A tough retail environment and unusually cold weather weighed on Wolverine World Wide Inc.’s fourth-quarter sales, despite a strong performance from the company’s outdoor brands, such as Merrell.
Rockford, Mich.-based Wolverine’s shares sank more than 6 percent in midday trading after the firm reported a narrower loss for the quarter of $1.7 million, or 2 cents a share, from a loss of $3.7 million, or 4 cents, a year ago. Analysts said shares were lower after the company’s sales missed expectations.
When adjusted, fourth-quarter earnings were 22 cents a diluted share, versus 24 cents in the prior corresponding period, higher than Wall Street’s forecast of 20 cents.
As noted during the company’s previous earnings call, fourth-quarter earnings were negatively impacted by incremental pension and incentive compensation expenses and a higher tax rate and share count.
Revenue for the quarter rose 13.6 percent to $740.8 million, missing the firm’s guidance for between $760 million and $780 million, and falling short of analysts’ consensus forecast of $743.9 million.
On a conference call with analysts and investors, Blake Krueger, Wolverine’s chairman, president and CEO, said the challenged retail environment in the U.S. hurt sales for the company’s Sperry Top-Sider label in the quarter, adding that he is optimistic about the brand’s performance in the first quarter of 2014.
“As a result [of the retail environment and early start to winter], the U.S. market for brown shoes and casual footwear brand[s] was negatively impacted,” he said.
“The dramatic shift in weather, coupled with a shift in the demand toward boots, caused the consumer to quickly transition from warm-weather casual offerings directly into boots,” Krueger said on the call.
To protect the long-term growth potential of Sperry in the U.S., Wolverine CFO Donald Grimes said the company decided to exit certain retail distribution networks in 2013, the impact of which will be realized this year.
“This combination of factors is expected to result in a stronger performance for the brand in the second half of the fiscal year than the first half, and flattish revenue growth for the year taken as a whole,” Grimes said on the call.
For the full year, earnings increased 25.4 percent to $1.43 a diluted share, beating consensus forecasts of $1.42.
Sales for the full year rose 64 percent to $2.69 billion, compared with the prior corresponding period, matching consensus forecasts of $2.69 billion.
Wolverine expects revenue growth of 3 percent to 6 percent for the full year, to between $2.78 billion and $2.9 billion in fiscal 2014. The company forecast diluted earnings per share in the range of $1.57 to $1.63, representing growth of between 10 percent and 14 percent from fiscal 2013.
On the outlook for 2014, Grimes said in a statement, “A more challenging 2013 holiday selling season and lingering uncertainty in the U.S. are balanced with 2014 expectations for continued double-digit growth from our brands in Latin America and Asia Pacific. International efforts for our newly acquired brands will begin showing results in the back half of the year and are expected to gain meaningful momentum into 2015.”