Wolverine Worldwide reported an overall profit loss in fourth quarter, in part driven by declines at Sperry.
The company’s lifestyle boat shoe brand was especially challenged, with revenues down 28% in the quarter and 10% in fiscal 2022. Lower sell-throughs on some styles as well as wholesale partner cancellations also impacted results.
Overall, the footwear conglomerate on Wednesday reported a net loss of $361 million for the fourth quarter. Revenues grew 4.6% to $665 million on a constant currency basis. For all of last year, Wolverine lost $188.3 million, versus net earnings of $68.6 million in 2021. Revenues in 2022 rose to $2.69 billion, from $2.42 billion in 2021.
The main problem for Sperry in Q4 was product, explained Brendan Hoffman, Wolverine Worldwide’s president and CEO, in a call with investors. That is, Sperry focused too much on the wrong products, failing to realize when consumer trends were shifting until it was too late.
“Customers love Sperry for its core franchises, but we did not proactively modernize quickly enough based on trend,” Hoffman said. For example, Hoffman said Sperry was late in recognizing that the duck boat trend was declining in favor of fashion boots. Other “missteps” included chasing product that was not relevant to the Sperry consumer but popular at other brands.
Sperry is known for its boat shoes and coastal brand identity. However, the Wolverine Worldwide-owned footwear brand has more recently looked to expand its appeal beyond its waterside, preppy heritage, Sperry’s chief marketing officer Elizabeth Drori told FN in August.
Moving forward, Wolverine will lean more heavily into its core nautical and preppy DNA, narrowing its collaborations to relevant designers with a nautical connection.
“We need to refocus on boat and making boat cool again,” Hoffman said. “And that includes focusing our collabs and marketing around boat with new updated styles that really resonate to the core.”
In Q1, Wolverine expects Sperry revenues to decline in the high single digits as the brand embarks on its recovery. When asked by analysts if he would consider selling the brand, Hoffman said it’s not the right time, given the company’s recent divestment of the Keds brand to Designer Brands Inc. and the planned sale of its leather business. He also wants to see this recovery plan through.
“As far as Sperry goes, I think we’ve uncovered some stuff that can help us recover what some of what we’ve lost over the last few years, and that will just make the business healthier for whatever track we decided to take it,” he said. “[We] feel like there’s some opportunities in Sperry that, given the macro conditions, we should focus on and then reassess.”
The challenging results come as Wolverine rolls out a turnaround plan to rightsize business and improve gross margin, reorganizing its portfolio of brands into three different segments.