Amid the coronavirus pandemic, business at Wolverine World Wide Inc. appears to be bouncing back.
The Rockford, Mich.-based company today reported second-quarter financial results that beat analysts’ expectations: For the three months ended June 27, it logged adjusted diluted earnings per share of $0.08, compared with the prior year’s 52 cents. Meanwhile, revenues dropped 38.6% to $349.1 million. Market watchers had forecasted a loss of 13 cents and sales of $314.96 million.
“The company’s second-quarter results were much stronger than expected despite the negative impact of unprecedented global market conditions and significant retail store closures for much of the time period,” chairman, president and CEO Blake Krueger said in a statement.
As the majority of its stores shuttered due to COVID-19-mandated lockdowns, Wolverine — whose roster of brands includes Merrell, Sperry, Keds and Saucony — saw a nearly triple-digit surge in its e-commerce business.
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“The acceleration of our digital direct offense, together with our diversified and agile business model, enabled the company to adapt to the rapidly changing marketplace and deliver positive earnings and exceptional cash flow in the quarter,” Krueger added. “We believe the company is positioned well to accelerate out of the current market downturn once the impact of the pandemic subsides.”
In the first quarter, Wolverine took steps to address its liquidity: It drew 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.
What’s more, over the past three months, the company amended its senior credit facility to improve flexibility and facilitated the sale of senior notes to provide longer-term financing. It ended the second quarter with $423 million of cash on hand, total liquidity of $1.1 billion and a “much-improved” debt leverage position.
“These financial results are very encouraging and, importantly, are clear evidence of an operating model that can adjust quickly to unexpected challenges,” SVP and CFO Mike Stornant added. “While we expect the second half of the year to remain challenging, we are well prepared for various scenarios that may play out and are confident that the company will remain strong during this volatile time.”