Wolverine World Wide Inc. has taken steps to expand its international presence, revealing in its first-quarter earnings report that it spent up to $40 million on capital investments, particularly for its Merrell, Sperry and Saucony brands.
The investments come as the Rockford, Mich.-based footwear manufacturer — also parent to Keds and Hush Puppies — posted earnings of 43 cents per share, compared with 48 cents in the prior year period. On an adjusted basis, EPS was at 49 cents, versus 50 cents last year — still besting analysts’ estimates of 47 cents per diluted share.
Both profits and sales declined, with the former down 13% to $40.5 million, while the latter dipped 2% to $523.4 million over the same time last year. Wolverine’s shares were down 6% at $32.83 in Thursday morning trading.
Despite underperforming the market so far this year, Wolverine chairman, CEO and president Blake Krueger said in a statement that the company’s bottom line exceeded expectations.
“Four of our top five brands delivered revenue above plan during the quarter, including Merrell and Saucony, and our owned e-commerce business continued to be robust, growing 28% over the prior year,” he explained. “This strength helped to offset some unforeseen challenges at Sperry and the late start to spring, which impacted certain product categories.”
During a conference call, the firm added that the slow lead-up to the warmer seasons affected the sales of boat shoes and sandals. Additionally, inventories increased 28.7% against the prior year, about 7% higher than predicted, largely due to Sperry.
Among Wolverine’s key investments include a previously announced joint venture with Chinese sportswear retailer Xtep International Holdings Ltd. to grow its Merrell and Saucony products in mainland China, Hong Kong and Macau. The company is also expanding operations in Europe through the acquisition of one of its key Saucony footwear distributors as well as opening new outlet store locations for the Merrell and Sperry brands as part of its direct-to-consumer strategy.
“Our diversified portfolio was an asset during the quarter as several brands experienced attractive revenue growth, which helped to offset the macro headwinds faced in other parts of the business,” SVP and CFO Mike Stornant said. “We remain committed to making key investments to drive revenue growth as part of our global growth agenda, including a new joint venture in China, acquiring a European distributor, expanding our store base for key brands and significantly enhancing the work environment of our corporate headquarters.”
For the full year, Wolverine reiterated its expectation for revenues to be in the range of $2.28 billion to $2.33 billion. Diluted earnings per share are now forecasted to be between $2 and $2.15, while adjusted diluted earnings per share are anticipated to be between $2.20 and $2.35.
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