In one fell swoop last year, Wolverine World Wide Inc. nearly doubled its direct-to-consumer revenues through the $1.24 billion Collective Brands Inc. deal — yet more growth is to come, the firm said.
“Post-acquisition, retail is a more meaningful component of the business,” said Chris Hufnagel, the firm’s president of retail, noting that direct-to-consumer revenue jumped to 13 percent of annual sales, from 7 percent, through the addition of the Stride Rite, Sperry Top-Sider, Saucony and Keds brands.
But, the executive noted, the mid-term goal is for that figure to reach 30 percent, and the firm plans to reach it via both brick-and-mortar and e-commerce expansion. Already, the cache of labels has boosted Wolverine’s door count to 450, from 100, and added 25 e-commerce sites to the 38 currently operating for its Merrell, Wolverine, Cushe, Hush Puppies, Chaco, Cat, Sebago and Bates labels.
Sperry, in particular, is experiencing enough growth at wholesale and retail to warrant an acceleration in store expansion, said Hufnagel.
Between July and August, the label, which saw double-digit e-commerce growth in the second quarter, will debut four new retail locations in Natick, Mass.; Atlanta; Jacksonville, Fla.; and Edina, Minn. More openings are slated for 2014, and all doors will showcase a new beach house-inspired design that allows more displays for apparel.
Market watchers such as Steven Marotta, analyst with CL King & Associates, were upbeat on Sperry’s retail road map.
“Considering they posted a mid-teens comp, they’re doing some things right,” he said. “They are materially broadening their product categories and that will benefit their own direct-to-consumer strategy — because when you walk into the store, there’s a much stronger presentation.”
However, Sam Poser, an analyst with Sterne Agee, sounded a more cautious tone: “[The brand is] talking about having up to 100 stores. That I feel is more risky. Once boat shoes run their course, Sperry’s got a problem. They see it being a full lifestyle brand, and it could be lifestyle, but not tomorrow.”
But Wolverine, which owns 16 brands, isn’t putting all its eggs in one basket.
Last month, Stride Rite cut the ribbon on a new store in Columbus, Ohio, that features an updated interior design. Key elements include a more-open floor layout; clean, modern fixtures; a Fit Station; a light color scheme using splashes of neon; and shelves at varying heights to allow kids to view product easily. Three more Stride Rite stores will be added this fall, in Augusta, Ga.; Houston and Columbia, Md.
Additionally, the firm’s Wolverine Company Store concept is seeing encouraging results. A pop-up in New York last summer, for instance, was so successful that the brand is moving into a permanent space on Elizabeth Street in Manhattan later this month, noted Hufnagel.
“The idea was built around the Wolverine 1,000 Mile boot — a great heritage piece. It’s the pinnacle product of the Wolverine brand, and it really fit well within what was happening from a consumer standpoint,” he said, adding that the store concept has the potential to perform well elsewhere in the U.S. or abroad.
Outside of brick-and-mortar, Wolverine continues to target the digital realm to better meet the demands of today’s shoppers.
“The way consumers shop, the way they bounce between channels, whether they’re tethered to a computer at home or on their mobile device or their tablet, and how they actually engage in the digital experience — that’s an area that we’re continuing to invest in. It’s a very fast-growing piece of the business right now, and it continues to accelerate,” said Hufnagel.
To grow that piece of the business, Wolverine is looking not just at mono-branded Web portals but also multibrand e-commerce options.
“When you look at our portfolio, across all the brands and all the occasions we serve — male, female, kids, work, play — there are pieces of our portfolio that could be a compelling multibrand experience,” said Hufnagel. “[We’re thinking about] what is the opportunity to take brands from within our portfolio and merge them together in a new experience for the consumer.”
Wolverine already has a multibrand concept in the brick-and-mortar realm. Several years ago it bought Track N Trail, consisting of 12 stores that carry both Wolverine brands and outside product.
While the casual-active footwear chain is not a growth target for the company, Hufnagel pointed out it still serves an important role. “It’s a concept that we test a lot of ideas in, for our own brands and also as we think about new multibrand opportunities,” he said.
Overall, Wolverine’s high-margin direct-to-consumer business offers a fertile revenue source. But almost as important, it is a fount of knowledge to help the firm build better brands.
“The great thing about retail is that every day the consumer votes and essentially we get real-time data on how we did. So it’s amazingly energizing and exciting,” Hufnagel said. “At the end of the day, we’re in the branded business, and we want to create great experiences and make people fall in love with our brands.”