Wolverine World Wide, Inc. (WWW Quick QuoteWWW - Free Report) appears good on the back of its enhanced digital capabilities, a diversified global business model and brand strength. Among the company’s sales channels, e-commerce has been its key driver so far. Management is also focused on its product innovations and launches across its brands. Its two major brands, namely Merrell and Saucony are performing outstandingly.

This Rockford, MI-based company’s shares have increased 42.1% over the course of a year compared with its industry’s rally of 40%. The Zacks Consensus Estimate for earnings currently stands at $2.31 for 2021 and $2.76 for 2022, suggesting growth of 1.3% and 4.5%, respectively, in the past 30 days. A glimpse of this currently Zacks Rank #1 (Strong Buy) stock’s performance in the trailing four quarters shows that it delivered an earnings surprise of 23%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let’s Delve Deeper

Wolverine constantly utilizes digital capabilities to enhance the speed of information and product flow. In order to support growth in the digital arena, the company is investing in strengthening its distribution centers. Its owned e-commerce revenues more than doubled in the first half of 2021 from the same-period level in 2019. Owned e-commerce revenues surged 90.7% from the 2019 tally. Its direct-to-consumer (DTC) channels have also been strong for a while now.

In the second quarter of 2021, total DTC revenues jumped 17.5% year over year and 68.8% from the 2019 level. Brandwise, saucony.com registered growth of above 20% while Merrell.com revenues soared above 150% year over year. Management targets accomplishing $500 million in digital revenues during 2021.

Now coming to Wolverine’s Merrell and Saucony, these brands posted all-time record revenues during the second quarter of 2021 and their combined revenues grew above 40% from the 2019 figure. Merrell revenues skyrocketed 88% year over year or about 30% from the 2019 reading with DTC growing nearly 40%. Saucony revenues surged 129% from the 2020 level and 65% from the 2019 tally with all the regions experiencing triple-digit growth year over year. Wolverine’s smaller brands are also making significant contributions. Its Performance business nearly doubled year over year and increased about 40% from the 2019 reading.

In the next couple of months, management expects the company to launch its first Merrell mobile app. It expects robust growth at Sperry year over year during the back half of the year. Also, the company is quite focused on driving growth across its performance product categories including hiking, running and work categories.

Robust Outlook

The aforesaid strengths and a sturdy second-quarter 2021 performance helped Wolverine issue an encouraging outlook for the year. Positive trends like robust sell-through at retail, an impressive future order book and improving inventory levels are added tailwinds. Management anticipates the company to deliver significant growth in 2021 compared with the 2020 and 2019 levels, driven by accelerating demand for its brands.

For 2021, the company projects revenues in the band of $2,340-$2,400 million, suggesting growth of 31-34% from the 2020 reading and a 5.6% rise from the 2019 actuals at the upper end of the range. Adjusted earnings per share are envisioned in the bracket of $2.20-$2.30. We note that the company delivered adjusted earnings per share of 93 cents and 95 cents in constant currency during 2020.

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