Wolverine World Wide Inc. trampled over Wall Street’s second-quarter predictions today producing significant top-and-bottom line beats and also upping its full-year guidance. But the firm — which has been rationalizing its portfolio, recently divesting its Sebago brand and licensing out the Stride Rite label — is remaining grounded, noting that it will continue to aggressively execute its digital-focused Way Forward Plan.
“While we’re not done with all of the heavy lifting, we’ve made tremendous progress at an incredible pace,” president, chairman and CEO Blake Krueger told investors during a conference call this morning. “All [of these improvements] are reflected in our first half results. As a company, we’re beginning to harvest the benefits of our collective efforts and are pivoting to the offense from a strong foundation and a position of confidence.”
Krueger noted that the firm — which owns Sperry, Merrell, Saucony and other popular shoe brands — has recently made significant investments in consumer insight, market intelligence, innovation and trends resources.
“[We’ve also] expanded and invested in our digital infrastructure and analytics capabilities to drive e-commerce growth and digital and social connections with our consumers …” Wolverine’s chief added.
During the quarter, the company said its reported revenues gained 2.6 percent year-over-year, to $598.8 million, topping bets for revenues of $573.3 million.
Profits, however, fell 14 percent to $20.7 million, or 21 cents per diluted share. Still, adjusted diluted EPS were 43 cents, a record second-quarter performance for the company, and a solid beat against Wall Street’s forecast for diluted EPS of 29 cents.
On the brand side, sales at Merrell were just above mid-single digits; Chaco posted mid-teens growth; and revenues at Hush Puppies were down high single digits.
According to Krueger, sales remained soft at Sperry, down mid-single digits; Keds was down low double digits; Saucony was “up slightly.”
“Sperry performed better than anticipated in the quarter,” Krueger said. “While the boat shoe category stabilized somewhat, this category continued to experience trend headwinds.”
Krueger added that the brand’s product team accelerated efforts to diversify the category mix and drove “strong double-digit growth during Q2 in its second-largest spring/summer category, vulcanized footwear.”
Looking ahead, while Michael Stornant, Wolverine CFO, SVP and treasurer, said he was cautious and doesn’t “expect global market conditions to improve meaningfully in the near term,” he upped the firm’s reported revenue guidance for fiscal 2017.
Reported revenue is now expected in the range of $2.320 billion to $2.370 billion, which includes a $40 million reduction in revenue from the conversion of the Stride Rite business to a license model. The new revenue forecast represents a reported decline of 7 percent to 5 percent, but underlying revenue is now expected to increase and be within the range of flat to growth of 2 percent, reflecting $175 million impact from retail store closures, the Stride Rite change and currency. Reported diluted earnings per share is predicted to be in the range of 82 cents to 92 cents, compared to 89 cents in fiscal 2016. Adjusted diluted EPS are now expected in the range of $1.55 to $1.65 compared to $1.36 in fiscal 2016. On a constant currency basis, adjusted EPS is predicted in the range of $1.62 to $1.72.
Under its previously-announced Store Restructuring Plan, Wolverine has closed 180 stores since the beginning of 2017 — including 76 closures during the second quarter of fiscal 2017. The company expects an additional 33 store closings before the end of fiscal 2017, leaving a remaining retail store fleet of 80 stores.
As of 1 p.m., Wolverine’s shares were down nearly 4 percent, to $26.70.