Wolverine World Wide, the well-known American footwear and apparel brand, has reported a significant decline in its revenue for the third quarter of 2024. The company’s revenue totaled $440.2 million, marking a 16.6% drop compared to the same period last year. Despite this dip in revenue, Wolverine managed to improve its gross margin, which rose by 450 basis points to an impressive 45.3%. Concurrently, net debt decreased to $563 million.
Looking ahead to fiscal year 2024, Wolverine World Wide anticipates revenues ranging from $1.730 billion to $1.745 billion and projects a gross margin of 44.5%. They expect adjusted earnings per share (EPS) to fall between $0.80 and $0.90. Notably, the company is also planning to reduce its inventory by about $85 million.
In the latest quarterly results, the company reported a 12.8% decrease in operating expenses, bringing them down to $164 million. Additionally, the operating margin grew by 280 basis points to 8.0%, and diluted earnings per share saw remarkable growth, increasing 154.5% to $0.28. If we delve deeper into the adjusted figures, the gross margin remained at an identical 45.3%, with adjusted operating expenses showing a minimal drop of 2.8% to $165.1 million. The adjusted operating margin climbed to 7.7%, and adjusted diluted EPS was reported at $0.29, reflecting a substantial increase compared to last year.
Examining the sales performance by category, the direct-to-consumer channel experienced a troubling 17.7% decrease, generating $112.4 million in revenue. Brand-wise, Merrell achieved slight growth, reaching $159.2 million, whereas revenue from Saucony fell by 10% to $104.8 million. Wolverine’s revenue dropped by 12.3% to $49.4 million, though Sweaty Betty reported a 3% growth, with sales reaching $46.3 million. The international segment also faced challenges, with sales declining 6.6% to $213.8 million.
Chris Hufnagel, the CEO and President of Wolverine World Wide, commented on the company’s performance, stating that despite the revenue decline, they exceeded expectations due to strong performances from brands like Merrell and Saucony. He stressed that the company is making solid progress in its strategic turnaround efforts while boasting a healthier financial position and a dedicated team.
For the first nine months of 2024, Wolverine’s revenues totaled $1.260 billion, down from $1.716 billion in the same period last year. However, the company saw a bounce back in gross margin, which stood at 44.7%, significantly up from 39.6% in the previous year. Overall, they managed to control operational expenses effectively, with a decrease in selling, general, and administrative expenses.
As for the outlook for 2024, Wolverine World Wide expects ongoing revenue to fall in the range of $1.730 to $1.745 billion, an update from their prior guidance. They have projected a gross margin of 44.5% and an operating margin of approximately 5.8%. The company is also factoring in a reduction in the effective tax rate and is anticipating a slight decline in inventory levels at the year’s end.
In conclusion, while Wolverine World Wide faces considerable revenue challenges in the current market landscape, the company appears to be strategically positioning itself for future growth, with an optimistic outlook for earnings and operational improvement.
