Wolverine World Wide Inc. reported sales were down 16.1 percent in the fourth quarter and earnings also were below year-ago levels but results were ahead of Wall Street’s targets and the company predicted an “accelerated recovery” in 2021.

“The company delivered better-than-expected results for the fourth quarter and is poised to drive an accelerated recovery over the next twelve to eighteen months,” said Blake W. Krueger, Wolverine Worldwide’s chairman and chief executive officer. “During a year of unprecedented challenges, we took action focused on the rapidly changing consumer landscape. Our owned eCommerce revenue grew 50 percent in 2020, and we have planned further investment in this area to enable growth of 40 percent in 2021, significantly outpacing broader industry expectations. Our balance sheet is healthy, and our brands are well-positioned in winning product categories with strong momentum. Merrell, Saucony, Sperry, and Wolverine all plan to launch compelling new products behind some of their biggest franchises, and we anticipate meaningful growth for the company in 2021, resulting in revenue approaching 2019 levels for the year.”

Fourth-Quarter 2020 Review 

  • Reported revenue was $509.6 million, down 16.1 percent versus the prior year. On a constant currency basis, revenue was down 16.4 percent versus the prior year. Owned eCommerce reported revenue grew 31.7 percent versus the prior year. Wall Street’s consensus estimate had been $479 million.
  • Wolverine Michigan Group’s sales fell 17.3 percent on a reported basis (17.3 percent currency-neutral) to $298.5 million from $297.7 million a year ago. The Michigan Group includes Bates, Cat Footwear, Chaco, Harley-Davidson Footwear, Hush Puppies, HyTest, Merrell, and Wolverine.
  • Wolverine Boston Group’s sales were down 16.1 percent on a reported basis (15.6 percent currency-neutral) to $197.6 million from $234.1 million a year ago. Wolverine Boston Group includes Keds, Saucony and Sperry Top-Sider.
  • Reported gross margin was 40.1 percent, compared to 37.8 percent in the prior year. Adjusted gross margin was 41.4 percent, compared to 37.8 percent in the prior year.
  • Reported gross margin was 40.1 percent, compared to 37.8 percent in the prior year. Adjusted gross margin was 41.4 percent, compared to 37.8 percent in the prior year.
  • Reported operating margin was -40.1 percent, including the impact of a non-cash trade name impairment, compared to -0.9 percent in the prior year. Adjusted operating margin was 6.6 percent, compared to 10.1 percent in the prior year.
  • Reported diluted loss per share was $2.10, including the impact of a non-cash trade name impairment of $2.07 per share, compared to a loss per share of $0.01 in the prior year. Adjusted diluted earnings per share were $0.21, and, on a constant currency basis, were $0.22, compared to $0.59 in the prior year. Wall Street’s consensus estimate had been 17 cents.
  • Inventory at the end of the quarter was down 30.2 percent versus the prior year.
  • Cash flow from operating activities in the quarter was $173.6 million, compared to $206.6 million in the prior year.
  • Cash on hand at the end of the quarter was $347.4 million, compared to $180.6 million in the prior year.

Full-Year 2020 Review

  • Reported revenue was $1,791.1 million, down 21.2 percent versus the prior year on a reported and constant-currency basis. Owned eCommerce reported revenue grew 49.9 percent versus the prior year.
  • Wolverine Michigan Group’s sales were down 19.0 percent on a reported basis (19.1 percent currency-neutral) to $1.05 billion from $1.3 billion the prior year.
  • Wolverine Boston Group’s sales were down 23.7 percent on a reported basis (23.6 percent currency-neutral) to $696.0 million from $910.9 million a year ago.
    Reported gross margin was 40.1 percent, compared to 37.8 percent in the prior year. Adjusted gross margin was 41.4 percent, compared to 37.8 percent in the prior year.
  • Reported gross margin was 41.1 percent, compared to 40.6 percent in the prior year. Adjusted gross margin was 41.5 percent, compared to 40.6 percent in the prior year.
  • Reported operating margin was -7.7 percent, including the impact of a non-cash trade name impairment, compared to 7.5 percent in the prior year. Adjusted operating margin was 7.5 percent, compared to 11.5 percent in the prior year.
  • Reported diluted loss per share was $1.70, including the impact of a non-cash trade name impairment of $2.07 per share, compared to earnings per share of $1.44 in the prior year. Adjusted diluted earnings per share were $0.93, and, on a constant currency basis, were $0.95, compared to $2.25 in the prior year.
  • Cash flow from operating activities for the year was $309.1 million, compared to $222.6 million in the prior year.

“Our team executed on key profit and liquidity priorities that were identified at the onset of the pandemic, resulting in annual operating cash flow of $309 million and $1.1 billion of total liquidity at year-end,” said Mike Stornant, senior vice president and chief financial officer. “We are now able to increase our investment behind several key growth priorities supported by good visibility to robust demand and an eCommerce platform that continues to outperform. The company is in an enviable position to drive profitable and accelerated growth in 2021.”

Full-Year 2021 Outlook
Wolverine Worldwide expects the positive momentum of its performance, athletic, outdoor, and work brands to continue in 2021. The company is providing its initial revenue and earnings outlook for the full year, which assumes no meaningful deterioration of current market conditions related to the COVID-19 pandemic during the remainder of 2021.

For the full 2021 fiscal year, the company expects revenue in the range of $2,190 million to $2,250 million, growth of 22 percent to 26 percent versus the prior year, approaching 2019 revenue at the high end of the range. The company is also focused on delivering its aspirational target of $500 million in owned eCommerce revenue, more than double 2019 owned eCommerce revenue. Reported diluted earnings per share are expected to be in the range of $1.75 to $1.90 and adjusted diluted earnings per share are expected to be in the range of $1.90 to $2.05.

Wolverine’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 the Cat and Harley-Davidson brands.

Photo courtesy Wolverine Worldwide