Crocs Inc.’s shares fell as much as 16 percent in US premarket trading after the seller of brightly coloured plastic clogs tempered growth expectations and warned of sales declines for its casual HeyDude brand.

Crocs’ sales growth in the third quarter, which includes the crucial back-to-school shopping period, remained flat. The company said it expects 2024 sales growth of 3 percent, the low end of its prior guidance of 3 percent to 5 percent. Dragging revenues was Crocs’ casual sneaker and loafer brand, HeyDude. The brand’s full year sales are expected to fall 14.5 percent compared to a year ago, lower than its previous guidance of down 8 percent to 10 percent.

“HeyDude’s recent performance and the current operating environment are signalling it will take longer than we had initially planned for the brand to turn a corner,” said chief executive officer Andrew Rees in a press release.

After a decade-long fallow period during the 2010s, Crocs regained relevance following a strategic move to target teens with endorsements from celebrities like Justin Bieber and Post Malone. Annual sales more than tripled over the last four years.

The shoemaker has run into trouble among schools across the US that are banning Crocs due to safety concerns and distractions. The company has said the school restrictions are “baffling.”

Crocs shares were up 47 percent for the year through Monday’s close, while the S&P 500 index has risen 22 percent.

By Julia Fanzeres

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Crocs to Buy Footwear Brand Heydude for $2.5 Billion

Crocs Inc said on Thursday it would buy privately owned footwear label Heydude for $2.5 billion in a cash-and-stock deal, as the rubber clogs maker looks to take advantage of the pandemic-led surge in demand for casual shoes.

Over the past 15 or so years, Shopify Inc. has established itself as the go-to for mom-and-pop businesses looking to set up shop online. Now, in a dramatic shift, the Canadian company is targeting larger companies and, in doing so, looking to wrest e-commerce customers from Salesforce Inc.

Shopify says it has lured hundreds of Salesforce clients, including big brands like Mattel Inc., Toys R Us and mattress seller Casper, and is encouraging other companies to “join the mass migration.” Shopify’s key selling point is lower prices for its suite of e-commerce services and it has been cheekily calling out Salesforce’s penchant for wining and dining potential clients.

“The reason most enterprise software is so expensive is because it takes so many steak dinners to put it in your hand,” Shopify chief operating officer Kaz Nejatian said in an interview.

Salesforce eagerly clapped back, saying its platform offers functions that Shopify doesn’t, including customer service, and can better handle traffic surges. “Anything’s cheaper if you narrow the use case to one thing and say, ‘Oh, we’re cheaper for this one thing,’” said Luke Ball, Salesforce’s senior vice president of product management. “We’re still the incumbent reigning champion in the space other companies are trying to break into.”

By targeting larger retailers, Shopify is hoping to turbocharge growth, which took a hit after the pandemic e-commerce boom fizzled. The company makes much of its money selling services to its customers and is betting that the order volume generated by bigger retailers like Mattel will help it grow more quickly than by relying on its existing base of mom-and-pops.

For years, Salesforce and Shopify peacefully co-existed. Better known for its customer management software, Salesforce entered e-commerce in 2016 with the $2.8 billion acquisition of Demandware. Now called “Commerce Cloud,” Salesforce says its clients include most top retailers, such as Saks Fifth Avenue. Customers also typically use other Salesforce products, meaning they can integrate the e-commerce tools with marketing and other functions, Ball said.

Salesforce also benefitted from a healthy pipeline of direct-to-consumer brands backed by venture capitalists concentrated around its San Francisco headquarters. The thought at the time was that the startups would quickly grow to the point where they needed Salesforce’s robust set of commerce and customer-relations software. Instead, many of them flopped, and a key new business pipeline dried up.

Today, the company’s commerce and marketing business is its slowest growing segment, and Shopify revenue eclipsed the business back in 2021. “They’re certainly a noticeable competitor in the space,” Ball said. “I think one would be head-in-the-sand to not see it.” Salesforce says it has been attracting Shopify customers, including Black Rifle Coffee Co., ReserveBar and Hasbro Inc.

Shopify built its business by making it easy for small businesses to quickly set up online stores. The Ottawa-based company constantly monitors industry trends and updates its software so online merchants can reach their customers on desktops, mobile devices and shopping apps without having to worry about the back-end technology. Shopify’s broad visibility into online transactions also helps sharpen its fraud detection tools.

Like Amazon, Shopify benefited from shoppers’ stampede online during the pandemic, but suffered once they returned to their regular shopping habits. The company also abandoned ambitions of building a logistics operation that would have helped it grow by selling more services to customers it already has. Without that, Shopify needs to find new clients.

In an effort to attract bigger customers, the company has been touting fees that it says are much cheaper than Salesforce’s. Scott Lux, executive vice president of global commerce and technology at clothier Esprit, says customers could save as much as 50 percemt over three years by switching. Shopify also has added new features that help it appeal to bigger customers, such as letting brands list as many products as they want and selling them on marketplaces and social media apps in addition to their own websites.

Mattel, which recently switched from Salesforce to Shopify, says its decision rested partly on the fact that fees are tied to traffic. While the toymaker experiences big spikes in demand for new products, such as collectible Hot Wheels, it doesn’t need that much capacity 24/7. Shopify’s flexible platform also lets Mattel customise pages for key products, including American Girl dolls, says Subramanian Kovilmadam, the company’s vice president of technology.

“Shopify has been extremely responsive to the complexities of Mattel’s needs,” he said. “By moving from a large, annual licensing fee model to a more flexible and transactional cost model, transitioning to Shopify has also resulted in cost savings for us.”

Salesforce’s Ball said the company is working on introducing more “pricing flexibility” for customers.

“Shopify has added enough capabilities over the last few years that have made it a viable option for even the biggest e-commerce merchants,” said Gil Luria, an analyst at D.A. Davidson & Co. who follows both companies. “At the same time, Salesforce is deemphasising its Marketing Cloud and focusing more on the Data Cloud, which leaves them vulnerable to losing e-commerce customers.”

Salesforce will still appeal to big businesses with annual sales of $300 million or more since it has more sophisticated tools, including the ability to run tests and see which marketing campaigns perform best so they can be refined in real time, Lux said. Shopify is gaining traction with businesses that aren’t quite that large and want to save money, he said, adding that a lot of the Shopify savings come because the tools are simpler to use and don’t require as much technology support staff from the client.

“Shopify is just maniacally focused on commerce, which has helped them stand out with efficiency,” he said.

By Spencer Soper and Brody Ford

Adidas reported strong third-quarter growth across most regions in a sign a revival plan led by chief executive Bjørn Gulden is starting to work.

The German sportswear group said Tuesday that currency-neutral revenue grew by double digits in most places, except North America, where dwindling sales of Yeezy sneakers are still weighing on the region. Group operating profit also jumped to €598 million ($646 million), from €409 million in the same period last year.

Earlier this month, Adidas raised its annual profit target for the third time, amid surging demand for its retro kicks. The company said it now expects to generate operating profit of around €1.2 billion, up from the previous forecast of around €1 billion.

Shares of Adidas rose as much as nearly 3 percent in early trading. The stock had risen 16 percent so far this year through Monday’s close. Rivals Nike and Puma have both posted losses in contrast.

Gulden took over Adidas in January 2023, shortly after the company cancelled its partnership with Ye, following a string of anti-semitic comments by the rapper and designer. Gulden’s plan for Adidas is to reduce the company’s previous reliance on the Yeezy brand, while refocusing the design of new footwear and apparel and streamlining its operations and costs.

His early bet on boosting popular retro products like Samba and Gazelle shoes is paying off, with Adidas shares outperforming cross-town rival Puma. Adidas is currently scaling up volumes for its 70s-era running shoes SL 72. The goal is to close the gap to Nike, which remains the industry leader despite its struggles.

All regions, sales channels and product divisions are now growing, Gulden said in a statement. Even in North America, where sales fell percent, the region returned to positive growth when the Yeezy brand is excluded, he said.

Adidas is nearing the end of its Yeezy inventory, which contributed around €50 million in operating profit during the third quarter, the company has said previously. There will be no further profit contribution in the fourth quarter.

The current momentum is a sign that Adidas has more to offer than just its classic sneakers, according to analysts at Morgan Stanley led by Edouard Aubin. These strong top-line trends are likely to continue in the final quarter and next year, said RBC analysts led by Piral Dadhania.

Eyeing its next big seller, Adidas has said previously it’s preparing more launches in its lifestyle running shoes and its superstar brand.

By Sonja Wind

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Case Study | The Strategy That Brought Adidas Back From the Brink

Adidas has mounted one of the more remarkable turnarounds in recent memory after facing a crisis two years ago from the end of its Yeezy business. BoF spoke to chief executive Bjørn Gulden and other members of Adidas’ leadership to unpack how a series of bold decisions on products like its Samba sneaker, a move to refocus the brand on athletes and internal shifts brought Adidas back from the brink.

Estée Lauder Companies’ succession strategy is shaping up.

According to a report in The Wall Street Journal, Stéphane de La Faverie has been selected as Estée Lauder Companies new chief executive officer. Estée Lauder Companies declined to comment on the report, though earlier on Monday, it confirmed that Jane Lauder, the company’s chief digital officer and another name thought to be in close contention for the top role, was set to step down by the end of 2024.

Rumours around succession have been swirling since 2022, when Estée Lauder’s stock price began a continued slide and analysts began to question Freda’s leadership de La Faverie and Jane Lauder quickly emerged as top contenders.

de La Faverie has been with Estée Lauder Companies for over 13 years, serving in various leadership roles, mostly recently as executive group president, a position he held for two years. Before joining the company in 2011, he served as a senior vice president at L’Oréal.

In partnership with [Jane] Lauder, de La Faverie has been leading the Estée Lauder’s “profit growth and recovery plan” since 2023, designed to reboot the company’s flagging performance, with a focus on rebuilding core brand equity and improving its performance in Asia, a stubborn drag on its results.

Learn more:

A To-Do List for Estée Lauder’s Next CEO

Whoever steps into Fabrizio Freda’s Italian loafers in June 2025 has a big job on their hands, as the American beauty conglomerate battles softened demand internationally and on its home turf. Kickstarting meaningful growth will mean a fresh China strategy, channel and category overhauls, and generating some much needed buzz.

Less than two years into the role, The RealReal chief executive John Koryl has exited the company and will no longer serve on its board, the resale platform announced Monday morning.

In his place, the company has appointed president and chief operating officer Rati Sahi Levesque, who will assume the position effective immediately. Levesque helped found the company in 2011 and was its first employee. In her tenure, she has held leadership roles across the organisation, from sales and merchandising to marketing.

Under Levesque and former chief financial officer Robert Julian — the duo served as interim co-CEOs after founder Julie Wainwright resigned in 2022 — The RealReal set out on a path to profitability that included drastic changes to its commission structure that favour high-value items like jewellery and Hermès handbags.

In early 2023, the company brought in Neiman Marcus alum Koryl to seal the deal on narrowing losses. Koryl continued to iterate on the commission structure and helped revamp customer service offerings. In the fourth quarter of 2023, the company finally accomplished EBITDA (earnings before interest, tax, depreciation and amortisation) profitability, the first time since its IPO in 2019.

In fiscal 2024, The RealReal expects to post adjusted EBITDA of between $4.5 million to $7.5 million, it said as part of its CEO  announcement Monday. That’s compared to an adjusted EBITDA loss of $55 million in 2023 and loss of $112 million in 2022.

But as The RealReal reduced losses, its topline shrank. Last year, it posted $1.7 billion in gross merchandise value, reflecting a 5 percent drop from the year prior. This year, it’s expecting annual GMV of about $1.8 billion.

“Rati and the leadership team have the full confidence of the board and are well-positioned to drive the business forward,” Karen Katz, chairperson of the board, said in a statement. “We wish John well as he begins his next chapter and takes time to focus on his family.”

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Wall Street Loves The RealReal’s New Direction. Users Have Mixed Feelings

The fashion resale company finally became profitable last year, but it was at the cost of losing consignors who complain that reselling is no longer as lucrative as it once was on the platform.