A diversified global business model, enhanced digital capabilities and brand strength are aiding Wolverine World Wide, Inc.'s (WWW - Free Report) performance. The company is well on track with its Global Growth Agenda initiative. Undeniably, the company’s actions to mitigate the impact of the ongoing crisis and better-than-expected second quarter 2020 results have been also the contributing factors to the stock’s solid run. Markedly, the Rockford, MI-based company’s shares have surged 36.1% in the past three months, rallying ahead of its industry’s rise of 15.6%. Let’s explore this Zacks Rank #3 (Hold) stock.
E-commerce Fuels Growth
Amongst Wolverine’s sales channels, e-commerce has been the fastest-growing and the key growth driver. The company has been utilizing its digital capabilities to enhance speed of information and product flow alongside strengthening its distribution centers. Impressively, the e-commerce business excelled in the second quarter and surged 96% year over year on accretive margins. In fact, e-commerce was the major revenue and earnings driver across the company’s portfolio. Notably, the company’s digital platform accounted for nearly two-thirds of the overall U.S. sales in the quarter. Compelling new products in the hiking, outdoor, trail-running and home-casual categories coupled with robust customer engagement fueled online demand.
Brand wise, merrell.com surged nearly 140% in the quarter while tripling new-customer acquisition on a year-over-year basis. Additionally, Wolverine and Cat Footwear brands registered more than 100% online growth. Furthermore, saucony.com revenues almost tripled, primarily buoyed by product innovation and new-customer acquisition. Meanwhile, sperry.com also grew above 30% on gains from new-customer acquisition. We believe the company will continue capitalizing on its solid e-commerce platform.
Other Initiatives
Wolverine has been progressing well with the Global Growth Agenda, which is aimed at three major elements — continuous introduction of products worldwide with creative designs, expansion of digital engagement to enhance its e-commerce business, and stronger investments in regional resources and systems to drive international growth. In addition, the company focuses on new launches across its different brand banners and brings forward a robust pipeline of new products.
Furthermore, Wolverine’s solid international presence looks quite encouraging. Across the world, the company’s third-party partners are managing inventory, thus coping with different market dynamics. Going forward, management projects EMEA to outperform the other regions, partly due to relative strength in the company’s own businesses, followed by Asia Pacific.
Bottom Line
While the aforementioned strengths build optimism for the stock, the company continued to report weak operating margin in the second quarter of 2020 despite a decline in adjusted selling, general and administrative expenses. Nonetheless, management has been managing costs in order to boost margins. In the most recent quarter, gross margin reverted to positive after two straight quarters of contraction and expanded 170 basis points year over year. The metric was mainly driven by its full-priced wholesale business and the increased mix of e-commerce business. Majority of its brands delivered impressive gross-margin expansion in the quarter.
Wrapping it up, Wolverine’s stock is worth holding, given its aforementioned robust strategies including sturdy e-commerce channel. The stock’s solid run on bourses is also justified by a VGM Score of B.
Better-Ranked Stocks
Rocky Brands (RCKY - Free Report) has delivered an impressive positive earnings surprise in the last-reported quarter and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Activision Blizzard , also a Zacks Rank #1 stock, has an expected long-term earnings growth rate of 17.3%.
Deckers (DECK - Free Report) has an expected long-term earnings growth rate of 16.9% and a Zacks Rank #2 (Buy).
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
A diversified global business model, enhanced digital capabilities and brand strength are aiding Wolverine World Wide, Inc.'s (WWW - Free Report) performance. The company is well on track with its Global Growth Agenda initiative. Undeniably, the company’s actions to mitigate the impact of the ongoing crisis and better-than-expected second quarter 2020 results have been also the contributing factors to the stock’s solid run. Markedly, the Rockford, MI-based company’s shares have surged 36.1% in the past three months, rallying ahead of its industry’s rise of 15.6%. Let’s explore this Zacks Rank #3 (Hold) stock.
E-commerce Fuels Growth
Amongst Wolverine’s sales channels, e-commerce has been the fastest-growing and the key growth driver. The company has been utilizing its digital capabilities to enhance speed of information and product flow alongside strengthening its distribution centers. Impressively, the e-commerce business excelled in the second quarter and surged 96% year over year on accretive margins. In fact, e-commerce was the major revenue and earnings driver across the company’s portfolio. Notably, the company’s digital platform accounted for nearly two-thirds of the overall U.S. sales in the quarter. Compelling new products in the hiking, outdoor, trail-running and home-casual categories coupled with robust customer engagement fueled online demand.
Brand wise, merrell.com surged nearly 140% in the quarter while tripling new-customer acquisition on a year-over-year basis. Additionally, Wolverine and Cat Footwear brands registered more than 100% online growth. Furthermore, saucony.com revenues almost tripled, primarily buoyed by product innovation and new-customer acquisition. Meanwhile, sperry.com also grew above 30% on gains from new-customer acquisition. We believe the company will continue capitalizing on its solid e-commerce platform.
Other Initiatives
Wolverine has been progressing well with the Global Growth Agenda, which is aimed at three major elements — continuous introduction of products worldwide with creative designs, expansion of digital engagement to enhance its e-commerce business, and stronger investments in regional resources and systems to drive international growth. In addition, the company focuses on new launches across its different brand banners and brings forward a robust pipeline of new products.
Furthermore, Wolverine’s solid international presence looks quite encouraging. Across the world, the company’s third-party partners are managing inventory, thus coping with different market dynamics. Going forward, management projects EMEA to outperform the other regions, partly due to relative strength in the company’s own businesses, followed by Asia Pacific.
Bottom Line
While the aforementioned strengths build optimism for the stock, the company continued to report weak operating margin in the second quarter of 2020 despite a decline in adjusted selling, general and administrative expenses. Nonetheless, management has been managing costs in order to boost margins. In the most recent quarter, gross margin reverted to positive after two straight quarters of contraction and expanded 170 basis points year over year. The metric was mainly driven by its full-priced wholesale business and the increased mix of e-commerce business. Majority of its brands delivered impressive gross-margin expansion in the quarter.
Wrapping it up, Wolverine’s stock is worth holding, given its aforementioned robust strategies including sturdy e-commerce channel. The stock’s solid run on bourses is also justified by a VGM Score of B.
Better-Ranked Stocks
Rocky Brands (RCKY - Free Report) has delivered an impressive positive earnings surprise in the last-reported quarter and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Activision Blizzard , also a Zacks Rank #1 stock, has an expected long-term earnings growth rate of 17.3%.
Deckers (DECK - Free Report) has an expected long-term earnings growth rate of 16.9% and a Zacks Rank #2 (Buy).
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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