Wolverine World Wide, Inc. reported Thursday it is taking immediate actions to further its ongoing strategic transformation into a brand-led and consumer-obsessed growth company.

“We are moving with speed and urgency to transform the company, which will enable us to capitalize on our biggest growth opportunities,” said Chris Hufnagel, president and CEO of Wolverine World Wide, Inc. “We are taking decisive steps to stabilize the business by divesting non-core assets, paying down debt, reducing inventory, and right-sizing our cost structure. At the same time, we are redesigning the organization to become great global brand builders.”

To help stabilize the business, enhance financial performance, and provide future investment capacity for Wolverine Worldwide’s strategic growth brands, the company has accelerated and expanded its transformation effort and the work of the Profit Improvement Office. To date, the company has identified initiatives that are expected to deliver $215 million in annualized savings, including a global workforce restructuring.

“We are committed to taking the necessary actions to best position the company for future profitable growth,” continued Hufnagel. “Decisions like these that affect our team are difficult, and we are committed to supporting each team member through this transition.”

The acceleration of the initiatives comes as the company reported dismal third-quarter results that reflected an ongoing business that was down in strong double digits across most of the enterprise, with the exception of a mid-single-digit decline in the Wolverine brand business, a mid-teens decline in the Saucony business and double-digit growth in the Sweaty Betty brand.

Consolidated company revenues declined 23.7 percent to $527.7 million in the third quarter versus the corresponding quarter in 2022, and declined 24.7 percent on a constant-currency (cc) basis. Revenue from the ongoing business was $519.5 million and declined 21.1 percent on a constant-currency basis.

The ongoing business excludes the impact of Keds, which was sold in February 2023, the U.S. Wolverine Leathers business, which was sold in August 2023, the non-U.S. Wolverine Leathers business, which is currently the subject of a sale process, and reflects an adjustment for the transition of the Hush Puppies North America business to a licensing model in the second half of 2023.

Merrell sales fell 24.3 percent (-25.2 percent cc) to $157.0 million in the third quarter and Saucony sales declined 14.0 percent (-14.6 percent cc) to $116.4 million, but Sperry took the biggest hit in Q3, falling 41.4 percent (-41.5 percent cc) to $46.2 million. Wolverine brand sales dipped 4.7 percent in both reported and constant-currency terms to $56.3 million. Sweaty Betty was the lone winner in the brands reported, growing 19.0 percent (+11.1 percent cc) to $45.0 million in the quarter.

The company’s third-quarter International revenue was down 24.4 percent to $229.0 million compared to the prior-year quarter and, International revenue from the ongoing business was down 22.3 percent (-24.6 percent cc) to $221.8 million in the period. DTC revenue was down 14.5 percent to $136.6 million in Q3, compared to the Q3 period last year, and down 12.8 percent for the ongoing business compared to the prior-year quarter.

Gross margin was 40.8 percent of sales in Q3, compared to 40.2 percent in the prior-year period, a 60 basis point improvement that was reportedly due to “profit improvement initiatives and channel mix, partially offset by the sale of higher-cost inventory due to transitory supply chain costs from 2022 and a higher mix of closeout sales in the quarter.”

SG&A expenses were $188.1 million, or 35.6 percent of revenue, in the quarter. Adjusted SG&A expenses of $191.7 million, or 36.9 percent of adjusted revenue, were 510 basis points higher than the prior-year quarter.

Operating profit was down 53.6 percent to $27.3 million in Q3, compared to $58.8 million in the year-ago quarter. Operating margins shrank over 300 basis points to 5.2 percent of sales in Q3, compared to 8.5 percent of sales in Q3 last year.

Net income was $9.0 million in the third quarter, compared to $38.8 million in the corresponding period last year. Diluted EPS was down 77.1 percent to 11 cents a share in Q3 from 48 cents a share in Q3 last year.

Full-year 2023 outlook is as follows:

  • Revenue from the ongoing business is expected to be approximately $2.19 billion to $2.20 billion, representing a decline of approximately 13 percent versus the prior year.
  • Diluted earnings per share are expected to be between 35 cents and 40 cents a share and adjusted diluted earnings per share are expected to be between 5 cents and 10 cents. Stornant said these full-year EPS expectations include an approximate 18 cents negative impact from foreign currency exchange rate fluctuations.

For more details about the strategic planning at Wolverine Worldwide, expense cuts, new investments and how the past is still weighing on the future, read more here:

EXEC: Inside Wolverine’s Plan for the Future—and the New Realities of 2023

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