Wolverine World Wide Inc., in a business update, said owned e-commerce grew more than 90 percent in the first nine weeks of the second quarter of fiscal 2020, helping the company deliver a better-than-expected performance so far in the period.
Wolverine wrote in a statement, “The company noted that while the COVID-19 pandemic greatly limited its global wholesale business during the first nine weeks of the second quarter, its powerful brands, strong digital capabilities, and diversified global business model have driven better-than-expected sales performance during this period. While the second quarter is still expected to be the most challenging quarter of fiscal 2020, the company’s work to proactively maximize its strong e-commerce platform and implement cash generation initiatives is anticipated to result in more than $20 million of operating cash flow in the quarter, significantly exceeding its expectations entering the quarter.”
The company provided a business update ahead of investor meetings taking place during the Baird 2020 Global Consumer, Technology and Services Conference on June 4.
Through the first nine weeks of the second quarter of fiscal 2020:
- Owned e-commerce grew more than 90 percent compared to the same nine-week period in the prior year, delivering more than 40 percent of the company’s revenue. Performance brands Merrell and Saucony, as well as work brands Wolverine and Cat Footwear, led the performance with strong triple-digit e-commerce growth.
- Owned retail stores started to reopen, and the company plans to open approximately 70 of its more than 90 stores by mid-June. As stores reopen, the focus has been, and will continue to be, on the health and safety of customers and employees. Employees will wear face masks, checkout protocol and traffic patterns will be adapted to limit touchpoints, store hours will be reduced, and enhanced cleaning procedures will be in place.
- Online sell-through of the company’s U.S. wholesale customers accelerated to strong double-digit growth after a few initial weeks of decline and grew double-digits overall during the nine-week period.
- Sell-through trends in retail stores operated by the company’s wholesale customers were down year-over-year but steadily improved during the nine-week period with at-once order trends exceeding the company’s expectations entering the quarter. Certain key U.S. retailers remained open during the COVID-19 pandemic shutdown including retailers in the farm channel among others. Re-order demand from these retailers primarily benefitted the company’s work and outdoor performance businesses.
- Certain countries, including many within Europe, began to emerge from the COVID-19 pandemic and started to return to more normal retail selling environments earlier than the U.S. In these markets, running and outdoor performance product categories generally performed better than other footwear categories.
- The company’s quarter-to-date revenue exceeded its expectations entering the second quarter. Total global revenue was down less than 50 percent compared to the same nine weeks in the prior year despite the impact of widespread global store closures during April and May. The strong performance of the company’s owned e-commerce business helped to offset the store closures. The company now anticipates a similar year-over-year trend in the last four weeks of the quarter.
The company currently expects to have approximately $1 billion of liquidity at the end of the second quarter, including $400 million of cash on hand and approximately $600 million of borrowing capacity available on its revolver. Operating cash flow is still expected to be $150 million to $200 million for fiscal 2020. Financial results for the second quarter of 2020 are expected to be released in early August.
“As the global economy continues to reopen, we are encouraged by some of the early trends,” said Blake Krueger, Wolverine Worldwide’s chairman, chief executive officer and president. “Our investment in digital capabilities over the last several years is paying off, delivering significant, highly profitable online growth. We are also seeing some promising at-once order demand where stores are open. The consumer is responding to fresh product offerings and relevant stories during this dynamic period. Our brands, particularly performance brands like Merrell and Saucony and work brands like Wolverine and Cat Footwear, are resonating with consumers in this environment, and our balance sheet and liquidity remain very healthy. We continue to be confident in the company’s ability to capitalize on the advantages of our diversified business model, powerful brands, and disciplined operations to deliver future value for our shareholders.”
The company’s portfolio includes Merrell, Sperry, Hush Puppies, Saucony, Wolverine, Keds, Stride Rite, Chaco, Bates, and Hytest. Wolverine Worldwide is also the global footwear licensee of Cat and Harley-Davidson.
Photo Merrell Ambassador Athlete Nick Zupanchich/Photo courtesy Merrell