Wolverine Posts Q2 Sales Beat, Announces Retail Consolidation

Wolverine Posts Q2 Sales Beat, Announces
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Wolverine World Wide Inc. announced plans to shut 140 retail locations over the next 18 months and to consolidate store operations amid efforts to improve profits as it delivered its second-quarter earnings on Tuesday.

The Rockford, M.I.-based company posted earnings of $27.5 million, or 27 cents per diluted share, compared to $17.9 million, or 18 cents, a year earlier. Excluding acquisition-related expense items, earnings per share rose 34.8 percent to 31 cents.

Revenue for the period increased 4.4 percent to $613.5 million.

The results beat the Street’s forecast for sales of $608.8 million and was in line with expectations for second-quarter EPS of 27 cents.

“We are extremely pleased to deliver a record quarter in what continues to be a volatile global retail environment, particularly in the U.S.,” said Blake W. Krueger, company chairman, CEO and president, noting the robust revenue increase across Wolverine’s operating groups globally in the second quarter.

“Our Saucony, Keds, Caterpillar Footwear, Chaco and Wolverine brands posted very strong year-over-year results, and double-digit revenue gains in EMEA, Latin America and Asia-Pacific highlight the broad geographic reach of our portfolio,” he added.

Wolverine expects to post earnings of $1.57 to $1.63 for the full year, or EPS growth of between 10 and 14 percent on the prior corresponding period.

On a reported basis, the company expects to post earnings in the range of $1.32 to $1.38 per share, down from its previous guidance of $1.48 to $1.54 a share, as a result of its strategic realignment plan.

This plan involves closing approximately 60 stores by the end of the current fiscal period, primarily Stride Rite shops, with an additional 80 stores expected to close by the end of 2015. Wolverine also announced plans to consolidate store operations and field support teams and intends to implement other organizational and infrastructure changes.

On the decision, Krueger said, “The strategic realignment plan announced today is an important step in the evolution of the company’s consumer-direct operations to meet the changing behavior of today’s consumer.”

“We are confident that these actions will set a new foundation for our consumer-direct business, help position our company for future growth and increase shareholder value,” he added.

The plan is expected to result in pretax benefits of $11 million annually, the company said, which will be used in part to boost growth in Wolverine’s wholesale operations.

Based on revised expectations for the remainder of the year, the company expects to post year-on-year revenue growth of 3 percent to $2.78 billion, at the lower end of its previously provided guidance range of $2.78 to $2.85 billion.

“As we turn to the back half of the year, we have taken a somewhat more conservative approach to our revenue outlook, reflective of a continued soft retail environment in the U.S.,” said Don Grimes, Wolverine SVP and CFO.

“Having said this, we are pleased to reiterate our full-year adjusted earnings per share guidance,” Grimes added.

Wolverine shares were 1.9 percent, or 51 cents lower, at $25.92 in morning trading.

Meanwhile, the company also announced an internal move, naming Linda Brunzell as vice president of global marketing. Brunzell first joined the company in 2008 as marketing director for Merrell.