Wolverine Worldwide Inc. reported earnings fell 51.9 percent on restructuring activities around its Wolverine Way Forward program, but adjusted earnings declined slightly and exceeded Wall Street’s target. Wolverine also raised its operating margin goal for 2018.

“We are very pleased to continue our positive momentum and report third quarter revenue and earnings that surpassed expectations. This marks the third consecutive quarter of strong results for the company,” said Blake W. Krueger, Wolverine Worldwide’s chairman, chief executive officer and president. “We continue to make excellent progress on our enterprise wide strategic transformation, the Wolverine Way Forward, including the recently announced sale of our Department of Defense business. Our third quarter results are reflective of this progress. This transformation is focused on elevating our most powerful brands with consumers, delivering continuous product innovation and sustained organic growth, and unlocking incremental operational efficiencies, all with an emphasis on pace and speed. We believe that the Wolverine Way Forward will enable us to drive global growth in the “new normal” fast-changing global consumer retail environment.”


  • Reported revenue of $581.3 million decreased 3.7 percent during the third quarter, but adjusted revenue decreased 8.0 percent after taking into effect the quarterly calendar change. Underlying revenue increased 1.1 percent.
  • Reported gross margin was 39.7 percent, compared to 39.3 percent in the prior year. Adjusted gross margin on a constant currency basis was 40.4 percent, compared to 39.1 percent in the prior year, reflecting an improvement of 130 basis points despite a 90 basis point negative mix impact from store closures.
  • Reported operating margin was 6.1 percent, compared to 11.4 percent in the prior year. Adjusted operating margin on a constant currency basis was 11.9 percent compared to 10.5 percent in the prior year.
  • Reported diluted earnings per share were 24 cents, compared to 49 cents in the prior year. Adjusted diluted earnings per share were 43 cents. On a constant currency basis, adjusted earnings per share were 45 cents, compared to 45 cents in the prior year.
  • Inventory at the end of the quarter was down 26.0 percent versus the prior year.
  • The company repurchased 1,139,256 shares in the third quarter for approximately $30 million at an average price of $26.33 per share.

Wall Street was expecting 37 cents per share on an adjusted basis on average on sales of $551.5 million.

“Our proactive efforts, which began eighteen months ago, have gained traction leading to better-than-expected results. This is best demonstrated by solid revenue performance across our portfolio with most brands exceeding our revenue expectations and over-delivering on our operating profit targets for the quarter,” stated Mike Stornant, senior vice president and chief financial officer. “We managed our working capital well, with inventory down 26 percent at quarter end versus the prior year quarter. We believe the strength of our global brands combined with the continued operational discipline and implementation of the Wolverine Way Forward leaves us well positioned to achieve our near-term growth and adjusted operating margin goals. We now expect full-year fiscal 2018 operating margin of 12 percent, ahead of our originally stated goal.”


The company continued to make progress on its comprehensive portfolio management initiatives including the following items:

  • In addition to the license of the Stride Rite brand to Vida Shoes International and the sale of the Sebago Brand announced earlier in the third quarter, on September 29, 2017, the company sold its Department of Defense contract business and certain associated assets.
  • The company also continued to make progress in realigning its retail store fleet under the previously announced Store Restructuring Plan. The company has closed 188 stores since the beginning of 2017. The company expects an additional 27 store closings before the end of fiscal 2017, leaving a remaining retail store fleet of approximately 80 stores.
  • The company continues to prioritize growth and innovation by accelerating its investments in product innovation, consumer insights, demand creation, and the digital/social space. The company also plans to focus on key international growth markets as it evolves its global footprint.


A strong third quarter, coupled with some stable trends in the business, have resulted in the following update to the company’s full-year 2017 outlook:

  • Wolverine narrowed its revenue outlook to the upper end of its prior range and now expect reported revenue of $2.340 billion to $2.370 billion. This is a reported decline of approximately 6.2 percent to 5.0 percent, but underlying revenue is expected to be within the range of flat to growth of 1.5 percent, reflecting approximately $160.0 million revenue impact from retail store closures and the Stride Rite transition.
  • Reported operating margin in the range of 5.0 percent to 5.4 percent and adjusted operating margin in the range of 10.6 percent to 10.9 percent, resulting from operational excellence initiatives focused on supply chain optimization, omnichannel transformation, and operational efficiencies. Fiscal 2016 adjusted operating margin was 8.5 percent.
  • Reported diluted earnings per share in the range of $0.76 to $0.81 compared to $0.89 in fiscal 2016. Adjusted diluted earnings per share are now expected in the range of $1.60 to $1.65 compared to $1.36 in fiscal 2016 adjusted on the same basis. On a constant currency basis, adjusted earnings per share in the range of $1.67 to $1.72.

Previously, revenue was expected in the range of $2.320 billion to $2.370 billion. Reported operating margin was projected to arrive in the range of 5.2 percent to 5.8 percent and adjusted operating margin in the range of 10.4 percent to 10.9 percent. Diluted earnings per share in the range of $0.82 to $0.92, adjusted diluted earnings per share in the range of $1.55 to $1.65, and adjusted earnings per share on a constant currency basis in the range of $1.62 to $1.72.

The company’s portfolio of  brands includes: Merrell, Sperry, Hush Puppies, Saucony, Wolverine, Keds, Stride Rite, Chaco, Bates, and HYTEST. The company also is the global footwear licensee of the brands Cat and Harley-Davidson.

Photo courtesy Merrell