Wolverine World Wide, Inc. raised its revenue and earnings guidance for the year after sales in the third quarter, which exceeded company expectations, driven by above-plan performances from Merrell and Saucony. Gross margins expanded 450 basis points on significantly lower inventory levels.

Revenues in the quarter reached $440.2 million, surpassing analyst consensus estimates of $421.4 million. Adjusted EPS of 29 cents topped analysts’ average target of 22 cents.

“In the third quarter, we delivered better-than-expected revenue and earnings—led by Merrell and Saucony outpacing our forecast—as we continue to make progress on our plan to turn around and transform the Company for the future,” said President and CEO Chris Hufnagel of Wolverine Worldwide. “We drove another quarter of record gross margin and more than doubled earnings versus last year. Today, we’re moving forward with a stronger platform for growth—a rationalized portfolio of authentic brands positioned in attractive categories, a much healthier balance sheet with our restructuring and stabilization efforts largely behind us, and finally, a talented, aligned, and motivated team driving the business each day.”

Financial Highlights
Financial results for 2024 and comparable results from 2023, in each case, for its ongoing business exclude the impact of the sale of Keds in February 2023, the sale of U.S. Wolverine Leathers business in August 2023, the sale of non-U.S. Wolverine Leathers business sold in December 2023, and the sale of the Sperry business in January 2024. 

Third Quarter 2024 Financial Highlights

Gross margin improved significantly due to lower supply chain costs and lower sales of end-of-life inventory.

Balance Sheet Summary

Inventory at the end of the quarter was $285.5 million, down $278.3 million, or approximately 49.4 percent, compared to the prior year and down $88.1 million from the prior year’s end.

Net debt at the end of the quarter was $563 million, down $373 million from the prior year and $179 million from the prior year’s end.

Full-Year 2024 Outlook
For Fiscal year 2024, the company expects the following:

  • Ongoing business revenue of approximately $1.730 billion to $1.745 billion. This range compares to the previous outlook of approximately $1.71 billion to $1.73 billion and represents a decline of roughly 13.1 percent to 12.4 percent and a constant currency decline of 13.3 percent to 12.6 percent compared to 2023;
  • Gross margin of approximately 44.5 percent, up 460 basis points compared to 2023, which remains unchanged from the previous outlook;
  • Operating margin of roughly 5.8 percent and adjusted operating margin of roughly 7.2 percent, up 330 basis points compared to 2023, which compares to the company’s previous operating margin outlook of roughly 6.0 percent and adjusted operating margin of roughly 7.4 percent;
  • The effective tax rate of approximately 16.5 percent, compared to the previous outlook of 18.5 percent;
  • Diluted earnings per share in the range of 56 cents to 66 cents and adjusted diluted earnings per share in the range of 80 cents to 90 cents, which compares to the company’s previous outlook for diluted earnings per share in the range of 53 cents to 63 cents and adjusted diluted EPS between 75 cents and 85 cents. These full-year EPS expectations continue to include an approximate 10 cents negative impact from foreign currency exchange rate fluctuations;
  • Diluted weighted average shares of approximately 80 million, unchanged from previous guidance;
  • Inventory to decline by approximately $85 million at year-end compared to the prior year-end, which compares to the previous outlook of a decline of at least $75 million; and
  • Net debt at year-end of roughly $545 million, a reduction of $195 million from the prior year-end compared to a previous outlook of $565 million.

Image courtesy Merrell, chart courtesy WWW