Earnings Preview: Big 5, Wolverine, Columbia, Crocs & VF

Timberland
Timberland’s men’s Stormbuck boot, with waterproof TPU top cap.
Courtesy Photo

Another big week in earnings has commenced.

In the days ahead, Big 5 Sporting Goods, Wolverine World Wide, Columbia Sportswear, Crocs and VF  are all expected to post first quarter earnings.

Here’s the roundup to get you up to speed for this week’s big earnings releases in footwear.

Big 5 Sporting Goods
In Q4, profits for the El Segundo, Calif.-based company fell to $2.8 million from $5.2 million in the year-ago quarter. Experts said lower-than-expected margins, as well as the overall decline, was due primarily to a soft holiday season for the sporting goods retailer.

For the first quarter of 2015, to be reported on April 28, Big 5 said it expects same-store sales to increase by the low- to mid-single-digit range, with earnings per diluted share to come in at 6 cents to 13 cents. The company cited the labor dispute at the West Coast ports and its impact on product availability for the modest expectations.

Big 5 is expected to report on April 28.

Wolverine World Wide Inc.
Analysts say they will be watching to see how the parent company of Sperry, Keds and Stride Rite’s profits and overall guidance held up against the dollar’s strength and the euro’s decline in Q1.

“We believe [Wolverine] could lower 2015 guidance, given what to us seems like high expectations for Sperry and Merrell — both of which are in turnaround mode,” Citi Research analyst Kate McShane wrote. “We also expect that the pressure on the euro could result in further EPS revisions.”

Even though the company lowered 2015 guidance during the Q4 conference call, McShane noted, Wolverine’s stock has appreciated 16 percent since Feb. 17.

“We are reiterating our ‘Hold’ rating and revising our estimates on [Wolverine] to reflect the stronger U.S. dollar ahead of 1Q15 earnings,” said analyst Danielle McCory of Wunderlich Securities Inc. “That said, we continue to believe management remains focused on positioning the business for future sustainable growth as it invests to support brand enhancement and adapt to the new way of consumer shopping.”

Susquehanna Financial Group LLC analyst Christopher Svezia also said he applauds management’s recent investments.

“Growth [in Q1] will likely be driven by the performance group, while we look for continued improvements at Sperry due to recent positive initiatives,” said Svezia.

The company is expected to report on April 28.

Sperry for spring '15 Sperry x Gray Malin’s women’s collection for spring ’15. Courtesy Photo.

Columbia Sportswear Co.
The Portland, Ore.-based company beat Wall Street expectations on revenue and profit in Q4 when it reported in February. Net income for the fourth quarter was $55.6 million — a significant increase compared with the year-ago period, when the company reported a profit of $36.7 million.

In March, Columbia announced that longtime CEO Tim Boyle, who also served as president and chairman, was being joined by Bryan Timm as the new COO and president.

At the Sorel division, Mark Nenow was appointed president, a newly created role. He was previously VP of global footwear merchandising and design for Sorel and Montrail. Joe Boyle was named VP of Columbia Brand Merchandising & Design, overseeing product creation for Columbia brand apparel, footwear, accessories and equipment.

The company is expected to report Q1 on April 30.

Crocs
“2015 is a transition year as the company moves towards an asset-light model,” said Sterne Agee analyst Sam Poser. “A strong management team with a footwear background is finally in place, the product mix is becoming more focused and compelling, and systems and processes are improving.”

During the fourth quarter, Crocs reported a net loss of $56.9 million, or 70 cents a share, compared with a loss of $66.9 million, or 76 cents, during the year-ago period. Excluding charges and other restructuring costs, the 2014 Q4 loss was $30 million.

Insiders have been critical and skeptical of the brand since it started consistently missing revenue projections around 2013 after its return to profitability in 2010.

In March, the company announced that it had launched its largest marketing investment in its 12-year history and its first international effort — a global ad campaign, #FindYourFun.

“The brand is not damaged, just in an out-of-sight, out-of-mind space, but that’s changing,” Poser noted. “Family footwear retailers’ initial reaction to spring ’16 product and brand strategy is very positive. Material improvement in sales trends and margins will commence by 4Q15.”

Crocs is expected to report on April 30.

VF Corp.
Analysts are generally positive about Vans and Timberland’s parent company this quarter, even though the company posted a mixed Q4 performance and is expected to continue to face some currency headwinds.

“VF Corp. is still a best-in-class operator, with core fundamentals offsetting modest foreign exchange pressure,” said Svezia in a note on April 15. “Our checks across many footwear channels suggest continued strength in the canvas/casual trend, with many calling out Vans specifically, while Timberland likely continued to build off a strong holiday season.”

Vans hit a milestone in Q4, surpassing $2 billion in sales.

The company is expected to report Q1 on May 1.