Merrell, Saucony Parent Misses Q4 Sales Expectations, Unveils 2018 Growth Plan

Shares for Wolverine World Wide Inc. are in the red today after the firm posted fourth-quarter revenues that missed expectations.

As of 11:45 a.m. ET, the stock was down 2.3 percent, to $30.02.

The Rockford, Mich.-based owner of Sperry, Merrell, Saucony and other popular shoe brands said today that its Q4 revenues fell more than 20 percent to $578.6 million, missing analysts’ bets for revenues of $580.3 million.

The firm also widened its net loss to $60.8 million, or 65 cents per diluted share, from $2.4 million, or 2 cents per diluted share. On an adjusted basis, earnings per diluted share were 41 cents, a 20 percent gain year-over-year and in line with analysts’ forecasts.

Wolverine chairman, president and CEO Blake Krueger said he was pleased with the sales gains during the period as well as the progress the company made on its Wolverine Way Forward restructuring plan, which was unveiled in December 2016.

“While some of the work will be ongoing, I’m pleased to say that the heavy lifting is behind us and the extra cost required to execute the transformation are complete,” Krueger said of the plan that saw the company shed the Sebago brand, license out Stride Rite, and drop its Department of Defense footwear business.

He added, “We are now ready to take full advantage of our new tools, processes and capabilities, become a nimble and agile company, and pivot our focus and energy to grow. A fast pace of change in the new normal retail in consumer environment continues. And our brands are operating to make the consumer experience frictionless and more convenient across all touch points.”

By brand, in Q4 Krueger said Merrell advanced at a rate in the high teens; Chaco saw nearly 30 percent growth; and Hush Puppies was down mid-single digits. Sperry saw declines in the high single digits; Saucony was also down mid-single digits; and Keds fell low single digits.

To continue to move the business forward, the company today unveiled its newest initiative, Global Growth Agenda, which is comprised of three key elements: a “product creation engine,” focused on speed-to-market and innovation; a digital-direct offense, expected to help Wolverine’s e-commerce grow beyond 20 percent; and international expansion, with a specific focus on China and the Asia-Pacific region. The company expects to invest between $40 million and $45 million in this project.

Looking ahead, for fiscal 2018 Wolverine predicts revenue in the range of $2.24 billion to $2.32 billion, a reported decline of 1.3 percent and underlying growth of about 6 percent at the high-end of the range. Reported diluted EPS is forecast in the range of $1.87 to $1.97 and adjusted diluted EPS is expected in the $1.95 to $2.05 range, an increase of 25 percent at the high-end of the range.

“This new Global Growth Agenda represents the next phase of our transformation,” SVP and CFO Mike Stornant said. “We have the financial capacity to invest in key initiatives and capabilities expected to fund our biggest growth opportunities and support accelerated growth beyond 2018. Including these important investments, we expect to achieve our stated 12 percent adjusted operating margin goal ahead of our original schedule.”

 

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