Merrell and Sperry Continue Their Progress, but Overall Wolverine Sales Fall Short

Shares for Wolverine World Wide Inc. are taking a hit today — remaining in the red almost 10 percent at $32.57 as of 1:45 p.m. ET — after the firm posted third-quarter sales that were much less than Wall Street had expected.

The Rockford, Mich.-based parent of Sperry, Merrell, Keds and other popular shoe brands said its sales during the period fell 4 percent to $558.6 million, missing the consensus estimate of $582.1 million.

Nevertheless, profits more than doubled year over year to $59 million, or 60 cents per diluted share. On an adjusted basis, earnings rose 44 percent to 62 cents per share, besting analysts’ forecasts of 56 cents per diluted share.

Addressing the sales deceleration, Wolverine chairman, president and CEO Blake Krueger said the firm’s underlying revenues were actually on the rise during the period — thanks to continued strength at Merrell and a steady recovery at Sperry.

“We reported strong earnings during the third quarter, driven by healthy gross and operating-margin expansion,” Krueger said. “Our ‘Way Forward’ transformation initiatives continue to gain traction and deliver tremendous benefits as evidenced by better-than-expected operating leverage in the quarter. Underlying revenue growth in the third quarter was positive, and we expect underlying revenue growth for the fourth quarter to improve meaningfully as our growth initiatives take hold, especially for our two largest brands, Merrell and Sperry.”

Still, the company lowered its revenue expectations for the fiscal year, citing weakness in the Latin America market and the bankruptcy of a “workboot customer” (likely Sears Holdings Corp, which filed for Chapter 11 bankruptcy protection in October).

It now expects revenue of $2.24 billion, representing 2.5 percent underlying growth for the full year — this compares with a previously issued range of $2.24 billion to $2.32 billion. Reported diluted earnings per share are now expected to be between $2.09 and $2.13, and adjusted diluted EPS are forecast between $2.12 and $2.16, an increase over its previous outlook. (It previously called for reported diluted EPS in the range of $2.05 to $2.12 and adjusted diluted EPS from $2.08 to $2.15.)

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