Will HeyDude Trip Up Crocs’ Winning Streak?

HeyDude is counting on Sydney Sweeney to give its image a makeover.

In August, the brand announced that the “Euphoria” actress would be its new global spokesperson, or “Director of Dude,” and will front several campaigns designed to showcase “who she really is behind the cameras.” The move was orchestrated by HeyDude’s new president, Terence Reilly, who joined the business in April after serving as brand president of Stanley, the company behind the sleeper-turned-viral-sensation tumblers popular with Gen-Z.

The goal is to help the brand alter its reputation as a maker of loafers for guys who prioritise comfort above style, a topic that’s sparked online debates and a write up in GQ.

HeyDude certainly needs something to change. When Crocs Inc. acquired HeyDude in 2022 for $2.5 billion, it believed the loafers brand would fit perfectly into its empire of casual, comfortable footwear. The goal, according to the company, was to make HeyDude a $1 billion dollar brand by 2024.

But those hopes have since dwindled, with HeyDude now reporting double-digit sales declines for four consecutive quarters. In October, Crocs lowered its guidance for the brand, forecasting a roughly 14.5 percent drop in sales for 2024 compared to last year. In an interview, chief executive Andrew Rees admitted the company expanded HeyDude too aggressively beyond its core market, only to find the audience wasn’t there.

“We made a few mistakes,” he said. “We were trying to keep up with demand. And I think nobody really fully understood where demand was.”

HeyDude’s troubles have mostly been overshadowed by the explosive success during the pandemic of Crocs, which make up approximately 75 percent of Crocs Inc.’s revenue. But its turnaround is a top priority as growth at Crocs slows. The craze for the clogs has outlasted some other Covid-era trends, with the brand’s revenue increasing 13 percent to just over $3 billion last year. But the company predicts revenue will rise a more modest 8 percent this year. And young shoppers in particular look to be cooling on the brand. According to the fall 2024 edition of Piper Sandler’s biannual Taking Stock With Teens survey, upper-income teens ranked Crocs as one of the top fashion trends that are “on the way out.”

Now, the company is borrowing from the celebrity-centred, collaboration-heavy turnaround playbook that made Crocs successful in order to refresh HeyDude. The brand will be allocating more resources to marketing and is increasing its efforts to court young female consumers, who Rees sees as “big influencers of culture.” The business will also restructure its distribution, with a strong focus on direct-to-consumer channels, and is making key hires in branding and innovation. Last Tuesday, it announced its hire of Steven Smith, who has held roles at Adidas, Nike and most recently at Yeezy, where he created the highly coveted Yeezy Boost 700 Runner, to lead design at Crocs and HeyDude.

“Our number one job is to increase the relevance and the receptivity and the desire for the Wally and the Wendy [silhouettes],” said Rees, referring to the core styles that make up the bulk of the brand’s sales. “And to get the brand more embedded in the cultural psyche.”

Correcting Course

Crocs’ purchase of HeyDude felt like a no-brainer for Rees at the time. Founded in 2008, HeyDude always placed comfort at the centre of its brand messaging, as Crocs had with its colourful foam clogs. HeyDude also shared shelf space at the same retailers as Crocs, making understanding the brand’s distribution network seamless. And for the parent company and its investors, having one, albeit successful, brand to count on felt precarious. HeyDude offered a chance at diversifying its revenue streams.

Although HeyDude had struggled to garner interest beyond its core markets of the US Midwest, Texas and Florida, Crocs — a turnaround success itself — felt confident it would be able to scale the brand and “create significant shareholder value,” Rees said in a statement announcing the deal in 2021. It quickly set about revamping HeyDude’s logo and messaging, introducing a new tagline “Good to Go-to,” and hoping to position the label as quirky and relatable. Collaborations followed with a range of companies, including motorsport organisation Nascar, beer brand Corona and toy line My Little Pony.

But the brand’s performance suffered as Crocs oversupplied the market with HeyDude products while not dedicating enough marketing resources to aid in customer acquisition beyond the regions where it was already a success, Rees said.

HeyDude’s plan is to tap into the same consumer segment that’s driven Crocs’s success: Gen-Z. Sydney Sweeney is its way in.

“The reputation of the brand is sort of middle-aged, male-centric,” said Rees. “We thought she would be really relevant in terms of helping us appeal to young female consumers, as well as continue to enforce our reputation with a male consumer base.”

While Sweeney may allow HeyDude to appeal to a new set of customers, her extensive roster of ambassador roles, ranging from hair care label Kerastase to luxury house Miu Miu, risks diluting the exclusivity and impact of her endorsement, making her association with any single brand potentially less effective in standing out.

The brand is not solely relying on Sweeney to bring the heat, however. It has also worked with musician Jelly Roll and actor Chase Stokes. (Rees said the Jelly Roll collection sold out in 60 seconds.) It has leaned heavily into social media marketing, working with influencers on TikTok. It is doubling down on its collaboration strategy as well, inking licensing deals with brands across industries, including Coca-Cola, Margaritaville and animated series SpongeBob Squarepants.

The hope is that the brand will generate mass appeal, a playbook Crocs used when it partnered with luxury brand Simone Rocha and fast-food giant McDonalds.

“We’re trying to create affinity with additional consumer groups,” said Rees.

No Easy Answers

Sceptics question how effective the plan will prove.

“I think they see this brand as cheeky with a point of view that could resonate with young consumers,” said Anna Andreeva, managing director and senior analyst at Piper Sandler. “I don’t think the consumer necessarily sees it as such … I don’t foresee somebody actually wanting to buy a HeyDude Coca-Cola collab shoe at $75.”

The larger issue is that the brand is not producing products customers want to buy, according to Jessica Ramirez, senior analyst at Jane Hali and Associates.

“If a product isn’t good, an ambassador isn’t going to move the needle,” said Ramirez. “The issue with HeyDude is the shoes just aren’t appealing.”

While on the surface, HeyDude and Crocs may seem very similar, they occupy different segments of the footwear market, she added. Crocs has been able to carve out a niche for itself as a casual and kitschy shoe whose main competitor would be a label like Birkenstock. HeyDude’s loafer-sneaker “walking shoe” faces stiff competition from footwear labels Adidas, Nike, Hoka and On, as well as from dressier options like Cole Haan and Vince.

“A lot of these brands are coveted and are producing exciting silhouettes,” said Ramirez. “HeyDude would need to follow suit in order to compete.”

The brand’s recent hire of Smith is an opportunity to produce innovative products and expand the brand’s opportunities in the US, said Rees. In an August earnings call, he said the brand will “make calculated bets” with sneaker and boot styles.

Piper Sandler’s Andreeva said it could be necessary for HeyDude to diversify beyond its Wendy and Wally silhouettes. But Rees emphasised that the brand won’t deviate too far from its core offering.

“The flip side of having more competition is also a way bigger market,” said Rees. “We stand out from a functional perspective — very lightweight, easy on and off, very comfortable.”

Samuel Poser, equity analyst at Williams Trading, said the product is not as much of a concern as the brand’s management.

“A lot of people thought Uggs weren’t appealing, but that didn’t stop Ugg from doing well,” he said. “You can always create demand, if the brand is managed well.”

To better control the brand image, Rees plans to streamline distribution. Due to the overly eager rush into new markets a few years ago, a number of HeyDude products landed in off-price retailers. Today the brand is investing heavily into its direct-to-consumer channels, launching a fleet of “premium” outlet stores geared towards brand storytelling and has raised its average selling prices.

Earlier this year, HeyDude also launched on TikTok Shop with the hope of engaging Gen-Z more directly. Rees noted that the brand’s following on TikTok (over 690,000) surpassed its Instagram following (631,000) in the last quarter.

It’s still facing an uphill march, though. Retail analytics firm Trendalytics said Google searches for HeyDude have continued to trend downward since 2022. Ramirez noted that the brand could stand being a bit more youthful in other ways, such as staging pop-ups to create excitement. For a young brand, “it hasn’t been operating like one,” she said.

Despite some progress, Rees told investors in October that it would take longer than initially planned for the business to recover. But he remains optimistic.

“It was a relatively bold move and bold investment, but we really like how it panned out,” he said.

For now, however, Sydney Sweeney has her work cut out for her.