Wolverine Worldwide raised its full-year guidance after second-quarter results easily topped Wall Street targets. All-time record quarterly revenue for Merrell and Saucony drove consolidated revenue growth of 81 percent compared to 2020 and 11 percent versus 2019.
“With record revenue in the second quarter and demand for our brands continuing to accelerate, we now expect to deliver meaningful growth this year over both 2020 and 2019,” said Blake W. Krueger, Wolverine Worldwide’s Chairman and Chief Executive Officer. “Merrell and Saucony, our two largest brands, both achieved all-time record quarterly revenue – more than doubling their combined revenue year-over-year and driving combined revenue growth of more than 40 percent versus 2019. Our strategic shift over the last several years together with ongoing category tailwinds has resulted in two-thirds of our revenue positioned in trending performance categories like hiking, running, and work. We are bullish about the future, have raised our growth expectations for 2021, and are planning for sustained accelerated growth over the longer-term.”
SECOND-QUARTER 2021 REVIEW
Reported revenue was $631.9 million, up 81.0 percent versus the prior year. Wall Street’s consensus estimate had been $573 million.
On a constant currency basis, revenue was up 77.7 percent versus the prior year. Total Direct-to-Consumer reported revenue was up 17.5 percent versus the prior year and up 68.8 percent versus 2019. Owned eCommerce reported revenue was down 2.7 percent versus the prior year and up 90.7 percent versus 2019, and owned stores reported revenue was up 380.5 percent versus the prior year and up 19.2 percent versus 2019.
Wolverine Michigan Group sales reached $354.4 million, up 59.8 percent on a currency-neutral basis and ahead 63.0 percent on a reported basis. The Wolverine Michigan Group includes Merrell, Cat, Wolverine, Chaco, Hush Puppies, Bates, Harley-Davidson, and Hytest.
Wolverine Boston Group achieved sales of $258 million, up 106.9 percent on a currency-neutral basis and 110.6 percent on a reported basis. The Wolverine Boston Group consists of Sperry, Saucony, Keds and the Kids’ footwear business, which includes the Stride Rite licensed business, as well as Kids’ footwear offerings from Saucony, Sperry, Keds, Merrell, Hush Puppies, and Cat
Reported gross margin was 42.8 percent, compared to 42.2 percent in the prior year. Adjusted gross margin was 44.5 percent, compared to 42.2 percent in the prior year.
Reported operating margin was 10.1 percent, compared to 2.1 percent in the prior year. Adjusted operating margin was 12.6 percent, compared to 5.1 percent in the prior year.
Reported diluted earnings per share were $0.53, compared to a reported diluted loss per share of $0.02 in the prior year. Adjusted diluted earnings per share were $0.67, and, on a constant currency basis, were $0.65, compared to $0.08 in the prior year. Adjusted EPS of 67 cents compares with Wall Street’s consensus estimate of 50 cents.
Inventory at the end of the quarter was down 14.2 percent versus the prior year, a significant improvement compared to the 20.8 percent lower year-over-year inventory position at the end of the first quarter of 2021.
Cash flow from operating activities in the quarter was $25.4 million, compared to $115.6 million in the prior year, which was a result of initiatives taken to maximize cash at the onset of the COVID-19 pandemic.
Total debt at the end of the quarter was $718.4 million, or $306 million less than in the prior year, and total liquidity at the end of the quarter was $1.1 billion.
“The company exceeded 2019 revenue and earnings by double digits in the second quarter, with broad-based contributions across brands and regions,” said Mike Stornant, senior vice president and chief financial officer. “Our owned eCommerce revenue has more than doubled in the first half of 2021 compared to 2019. Our future order book remains at historically high levels, sell-through at retail is strong, and our inventory position continues to improve. These positive trends give us confidence to again raise our outlook for fiscal 2021, which now anticipates $150 million more revenue than we projected at the start of the year and represents mid-single-digit revenue growth versus 2019 at the high end of our range.”
FULL-YEAR 2021 OUTLOOK
For the full 2021 fiscal year, the company now expects revenue in the range of $2,340 million to $2,400 million, growth of 31 percent to 34 percent versus the prior year, up $150 million from our original outlook in February. This revenue outlook represents growth of 5.6 percent over 2019 at the high end of the range. Reported diluted earnings per share are now expected to be in the range of $1.85 to $1.95, and adjusted diluted earnings per share are now expected to be in the range of $2.20 to $2.30.
This outlook assumes no meaningful deterioration of current market conditions related to the COVID-19 pandemic during the remainder of 2021.
Wolverine in May also raised its guidance when reporting first-quarter results. The company at the time said it expected revenue in the range of $2,240 million to $2,300 million, or growth of 25 percent to 28 percent versus the prior year, up $50 million from its outlook in February and exceeding 2019 revenue at the high end of the range. Reported diluted earnings per share were expected to be in the range of $1.70 to $1.85, and adjusted diluted earnings per share were expected to be in the range of $1.95 to $2.10.
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