Wolverine World Wide Inc. has posted a mixed first quarter as the coronavirus pandemic weighed on its business.
The Rockford, Mich.-based company logged adjusted diluted earnings per share of 28 cents, down from last year’s 49 cents but better than analysts’ bets of 17 cents a share. Revenues, on the other hand, dropped 16.1% to $439.3 million, below market watchers’ forecasts of $455.2 million.
At the quarter’s end of March 28, Wolverine had $472.6 million cash on hand.
“While prioritizing the health and wellbeing of our global team, we have quickly initiated a comprehensive set of measures over the last 30 days to proactively strengthen the company’s financial position, liquidity and balance sheet in the face of the ongoing pandemic,” chairman, president and CEO Blake Krueger said in a statement.
Over the past few weeks, the Merrell and Sperry parent has taken steps to address its liquidity amid the COVID-19 crisis: It has drawn down the remainder of its revolving credit line of $367 million, as well as reduced planned inventory receipts by roughly $300 million, which led to a decline in year-end inventory compared with the prior year.
It has also postponed $25 million of capital expenditures — the funds it uses to make improvements to its fixed assets, including buildings and stores — and reduced planned operating expenses by about $100 million through furloughs, changes in its organizational structure and compensation for its management team. (Overall, the company expects to generate $150 million to $200 million of operating cash flow this year.)
“Based on all of our proactive measures, we expect to be well within the requirements of our current financial covenants throughout the year,” SVP and CFO Mike Stornant said.
Just a few days ago, Wolverine announced a major shakeup to its leadership suite. It expanded the roles of three executives — Chris Hufnagel, Joelle Grunberg and Tom Kennedy — who will now head up multiple brands within the company’s portfolio. In addition, Todd Spaletto has departed his post as president of Wolverine’s Michigan Group.
“We believe our agile business model, which includes our well-established global distribution network and fast-growing digital channels, is well-suited for the future consumer landscape,” Krueger added. “Many of our brands are resonating with consumers faced with shelter-in-place restrictions, and our e-commerce business has accelerated following the close of the first quarter. We believe the company is strong, well positioned to navigate the current challenges and will emerge even stronger.”