Sneakers sales are down sharply, but the Wolverine-owned Saucony athletic brand is still winning.
While the parent company reported mixed Q1 results today — and warned that Q2 will be its most challenging period of the year as the coronavirus crisis continues — Wolverine World Wide Inc. singled out some bright spots, starting with the surging Saucony brand.
“Saucony was our top-performing brand in the quarter, fueled by the combination of innovative new product and a focus on consumer connections through e-commerce,” said Wolverine chairman and CEO Blake Krueger in a conference call, noting that the brand posted double-digit growth for the quarter.
The executive said the performance pointed to further evidence that Saucony has “regained momentum.”
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Several new launches, including the Triumph 17 performance running shoe and versatile Guide 13 style, drove excitement. “Both franchises utilize the brand’s power run plus midsole cushioning technology, which delivers enhanced flexibility, fit, durability and energy return, while weighing a third less than comparable models,” Krueger explained.
While insiders are mixed on whether the quarantine running boom is translating into clicks, Saucony saw continued digital momentum as website sales grew in the double digits.
More broadly, Wolverine is pushing full-price selling in its e-commerce business, with a focus on newness and storytelling to capture interest while consumers are spending most of their time at home.
As many industry executives have noted, the right messaging is critical. Krueger noted that when Chaco last month converted its repair and custom sandal factory in Michigan to a mask production site — and a the same time debuted new product — Chaco.com experienced triple-digit increases. “We have similar examples in Merrell, Saucony and the rest of the portfolio. The consumer is looking for newness and an optimistic brand message and outlook,” the CEO said.
During the call, Krueger also outlined additional leadership changes within the company’s ranks. As reported, Wolverine this week elevated Chris Hufnagel, Joelle Grunberg and Tom Kennedy.
In addition, Keds president Gillian Meek is exiting the company, while Bornie Del Priore will now lead both the Keds brand and kids’ group in Boston.
Greg Tunney, Hush Puppies head, also is stepping down as Kate Pinkham takes the reins of that brand after a stint as head of marketing. Chip Coe will now run Cat Footwear, while Todd Gordon is leading Chaco. And Seth Cobb will steer the Bates brand.
As all of those leaders settle into their new posts, the company is optimistic about the digital opportunities ahead. It projects its combined e-commerce and third-party online businesses will represent between 50% and 60% of full-year revenues.
Still, there are big challenges ahead as the coronavirus continues to cripple brick-and-mortar business.
“We think Q2 is going to be the toughest quarter for us in terms of revenue growth based on the fact that we have a shutdown in most markets around the world,” said Michael Stornant, SVP, CFO, treasurer and chief accounting officer.
In the near-term, the executives are most confident about Merrell, Saucony and Wolverine’s work brands.
For Q1, 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 on 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,” Krueger said.