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Wolverine World Wide Inc. (WWW - Snapshot Report) posted strong third-quarter 2013 results, driven by the continuous impressive performance of its newly acquired brands. Wolverine’s quarterly earnings per share of $1.16 handily surpassed the Zacks Consensus Estimate of $1.05 and rose 61.1% year over year.

Including one-time items, the company reported earnings per share of $1.08 compared with 66 cents in the year-ago quarter.

Benefiting largely from the acquisition of Collective Brands’ Performance + Lifestyle Group (PLG) group, Wolverine reported net sales of $716.7 million that more than doubled  on a year-over-year basis and came ahead of  the Zacks Consensus Estimate of $711 million. Moreover, on a pro-forma basis, revenues increased 9.0% in the quarter.

Wolverine acquired the PLG unit for $1.25 billion. The PLG unit sells footwear and related products, both wholesale and retail, for children and adults under popular brands including Stride Rite, Sperry Top-Sider, Saucony and Keds.

As regards the company’s operating groups, revenues at its Lifestyle group came in at $295.8 million, a whopping rise from $38.0 million in the year-ago quarter. The Performance group’s revenues rose 67.0% to $254.1 million, while Heritage group’s revenues nudged up 0.8% to $144.6 million. Revenues derived from the company’s other brands rose14.4% to $22.2 million in the quarter.

On account of top-line improvement, the company’s gross profit rose more than twofold to $286.0 million, while gross margin expanded 70 basis points (bps) to 39.9%. The improvement in both these cases reflected an encouraging channel mix, partly offset by foreign exchange contract losses.

Operating profit came in at $86.3 million, rising 86.4% year over year. However, operating margin contracted 110 bps to 12.0%.  

Other Financial Aspects

Wolverine, which competes with Deckers Outdoor Corporation (DECK - Analyst Report), ended the quarter with cash and cash equivalents of $147.8 million, net debt of $994.3 million and shareholders’ equity of $768.0 million. Operating free cash flow came in at $22.8 million for the quarter.

Guidance

This Zacks Rank #3 (Hold) company raised its earnings guidance based on robust year-to-date performance. Adjusted earnings per share are now expected to be in the range of $2.73–$2.83, up from its earlier projection of $2.60–$2.75, and reflecting year-over-year growth of 19.2% to 23.6%.

Revenues are expected to be in the range of $2.71–$2.73 billion, up 6.4% to 7.1% year over year on a pro-forma basis. For fiscal fourth-quarter 2013, the company anticipates revenues in the band of $750–$780 million, reflecting growth of 3.2% to 6%.

Other Stocks to Consider

Apart from Wolverine, other stocks in the consumer discretionary sector worth considering include Brown Shoe Co. Inc. (BWS - Snapshot Report) and Skechers USA Inc. (SKX - Analyst Report). Both of these carry a Zacks Rank #1 (Strong Buy).

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