Wolverine Worldwide reported adjusted earnings in the fourth quarter nearly doubled as sales grew 25 percent. Results were slightly ahead of Wall Street targets. Sales grew 35 percent for 2021 and are expected to expand in the range of 15 to 18 percent in the current year.  

“We are pleased that the company managed through a challenging supply chain to deliver nearly 25 percent revenue growth in the fourth quarter,” said Brendan Hoffman, Wolverine Worldwide’s president and chief executive officer. “I am thrilled to be leading the organization at such a pivotal time. Our strong portfolio of iconic brands combined with the operational foundation built over the last decade positions us to capitalize on very favorable consumer and category trends. Excluding Sweaty Betty, fiscal 2021 revenue exceeded 2019 which speaks to our team’s resolve and tenacity in overcoming the impact of COVID-19. We expect to further unlock the growth potential of our brands as we deliver on our fiscal 2022 outlook of mid to high-teens revenue growth.”

Fourth Quarter 2021 Performance
On August 2, 2021, Wolverine Worldwide acquired women’s activewear brand Sweaty Betty, a digitally-native, global apparel brand, which will continue to fuel growth and the company’s eCommerce business. Unless otherwise stated, the following 2021 fourth-quarter and full-year results include Sweaty Betty; the prior year 2020 quarter and full-year periods do not.

  • Revenue was $635.6 million, up 24.7 percent versus the prior year. On a constant-currency basis, revenue was up 24.6 percent versus the prior year.
    • Excluding Sweaty Betty, revenue increased 9.4 percent versus the prior year and decreased 8.2 percent versus 2019.
  • eCommerce revenue was up 58.3 percent versus the prior year and up 108.5 percent versus 2019.
    • Excluding Sweaty Betty, eCommerce revenue was up 12.7 percent versus the prior year and up 48.5 percent versus 2019.
  • Gross margin was 41.3 percent compared to 40.1 percent in the prior year. Adjusted gross margin was 43.0 percent, compared to 41.4 percent in the prior year.
    • Excluding Sweaty Betty, the Adjusted gross margin was 41.5 percent compared to 41.4 percent in the prior year.
  • Operating margin improved to (1.4) percent, compared to (40.1) percent in the prior year. Adjusted operating margin was 7.7 percent compared to 6.6 percent in the prior year.
    • Excluding Sweaty Betty, the Adjusted operating margin was 7.1 percent compared to 6.6 percent in the prior year.
  • Diluted earnings per share were ($0.18), compared to diluted earnings per share of ($2.10) in the prior year; this includes $44 million related to a legacy environmental matter and recent progress on settlements of certain litigation. Adjusted diluted earnings per share were $0.41, and on a constant-currency basis were $0.39 compared to $0.21 in the prior year.
    • Excluding Sweaty Betty, the Adjusted diluted earnings per share were $0.31 compared to $0.21 in the prior year.
  • Inventory at the end of the quarter was $365.5 million, up 50.3 percent versus the prior year. Sweaty Betty contributed 19.4 percent to the increase versus the prior year.
  • Total debt at the end of the quarter was $966.8 million, or $244.3 million more than in the prior year, reflecting the impact of the Sweaty Betty acquisition. Total liquidity, including cash and available borrowings under the company’s revolving line of credit, was approximately $900 million.
  • At the end of the quarter, the company has nearly $450 million available under its board-approved share repurchase plan.

Results came in ahead of Wall Street estimates. Sales of $636 million were ahead of the analyst’s consensus target of $629 million. Earnings of 41 cents a share topped Wall Street’s consensus estimate of 40 cents.

Sales at Wolverine Michigan Group (Merrell, Cat, Wolverine, Chaco, Hush Puppies, Bates, Harley-Davidson, and Hytest) reached $322.0 million, up 7.8 percent on a currency-neutral basis and 7.9 percent on a reported basis. Wolverine Boston Group (Sperry, Saucony, Keds, and the Stride Rite licensed business) generated revenues were $218.1 million, up 10.2 percent on a currency-neutral basis and 10.4 percent on a reported basis.

Full-Year 2021 Performance

  • Revenue was $2,414.9 million, up 34.8 percent versus the prior year. On a constant-currency basis, revenue was up 33.4 percent versus the prior year.
    • Excluding Sweaty Betty, revenue increased 28.3 percent versus the prior year and 1.0 percent versus 2019.
  • eCommerce reported revenue was up 39.7 percent versus the prior year and up 109.4 percent versus 2019.
    • Excluding Sweaty Betty, eCommerce revenue was up 18.3 percent versus the prior year and up 77.3 percent versus 2019. Gross margin was 42.6 percent, compared to 41.1 percent in the prior year. Adjusted gross margin was 44.1 percent, compared to 41.5 percent in the prior year.
      • Excluding Sweaty Betty, the Adjusted gross margin was 43.4 percent compared to 41.5 percent in the prior year.
  • Operating margin was 6.4 percent, compared to (7.7) percent in the prior year. Adjusted operating margin was 10.6 percent compared to 7.5 percent in the prior year.
    • Excluding Sweaty Betty, the Adjusted operating margin was 10.7 percent compared to 7.5 percent in the prior year.
  • Diluted earnings per share were $0.81, compared to diluted earnings per share of ($1.70) in the prior year. Adjusted diluted earnings per share were $2.09, and on a constant-currency basis, were $2.05, compared to $0.93 in the prior year.
    • Excluding Sweaty Betty, the Adjusted diluted earnings per share were $1.98 compared to $0.93 in the prior year.

Sales at Wolverine Michigan Group reached $1,298.9 million in the year, up 22.2 percent on a currency-neutral basis and 23.6 percent on a reported basis. Wolverine Boston Group generated revenues were $935.8 million, up 32.9 percent on a currency-neutral basis and 34.5 percent on a reported basis.

Wolverine didn’t break out its brand’s performance in the fourth quarter but did for its four largest brands for the year. Merrell grew 22 percent, Saucony expanded 57 percent, Sperry grew 25 percent and Sweaty Betty gained 40 percent on a pro-forma basis. The four brands accounted for 62 percent of sales.

“We are very encouraged by our fourth quarter and full-year performance and momentum, despite the ongoing impact of the pandemic on our business. Revenue and earnings exceeded expectations entering the year,” said Mike Stornant, senior vice president and chief financial officer. “As we transition to 2022, demand remains at historic levels and the progress made in 2021 to improve the flow of goods and our inventory position gives us confidence in our outlook for high-teens revenue growth in 2022.”

Full-Year 2022 Outlook 
The company is providing its initial revenue and earnings outlook for the full year, which is summarized below.

  • Revenue is expected to be in the range of $2.775 billion to $2.850 billion, representing growth of approximately 15.0 percent to 18.0 percent;
  • Diluted earnings per share are expected to be between $2.30 to $2.45 and adjusted diluted earnings per share are expected to be between $2.50 to $2.65, representing growth of 19.4 percent to 26.5 percent;
  • Gross margin is expected to be in the range of 43.5 percent to 44.0 percent;
  • Operating margin is expected to be approximately 10.2 percent, and the Adjusted operating margin is expected to be approximately 11.0 percent, up approximately 35 bps versus 2021;
  • The effective tax rate is expected to be approximately 20.0 percent; and
  • Diluted weighted average shares are expected to be approximately 82.6 million.

This outlook assumes no meaningful deterioration of current market conditions related to the pandemic during the remainder of 2022.

Wolverine’s portfolio includes Merrell, Saucony, Sweaty Betty, Sperry, Hush Puppies, Wolverine, Ked, Chaco, Bates, HYTEST, and Stride Rite. Wolverine Worldwide is also the global footwear licensee of  Cat and Harley-Davidson.

Photo courtesy Sweaty Betty/Simone De La Rue