Back to top

Wolverine Q1 Earnings Beat, Outlook Reiterated

Read MoreHide Full Article

Driven by the robust performance of its brands, Wolverine World Wide Inc. (WWW - Free Report) posted better-than-expected first-quarter 2014 bottom-line results. The company’s quarterly earnings per share of 38 cents beat the Zacks Consensus Estimate of 30 cents but fell 7.3% year over year.

Including one-time items, Wolverine’s earnings came in at 36 cents, up 20% from the year-ago quarter.

As anticipated by the company, Wolverine’s revenue of $627.6 million for the quarter descended 2.8% on a year-over-year basis and fell below the Zacks Consensus Estimate of $638.0 million. The decline came as a result of weakness in the company’s Lifestyle group, which offset strength in the Performance and Heritage Groups.

Apart from this, revenues were impacted by shift in the Easter sales to the second quarter, faulty weather in the U.K. and U.S., slow consumer traffic in the U.S., currency translations and the rearrangement of Sperry Top-Sider's U.S. distribution.

Wolverine acquired the 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 such as Stride Rite, Sperry Top-Sider, Saucony and Keds.

As regards to the company’s operating groups, first-quarter revenues at its Lifestyle group came in at $238 million, a 32.2% slump from the year-ago quarter. The Performance group’s revenues rose 8.3% to $248.8 million, while Heritage group’s revenues increased 2.1% to $120.7 million. Further, revenues derived from the company’s other brands climbed 3.5% to $20.1 million in the quarter.

On account of the top-line decline, the company’s gross profit slipped 2.4% to $255.8 million in the quarter, while gross margin expanded 20 basis points (bps) to 40.8%. Also, on excluding the effect of expenses related to the acquisition, adjusted operating expenses dropped 2.8% to $190.5 million.

Other Financial Aspects

Wolverine ended the first quarter with cash and cash equivalents of $166.8 million, long-term debt of $1096.7 million and shareholders’ equity of $871.6 million. Additionally, inventories during the quarter fell nearly 4.5% to $465.6 million, highlighting the company’s focus on efficient management of working capital.


Following the better-than-expected first quarter results, the company reiterated its outlook for fiscal 2014. Wolverine continues to expect adjusted earnings per share in the range of $1.57–1.63, reflecting year-over-year growth of 10%–14%. The Zacks Consensus Estimate is currently pegged at $1.59 per share, falling within the company’s guidance range. However, reported diluted earnings are now envisioned to be in the range of $1.48 to $1.54 per share.

Revenues for the year are still projected in the range of $2.775–$2.85 billion, up 3% to 6% year over year.

Going forward, management remains optimistic about its performance for fiscal 2014, given its impressive first-quarter results. The company believes that its international spread, strong bonding with consumers, focus on product innovations and most importantly, its solid brand portfolio will keep it well positioned and boost top and bottom line growth in the coming year.

Other Stocks to Consider

Wolverine currently carries a Zacks Rank #3 (Hold). However, other better-ranked stocks in the same industry include Skechers USA Inc. (SKX - Free Report) , with a Zacks Rank #1 (Strong Buy), along with Brown Shoe Co. Inc. and Carter's, Inc. (CRI - Free Report) , with a Zacks Rank #2 (Buy).

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Skechers U.S.A., Inc. (SKX) - free report >>

Wolverine World Wide, Inc. (WWW) - free report >>

Carter's, Inc. (CRI) - free report >>

More from Zacks Analyst Blog

You May Like