2022.    

During the Class Period, Defendants misled investors by concealing the fact that the strong revenue growth exhibited by HEYDUDE 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 ("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.

Thereafter, on June 7, 2023, and July 27, 2023, Defendants made additional disclosures which revealed that Crocs had intentionally made significant sales to the Company's major retail and wholesale partners, rather than gradually increasing third-party HEYDUDE inventory over several years to reflect actual retail demand for the product.  These disclosures caused the price of Crocs common stock to decline.  In addition, on August 16, 2023, the price of Crocs common stock declined nearly 4% when Williams Trading LLC significantly decreased its price target on Crocs from $145 per share, to $113 per share, due to information its primary Crocs analyst had uncovered as a result of his discussions with several HEYDUDE wholesale accounts regarding wholesaler inventory levels and the pricing for HEYDUDE products.  Among other things, Williams Trading LLC highlighted elevated HEYDUDE inventory levels at approved retailers and the "overabundance" of HEYDUDE products on Amazon.com at below suggested retail price.

Then, 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. 

Throughout the remainder of the Class Period, Defendants continued to downplay the impact of the Company's overstocking of third-party wholesalers and retailers following the February 2022 acquisition of HEYDUDE.  After the Company's retail partners began to destock this excess inventory, Defendants further misled investors by concealing that waning product demand would significantly exacerbate the negative impact on the Company's financial results. 

Finally, 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 held that same day, 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. 

WHAT CAN I DO?

Crocs investors may, no later than March 24, 2025, move the Court to serve as lead plaintiff for the class, through Kessler Topaz Meltzer & Check, LLP or other counsel, or may choose to do nothing and remain an absent class member. Kessler Topaz Meltzer & Check, LLP encourages Crocs investors who have suffered significant losses to contact the firm directly to acquire more information.

CLICK HERE to sign up for the case or GO TO: https://www.ktmc.com/new-cases/crocs-inc?utm_source=PR&utm_medium=link&utm_campaign=crx&mktm=r

WHO CAN BE A LEAD PLAINTIFF?

A lead plaintiff is a representative party who acts on behalf of all class members in directing the litigation.  The lead plaintiff is usually the investor or small group of investors who have the largest financial interest and who are also adequate and typical of the proposed class of investors. The lead plaintiff selects counsel to represent the lead plaintiff and the class and these attorneys, if approved by the court, are lead or class counsel. Your ability to share in any recovery is not affected by the decision of whether or not to serve as a lead plaintiff.

ABOUT KESSLER TOPAZ MELTZER & CHECK, LLP    

Kessler Topaz Meltzer & Check, LLP prosecutes class actions in state and federal courts throughout the country and around the world.  The firm has developed a global reputation for excellence and has recovered billions of dollars for victims of fraud and other corporate misconduct. All of our work is driven by a common goal: to protect investors, consumers, employees and others from fraud, abuse, misconduct and negligence by businesses and fiduciaries.

For more information about Kessler Topaz Meltzer & Check, LLP please visit www.ktmc.com.

CONTACT:

Kessler Topaz Meltzer & Check, LLP
Jonathan Naji, Esq.
280 King of Prussia Road
Radnor, PA 19087
(844) 887-9500 (toll free)
[email protected]

May be considered attorney advertising in certain jurisdictions. Past results do not guarantee future outcomes.

SOURCE Kessler Topaz Meltzer & Check, LLP