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Wolverine World Wide Inc. (WWW - Snapshot Report), one of the leading designers, manufacturers and marketers of branded footwear and apparel, is scheduled to report its third-quarter 2012 financial results on Tuesday, October 16, 2012.

The current Zacks Consensus Estimate for the quarter stands at 72 cents per share, indicating an estimated decline of 11.9% from the prior-year quarter. Revenue, as per the Zacks Consensus Estimate is $363 million.

Second-Quarter 2012, a Synopsis

Soft sales and decline in profitability took a toll on the company’s second-quarter 2012 earnings as Wolverine reported adjusted quarterly earnings of 41 cents a share, down 14.6% from the prior-year quarters’ earnings of 48 cents and missed the Zacks Consensus Estimate of 44 cents. Including one-time items, earnings came in at 42 cents a share, down 12.5% from the year-ago quarter.

Wolverine marked an increase of 0.8% in its top line to $312.7 million, which also came below the Zacks Consensus Estimate of $314 million.

Agreement of Estimate Revisions

For the to-be-reported quarter, 2 out of 8 estimates have been revised downward over the past 7 days, while none were raised during the period. Moreover, for 2012, 3 out of 9 estimates were revised downward, with none moving in the opposite direction. 

The analysts believe that the challenging macroeconomic outlook, especially in Europe, continues to deter the results of the company. Moreover, sales are expected to remain soft on account of declines in the company’s core businesses.

Further, analysts believe that the company’s aggressive pricing and low demand for new categories are expected to affect its profitability.

Magnitude of Estimate Revisions

Given the downward estimate revisions, the Zacks Consensus Estimate for the third quarter slipped 2 cents to 72 cents a share in the last 7 days, while, 2012 estimates decreased 11 cents to $2.48.  

Surprise History

With respect to earnings surprises, Wolverine surpassed the Zacks Consensus Estimate in two of the last four quarters, met in one and lagged in one. Earnings surprise range from a negative 6.8% to a positive 18.5%. The average remained at a positive 5.4%, indicating that the company has outperformed the Zacks Consensus Estimate by the same magnitude over the trailing four quarters.

Our Recommendation

Given the current macroeconomic environment and intense competition from Timberland Co. , Deckers Outdoor Corporation (DECK - Analyst Report) and Skechers USA Inc. (SKX - Analyst Report), we prefer to have a long-term “Underperform” recommendation on the stock. However, Wolverine holds a Zacks #3 Rank that translates into a short-term “Hold” rating.

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