Wolverine World Wide, a prominent player in the footwear and apparel industry, has reported a significant decline in its Q3 revenue, posting a total of $440.2 million. This marks a 16.6% drop compared to the same quarter last year. However, the company saw its gross margin improve by 450 basis points to 45.3%, driven largely by reduced supply chain costs and a decrease in the sales of end-of-life inventory. Additionally, Wolverine’s net debt decreased to $563 million.
Looking ahead to fiscal year 2024, Wolverine World Wide anticipates a revenue range of $1.730 to $1.745 billion, a gross margin of 44.5%, and adjusted earnings per share (EPS) between $0.80 and $0.90. The company expects its inventory levels to drop by $85 million.
In the third quarter, Wolverine’s operating expenses shrank by 12.8% year-over-year to $164 million, which contributed to an operating margin increase of 280 basis points to 8%. The diluted EPS saw a noteworthy rise of 154.5%, reaching $0.28. On an adjusted basis, the gross margin stood at 45.3%, and the operating margin improved to 7.7%.
Breaking it down by categories, direct-to-consumer revenue was reported at $112.4 million, reflecting a 17.7% decline. Meanwhile, the Merrell brand experienced a slight revenue increase to $159.2 million. In contrast, Saucony’s revenue declined by 10%, landing at $104.8 million. The international sales figures showed a decrease of 6.6%, totaling $213.8 million.
Chris Hufnagel, the CEO of Wolverine World Wide, expressed optimism regarding the company’s performance, highlighting that they exceeded revenue and earnings expectations, with notable contributions from Merrell and Saucony. He stated that the company is making strides in turning around and revitalizing its operations, asserting that they are now well-positioned for future growth.
For the first nine months of 2024, Wolverine World Wide reported revenues of $1.260 billion, down from $1.716 billion during the same period in 2023. The cost of goods sold also saw a reduction, indicating improved financial health in certain aspects.
The outlook for the entirety of 2024 includes expectations for a modest decline in revenues and a focus on maintaining a stable operating margin. The anticipated effective tax rate has been adjusted downward, which may aid in overall earnings.
In summary, while Wolverine World Wide faces challenges reflected in its declining revenue, strategic measures are underway to enhance its growth potential and establish a more resilient business model moving forward.
