Wolverine World Wide Inc. posted a better-than-expected third quarter driven by the performances of two labels often overshadowed by boldface brands Merrell and Sperry.
The Rockford, Mich.-based group said during a conference call with analysts that both Saucony and Chaco delivered double-digit revenue growth in the three-month period ended Sept. 16. While the running shoe brand drove gains in the low teens, the outdoor sandal label surged nearly 30% as the COVID-19 health crisis drove consumers to shop more athletic and casual styles.
According to chairman and CEO Blake Kreuger, Chaco outperformed “as a result of the outdoor category tailwinds, the brand’s high digital penetration and the continued success of Chillos,” a silhouette introduced early this year. On the other hand, Saucony’s momentum was fueled by its “Originals fashion product, as well as its award-winning product innovation in the running category as sport and activity have been experiencing a resurgence” amid the pandemic.
“Our brands are well positioned in high-demand categories and distribution channels, and forward-demand signals are healthy, both in wholesale and in our direct-to-consumer business,” Kreuger added. “Our strong brands stand at the center of the most relevant product categories trending with today’s consumers: active and athletic, including running; outdoor; at home; and work and work lifestyle.”
Separately, leading brands Merrell and Wolverine saw revenues down in the mid-single digits and high single digits, respectively. Overall, sales at Wolverine Michigan Group — including Chaco, Cat Footwear, Hush Puppies, Merrell and Wolverine — dropped 9.9%, while sales at Wolverine Boston Group — with labels Keds, Saucony, Sperry and Stride Rite — fell 19.7%.
For the third quarter, the footwear manufacturer reported adjusted earnings per share of 35 cents, compared with the prior year’s 68 cents. Analysts had anticipated EPS of 27 cents. Revenue were also down 14.1% to $493.1 million, versus market watchers’ predictions of $460.81 million.
Beyond Saucony and Chaco, Wolverine’s e-commerce business was another bright spot, spiking 56% from the prior year, with direct-to-consumer online sales serving as the “primary driver of growth” across its brands. Looking ahead, Wolverine’s CEO said he expects the impact of the COVID-19 to persist, but added that shifts in consumer behavior and broader trends have created opportunities for the brand portfolio, as well as forecasted a “strong” start to the next fiscal year.
“The company is poised to perform in the new environment that has emerged,” Krueger said. “We expect the acceleration of online purchasing to continue, and this channel could account for almost 50% of our U.S. business in 2021.”
He added, “We also expect consumers will continue to covet product newness, especially in the active and athletic, outdoor, at home and work categories. These consumer trends have been significantly accelerated by the work-from-home and social distancing experiences of the last eight months, and we expect these trends will continue beyond the pandemic horizon. This is great news for us as our portfolio includes brands that offer industry-leading products in all of these categories.”