What To Expect When Sperry & Saucony Parent Wolverine Reports Q2

Sperry x Sanderson Bahama
Sperry x Sanderson Bahama boat shoe.
Courtesy of brand.

Wolverine World Wide Inc., parent company of shoe brands Sperry, Keds and Saucony, among others, will report its second-quarter earnings before the market open Tuesday.

Similar to the previous quarter, consensus estimates predict that the firm will see year-over-year declines in both earnings per share and revenues. EPS is forecast to slip 15 percent, to 23 cents, while revenues are expected to decline more than 8 percent, to $579 million.

We expect gross margins to contract 30 [basis points] year-over-year to 38.8 percent on FX headwinds and ongoing inventory clearance, and 85 [basis points] SG&A deleverage on softer top-line growth and shifts in [advertising] spend, resulting in 115 [basis points] operating margin contraction to 7 percent,” Citi Research analyst Kate McShane wrote.

While she acknowledged that the U.S. retail environment remains challenged heading into the second half, McShane said she still sees “modest potential upside” from several factors, including the company’s ongoing share repurchases as well as continued momentum in Sperry’s non-boat offerings.

McShane forecasts EPS in line with consensus and a sales decline of 8 percent.

When Wolverine last reported, its sales and profit — at $577.6 million and $17.6 million, respectively — topped estimates. At that time, Wolverine chairman, CEO and president Blake Krueger attributed the earnings win to the company’s reorganization of its brand groups, adjustments of store fleets and new leadership changes.

As of Feb. 4, Wolverine’s stable of brands are organized into four operating segments: the Wolverine Outdoor and Lifestyle Group, which includes Merrell, Cat Footwear, Hush Puppies, Chaco and Sebago; the Wolverine Boston Group, which includes Sperry, Saucony and Keds; the Wolverine Heritage Group, which includes Wolverine, Bates, Harley-Davidson and HyTest; and the Wolverine Multibrand Group, which includes the Stride Rite Children’s Group and the company’s multibrand consumer direct businesses.