Saucony parent company Wolverine Worldwide (WWW) outlined progress and planning for some of its top brands when discussing fourth-quarter and full-year results, pointing to the running brand as a key contributor. Wolverine Worldwide CEO Chris Hufnagel said the brand will have an opportunity to work more closely with the company’s Merrell brand this year as the two brands co-locate later this year in Grand Rapids. MI area. Gazelle Sports should expect more frequent visits from the Saucony team going forward.
WWW is in the middle of a transformation plan to cull brands, cut costs, reduce inventories and empower brand teams to add excitement and growth to their product. Saucony was called out as one of the top brands of focus going forward, along with Merrell, Sweaty Betty and the Wolverine brand.
Hufnagel said that with firmer footing and a clear vision, the company’s brands are accelerating their efforts to reinvigorate growth, focusing squarely on “designing awesome products and telling amazing stories.”
“While we expect our inflection to growth will follow the meaningful margin improvement we’ve outlined, our brands are moving with great pace to drive improved top-line performance,” he said and highlighted the work Saucony is doing in the running business.
“Saucony is consistently one of the most trusted brands by Elite Runners in the world’s most important marathons,” he noted. “And we now have the opportunity to capitalize on this tip-of-spear success by democratizing the brand’s innovations for the larger casual running market and elevating its style to encourage adoption for the significantly larger lifestyle wearing occasions. The brand intends to do so through a focus on its core four franchises, the Ride, Guide, Triumph, and Hurricane.”
As a first step, he said Saucony launched a new Ride 17 several weeks ago, engineered to deliver a more comfortable fit and better ride for the brand’s neutral runner.
“It’s been well received and sell-through was up strong double digits in the important Run Specialty channel,” Hufnagel shared. “The brand followed this launch with a new introduction of its maximum comfort franchise, the Guide 17 with even more cushioning and support.” He said the Guide 17 has only been in the market a couple of weeks and sell-through is already off to a very strong start.
He added that Saucony expects to launch Triumph 22 next quarter, followed by the Hurricane 24 in the third quarter. Hufnagel also said the brand plans to sell into some of the best lifestyle distribution in the marketplace starting this spring with authentic, trend-right, retro tech designs from its archives like the ProGrid Omni and Azure.
“As a result of these important launches and the brand’s improved storytelling, which is just getting started, the brand has started to see an inflection in brand heat with consumers,” he suggested.
While other major brands in the portfolio were posting double-digit declines for the year, Saucony posted a 1.9 percent decline or a 1.2 percent decline in constant-currency (CC) terms. Sales for the year were $495.8 million, compared to $505.3 million in the prior year.
The fourth quarter was a little tougher for Saucony, as sales fell 13.4 percent (-13.7 CC) to $105.1 million, from $121.3 million in the prior-year corresponding quarter.
Looking ahead, Saucony is expected to decline in the low-20s range for 2024, with sequential improvement each quarter.
Part of the issues here for Saucony is the liquidation of product in the 2023 first half and the shift in the China business model.
“Discrete items in 2023 totaling $165 million in revenue [total for all brands] will not recur in 2024,” outlined company CFO Mike Stornant. “These include approximately $70 million of extraordinary end-of-life inventory liquidation, heavily weighted to the first half of 2023, approximately $55 million in business model changes, including the transition of our China JV to a distributor model for both Merrell and Saucony and approximately $40 million in a timing shift of international distributor shipments that benefited Q1 2023.”
“It’s important to pause here and set the near expectations for the business,” he said after reviewing the key brands’ upside. “Encouragingly, this year we expect the business to be much more profitable and again, generate strong cash flow, as our model has done so effectively in the past, driven by significant gross margin expansion and our aggressive and proactive profit improvement initiatives we’ve executed over the past few months.”
He observed that the business is starting the year from a challenging position, which will weigh on full-year revenue results.
He said the issue was meaningful for Saucony, followed by Merrell and Wolverine, but the company anticipates a sequential improvement in top-line performance as the year progresses.
“We expect the positive impact of our corrective actions will accelerate and be bolstered further in the second half by reduced rogue selling, cleaner inventories, better alignment with global partners and lapping easier year-over-year comparisons while contributing to an inflection in growth in the second half of the year and acceleration into 2025,” he said.
Image courtesy Saucony/Alexandra Sports
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See below for more SGB Media coverage of the Wolverine Worldwide results for Q4 and full year 2023.
EXEC: Inside the Wolverine Worldwide C-Suite – Assessing the Year Ahead
