US' Wolverine World Wide's revenue falls 16.6% to $440.2 mn in Q3

The company’s gross margin improved by 450 basis points to 45.3 per cent due to lower supply chain costs and lower sales of end-of-life inventory. Inventory at the end of the quarter was $285.5 million and was down $278.3 million or approximately 49.4 per cent year-over-year (YoY) compared to the prior year and down $88.1 million from the prior year end, said Wolverine World Wide in a media release.

In the quarter under review, the operating expenses of the company decreased by 12.8 per cent YoY to $164.0 million, operating margin increased by 280 basis points to 8.0 per cent, and diluted earnings per share rose significantly by 154.5 per cent to $0.28. On a non-GAAP and ongoing business basis, the adjusted gross margin was 45.3 per cent, up 380 basis points.

Adjusted operating expenses of the company were $165.1 million, a 2.8 per cent decrease, and the adjusted operating margin increased by 210 basis points to 7.7 per cent. Adjusted diluted earnings per share (EPS) were $0.29, a 163.6 per cent increase, and constant currency earnings per share were $0.28, up 154.5 per cent, compared to the same period in 2023.

Category-wise, direct-to-consumer (DTC) reported revenue was $112.4 million, a 17.7 per cent decrease, and ongoing direct-to-consumer revenue was $112.3 million, a 1.5 per cent decline.

Brand-wise, Merrell reported $159.2 million in Q3, a slight increase of 1.4 per cent YoY. Saucony’s revenue was $104.8 million, down 10.0 per cent YoY, and Wolverine’s revenue decreased by 12.3 per cent to $49.4 million. Sweaty Betty saw a 3.0 per cent increase, reporting $46.3 million.

The International sales revenue was $213.8 million, a 6.6 per cent decrease, while ongoing international revenue was $213.8 million, down 2.0 per cent.

Net Debt at the end of the quarter was $563 million, down $373 million compared to the prior year and down $179 million from the prior year end, stated the release.

“In the third quarter, we delivered better-than-expected revenue and earnings – led by Merrell and Saucony outpacing our forecast – as we continue to make progress on our plan to turnaround and transform the company for the future,” said Chris Hufnagel, president and chief executive officer (CEO) of Wolverine Worldwide. “We drove another quarter of record gross margin and more than doubled earnings versus last year. Today, we’re moving forward with a stronger platform for growth – a rationalized portfolio of authentic brands positioned in attractive categories, a much healthier balance sheet with our restructuring and stabilization efforts largely behind us, and finally, a talented, aligned, and motivated team driving the business each day.”

Nine-months (9M) financials

The revenue of the company was $1,260.3 million in the 9M period in 2024 vs $1,716.2 million in 2023. Cost of goods sold reached $696.5 million in comparison to $1,036.7 million last year. The gross profit of the company was $563.8 million vs $679.5 million in 2023, and gross margin stood at 44.7 per cent than in 2023 which was 39.6 per cent. The selling, general and administrative expenses were $514.6 million vs $610.8 million in 2023.

The operating expenses of the company were $502.6 million vs $560.8 million in the 9M period last year, and the operating profit was $61.2 million vs $118.7 million in 2023. The operating margin was 4.9 per cent vs 6.9 per cent in 2023. The diluted earnings per share was $0.28 vs $0.64 in 2023.

2024 outlook

For fiscal year 2024, the company currently expects revenue from its ongoing business to be approximately $1.730- $1.745 billion. This range compares to the previous outlook of approximately $1.71-$1.73 billion and represents a decline of approximately 13.1-12.4 per cent and a constant currency decline of approximately 13.3-12.6 per cent compared to 2023.

Gross margin of the company is expected at 44.5 per cent, up 460 basis points compared to 2023, which remains unchanged from the previous outlook. The company is expecting operating margin to be 5.8 per cent and adjusted operating margin to be approximately 7.2 per cent. This compares to the previous operating margin outlook of approximately 6.0 per cent and adjusted operating margin of approximately 7.4 per cent.

The company expects effective tax rate to be around 16.5 per cent, down from the earlier estimate of 18.5 per cent. Diluted earnings per share is estimated in the range of $0.56 to $0.66 and adjusted diluted earnings per share in the range of $0.80-$0.90. This compares to the previous outlook for diluted earnings per share in the range of $0.53-$0.63 and adjusted diluted EPS between $0.75 and $0.85. These full-year EPS expectations continue to include an approximate $0.10 negative impact from foreign currency exchange rate fluctuations. The company also expects diluted weighted average shares of approximately 80 million, unchanged from previous guidance.

The company is expecting inventory to decline by approximately $85 million at year end compared to the prior year end. This compares to the previous outlook of a decline of at least $75 million.

Fibre2Fashion News Desk (SG)