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Wolverine World Wide Inc. (WWW - Snapshot Report) posted strong first-quarter 2013 results, owing to the robust performance of its newly acquired brands. Wolverine’s quarterly earnings of 81 cents a share zoomed past the Zacks Consensus Estimate of 54 cents and jumped 26.6% year over year. However, including one-time items, the company reported earnings of 60 cents.

Benefiting largely from the acquisition of PLG group, Wolverine, which competes with Deckers Outdoor Corporation (DECK - Analyst Report), reported net sales of $645.9 million, which doubled from the comparable year-ago quarter and handily surpassed the Zacks Consensus Estimate of $632 million. However, on a pro-forma basis, revenues increased 8.2% during the quarter.

Wolverine acquired Collective Brands’ Performance + Lifestyle Group (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.

Coming to the operating groups, revenues at its Lifestyle group came in at $270.2 million, signifying a massive rise from $32.4 million in the year ago quarter. Performance group’s revenue jumped 57.7% to $240.5 million, while Heritage group’s revenue declined 0.5% to 118.6 million. Revenues derived from the company’s other brands decreased 11.2% to $16.6 million during the quarter.

On account of the growth in the top line, the company’s gross profit nearly doubled to $262.1 million. However, gross margin contracted 40 basis points to 40.6%, reflecting lower contribution of high margin products and higher LIFO expense.

Adjusted operating profit came in at $66.1 million, rising 78.6% year over year, while adjusted operating margin decreased by 120 basis points to 10.2%, reflecting increase in operating expenses as a percentage of sales.

Other Financial Aspects

Wolverine ended the quarter with cash and cash equivalents of $82 million and reduced its debt by $33 million. Net debt now stands at $1,176 million, while shareholder equity was $673.5 million.

Guidance Remains Strong

Going forward, this Zacks Rank #3 (Hold) stock expects 2013 revenues to be in the range of $2.7 to $2.775 billion, up 6% to 9% year over year on a pro-forma basis. Moreover, for the second, quarter the company expects revenues to be in the range of $580 million to $600 million, up 4.1% to 7.7% year over year on a pro-forma basis.

The company stated that adverse weather conditions and lingering macro concerns in Europe will continue to bring significant challenges in the upcoming quarters. Despite these headwinds, gross margin is expected to improve moderately in 2013 due to the product mix shift toward high margin consumer direct business and lower markdowns. 

Adjusted earnings per share for 2013 are expected in the range of $2.50–$2.65, reflecting year-over-year growth of 9.2% to 15.7%. For the second quarter, earnings are expected between 31 cents and 35 cents.

Other Stocks to Consider

Until any further upward revision in the rating of Wolverine, other stocks in the retail  industry worth considering include Macy’s Inc. (M - Analyst Report) and Big 5 Sporting Goods Corp. (BGFV - Analyst Report), both carrying a Zacks Rank #1 (Strong Buy).

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