Wolverine World Wide, Inc. (NYSE: WWW) beat guidance for the second quarter ended June 18 by reporting revenue declined 7.4 percent to $583.7 million.
The maker of Merrell, Sperry, Saucony and Chaco footwear said underlying revenue declined 5.2 percent versus the prior year.
“We delivered better-than-expected results for the second quarter,” said Blake W. Krueger, Wolverine Worldwide’s Chairman, Chief Executive Officer and President. “Equally important, we continued to drive progress against our key strategic initiatives, which are designed to accelerate growth and improve earnings performance through a relentless focus on the consumer, product innovation, and compelling storytelling. While the global retail environment continues to be volatile, our diversified business model – built around an industry-leading portfolio of brands – served us well in the quarter, and we expect that it will continue to be a critical competitive advantage for us in the future.”
SECOND-QUARTER 2016 REVIEW
- Reported gross margin was 38.8 percent, compared to 39.1 percent in the prior year. Gross margin on a constant currency basis was 39.8 percent, an increase of 70 basis points versus the prior year.
- Reported operating margin was 7.2 percent, compared to 7.6 percent in the prior year. Adjusted operating margin on a constant currency basis was 8.4 percent, up 30 basis points versus the prior year’s adjusted operating margin.
- Reported diluted earnings per share were $0.24 in the current and prior year quarter. Adjusted diluted earnings per share were $0.25, which exceeded expectations, and on a constant currency basis were $0.30, compared to $0.27 in the prior year.
- Inventory balances at the end of the quarter were 2.9 percent lower than the prior year.
- Cash and cash equivalents were $221.7 million. Reported debt was $808.0 million, which resulted in net debt of $586.3 million at quarter end.
“We are pleased with our performance for the second quarter,” stated Mike Stornant, Senior Vice President and Chief Financial Officer. “Our team’s disciplined execution of our business model allowed us to effectively manage inventory below last year’s level. Looking ahead, we plan to leverage our operational strengths to enhance earnings and drive greater value for our shareholders.”
FISCAL 2016 OUTLOOK
The company is reaffirming its revenue and reported and adjusted diluted earnings per share outlook for fiscal 2016, as well as its expectation for inventory levels, as follows:
- Consolidated reported revenue in the range of $2.475 billion to $2.575 billion, a decline in the range of approximately 8.0 percent to 4.3 percent on a reported basis and 5.0 percent to 1.0 percent on an underlying basis.
- Reported diluted earnings per share in the range of $1.16 to $1.26. Adjusted diluted earnings per share in the range of $1.30 to $1.40. On a constant currency basis, adjusted earnings per share in the range of $1.48 to $1.58.
- Inventory levels to be meaningfully lower than 2015 at year-end.
Wolverine World Wide’s portfolio of brands includes: Merrell , Sperry, Hush Puppies, Saucony, Wolverine, Keds, Stride Rite, Sebago, Chaco, Bates, and Hytest. The company also is the global footwear licensee of the popular brands Cat and Harley-Davidson.