Wolverine World Wide, the prominent footwear and apparel marketer based in the US, has reported a significant revenue drop in the third quarter of 2024, bringing in $440.2 million— marking a 16.6% decline year-over-year. Despite the revenue decrease, the company managed to improve its gross margin by 450 basis points, reaching 45.3% due to reduced supply chain expenses and a decrease in end-of-life inventory sales. Net debt has also seen a positive shift, falling to $563 million.
Looking ahead, Wolverine World Wide anticipates total revenue for fiscal year 2024 to be between $1.730 and $1.745 billion. They project a gross margin of 44.5% and adjusted earnings per share between $0.80 and $0.90. The inventory is expected to decrease by another $85 million.
The financial report indicates a reduction in operating expenses for the quarter, which fell by 12.8% year-over-year to $164 million. Operating margin improved to 8%, showing an increase of 280 basis points, while diluted earnings per share experienced a remarkable increase of 154.5%, reaching $0.28. On an adjusted basis, the gross margin stood at 45.3%, a boost of 380 basis points.
Breaking down performance by category, the direct-to-consumer revenue reported $112.4 million, a 17.7% decrease compared to the previous year. In contrast, brand performance varied: Merrell saw a slight revenue increase to $159.2 million, while Saucony’s revenue dropped by 10.0% to $104.8 million. Wolverine’s own brand revenue also fell by 12.3%, totaling $49.4 million. International sales reported $213.8 million, down 6.6% on a year-over-year basis.
CEO Chris Hufnagel shared optimism during the earnings call, stating that the quarter exceeded revenue and earnings expectations, driven primarily by the Merrell and Saucony brands. He emphasized the company’s ongoing efforts to reposition and transform its portfolio of brands for future growth, highlighting an improved balance sheet as a result of previous restructuring efforts.
For the nine-month period ending in 2024, Wolverine’s revenue stood at $1.260 billion, significantly lower than the $1.716 billion reported in 2023. The cost of goods sold was $696.5 million, leading to a gross profit of $563.8 million, and an overall gross margin of 44.7%, an improvement from the prior year’s figure of 39.6%.
As for the remainder of the fiscal year, Wolverine anticipates a revenue decline of 12.4% to 13.1% compared to 2023 figures. The company hopes to maintain a gross margin of 44.5%, a substantial increase from last year. They expect an operating margin of 5.8% and adjusted operating margin around 7.2%. The effective tax rate has been revised to approximately 16.5%, a decrease from earlier estimates, with diluted earnings per share expected to range from $0.56 to $0.66.
In summary, Wolverine World Wide is facing challenges with declining revenue while simultaneously making strides in efficiency and profitability. Their strategic focus on brand optimization and cost management appears to be laying a foundation for potential recovery in the near future.
