Wolverine Outshines, Beats Estimate

Wolverine World Wide Inc. (WWW - Snapshot Report), one of the leading designers, manufacturers and marketers of branded footwear and apparel, recently posted strong third-quarter 2011 results that topped the Zacks expectation on the heels of double-digit growth witnessed across its top and bottom line. Buoyed by better-than-expected results the company raised its outlook for fiscal 2011.

The company’s multi-brand portfolio, multi-distribution channel strategy and higher prices remain its key growth drivers.

Quarterly Discussion

The quarterly earnings of 82 cents a share outpaced the Zacks Consensus Estimate of 75 cents and grew 17.1% from 70 cents earned in the prior-year quarter.

Wolverine, the seller of products under Harley-Davidson Footwear, Hush Puppies, Merrell and other brands, declared that its total revenue for the quarter climbed 12.9% to $361.6 million from the prior-year quarter, handily beating the Zacks Consensus Estimate of $357 million.

Among the operating groups, revenues increased 19.9% year-over-year to $145.4 million for Outdoor, 6.8% to $128 million for Heritage, and 21.6% to $55.5 million for Lifestyle.  Other business units, which comprise Wolverine retail and leathers, posted a revenue growth of 22.8% to reach $3.9 million.

Gross profit jumped 14.1% to $146.7 million during the quarter, whereas gross margin expanded 44 basis points to 40.6% compared with the prior-year quarter, reflecting strong top line performance coupled with price increases and favorable product mix.

Rockford, Michigan-based Wolverine enjoyed increased momentum in fiscal 2010 that continues into fiscal 2011. Moreover, we believe that the company remains well positioned to increase its market share on the strength of its brand portfolio. The Merrell brand has been the key growth driver in the past decade, and we expect it to catalyze future growth.

Other Financial Aspects

Wolverine ended third-quarter 2011 with cash and cash equivalents of $97.9 million and shareholders’ equity of $601.6 million with no debt (long-term). The company repurchased 948,000 shares during the quarter at a cost of $34.45 per share aggregating to $32.7 million.

Guidance Raised

Wolverine’s healthy third-quarter 2011 results keep management optimistic in fiscal 2011. The company raised its revenue and earnings guidance.

The company now expects total revenue in the range of $ $1.40 billion to $1.43 billion reflecting a year-over-year growth of 12.1% to 14.5%. Fiscal 2011 earnings are now projected between $2.46 and $2.52 per share, representing a growth of 13.4% to 16.1% from the prior year.

Earlier, the company projected total revenue in the range of $1,380 million to $1,420 million, reflecting a year-over-year growth of 10.5% to 13.7%. Fiscal 2011 earnings were expected between $2.40 and $2.50 per share, representing a growth of 10.6% to 15.2% from the prior year.

Currently, we maintain a long-term Neutral rating on the stock. Moreover, Wolverine, which competes with Timberland Co. (TBL), Deckers Outdoor Corporation (DECK - Analyst Report) and Skechers USA Inc. (SKX - Analyst Report), holds a Zacks #1 Rank, which translates into a short-term Strong Buy recommendation.

Read the full analyst report on WWW

Read the full analyst report on SKX

Read the full analyst report on DECK

Read the full analyst report on TBL