Amid a series of turnaround efforts, Wolverine Worldwide Inc. reaffirmed its 2023 outlook after reporting earnings results that exceeded expectations for the first quarter.
The footwear company, which owns the Saucony, Merrell, Sperry and Sweaty Betty brands, among others, reported revenues of $599.4 million, down 2.5 percent compared to the prior year. Adjusted diluted earnings per share were $0.09, down from $0.38 from the same quarter last year but ahead of the $0.03 prediction from analysts surveyed by Yahoo Finance. Inventories were $725.9 million, down $19 million from Q4.
The results come during what CEO Brendan Hoffman described as a “challenging environment” and in the midst of a broad turnaround effort at the company, which has included a group restructure and layoffs to rightsize business. In late March, Wolverine said it would lay off employees in its Sweaty Betty brand and consolidate office space in London to improve its cost structure. The company also divested its Keds business late last year to focus more on higher-growth brands like Saucony or Sweaty Betty and made Designer Brands Inc. the exclusive licensee for Hush Puppies across all channels in the U.S. as well as Canada.
Hoffman said in statement that the company is now “exploring strategic alternatives for Sperry” while continuing “the foundational work needed to position the brand for long-term success.”
Revenues for the company’s lifestyle boat shoe brand were down 13 percent in the first quarter, following a 28 percent decline in Q4. Last quarter, Hoffman said the main problem for Sperry was that the brand focused too much on the wrong products, failing to realize when consumer trends were shifting until it was too late.
“We’re exploring all options,” Hoffman said in a call with investors. “So it could be a sale, it could be a [joint venture], could be licensing. We’re just starting this process.”
Hoffman added that looking into 2024, “it just became apparent that Sperry was going to continue to require investment that was going to take away from where we think the upside is.”
“I think it just became apparent to all of us that we should start this process and, much like Keds, look for a result that’s best for the company and also best for the brand,” he added.
Wolverine CFO Mike Stornant said in a statement that these cost-saving activities have put the retailer on track to meet its guidance for the year.
“The trading environment is challenging, but the diversity of our portfolio and its global reach is expected to help mitigate those challenges,” Stornant said.
Wolverine reiterated its outlook for 2023 and said it expects revenues between $2.53 billion to $2.58 billion, which would represent flat to 2 percent growth. Adjusted diluted earnings per share are expected to be between $1.40 and $1.60.