The parent company of popular shoe brands such as Sperry, Keds and Saucony said its net income declined 5 percent, to $24 million, or 24 cents per diluted share, from $25.3 million, or 24 cents per diluted share, in the comparable period. Adjusted diluted earnings per share were 25 cents, and 30 cents on a constant currency basis, compared to 27 cents in the prior year. It was a beat on market watchers’ forecast for EPS of 23 cents.
Reported revenue declined 7.4 versus the prior year, to $583.7 million — topping Wall Street’s predictions for revenue of $578.9 million.
“Our diversified business model built around an industry-leading portfolio brands, selling in nearly every market around the world, coupled with strong operational discipline, continued to serve us well during the quarter,” Wolverine president, chairman and CEO Blake Krueger said during the company’s conference call Tuesday. “I am pleased with our performance in the quarter given the global economic political and retail environment but even more excited about the progress we continue to make against our key strategic initiatives.”
In Wolverine’s Outdoor and Lifestyle Group, underlying revenue was down 0.8 percent compared to the prior year, with Chaco posting high-teen growth, Merrell and Cat Footwear down low-single digits, and Hush Puppies down high-single digits.
At the Wolverine Boston Group, underlying revenue declined 9 percent versus the prior year, with Saucony up mid-single digits, Sperry down high teens, and Keds down mid-single digits.
“We expected the first half of 2016 to present headwinds for Sperry,” Krueger said. “Softness in the boat shoe category persisted in the quarter, as consumers continue to focus on more athletic-inspired style. … We expect Sperry to return to growth in the back half of this year.”
Underlying revenue in the Wolverine Heritage Group was down 6.2 percent year over year, with Bates up double digits and Wolverine down high teens.
Wolverine’s inventory levels were down 2.9 percent year over year, the lowest Q2 ending inventory levels since the acquisition of the PLG brands in 2012, Krueger noted. (Wolverine closed the acquisition of Collective Brands’ Performance & Lifestyle Group (PLG), which consisted of the Sperry, Saucony, Stride Rite and Keds brands, in October 2012.)
The company reaffirmed its full-year outlook while Krueger suggested a few brand divestitures as well as more store closures could be imminent.
“Over the past few months, we have turned a very sharp eye towards our existing portfolio, in the context of what we believe to be the new normal global retail environment,” Krueger said. “We have made significant progress in reviewing strategic alternatives for our portfolio, which could include the sale of several brands in the portfolio that may not need our go-forward performance criteria and profit goals. We are also strategically reviewing our entire store fleet against the rising tide of challenges impacting domestic retail stores.”