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Wolverine Trades 11% Below 52-Week High: An Opportunity for Investors?
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Wolverine World Wide, Inc.’s (WWW - Free Report) shares are currently trading 10.5% below its 52-week high of $24.64 attained on Dec. 11, 2024, making investors contemplate their next moves. In the past six months, WWW stock has gained 67.4% compared with the Zacks Shoes and Retail Apparel industry’s 0.3% growth.
The company’s ongoing strategic approach and product diversification have also helped it to outperform the broader Zacks Consumer Discretionary sector and the S&P 500 index’s growth of 16.5% and 9.3%, respectively, during the same period.
WWW Stock Past Six-Month Performance
Image Source: Zacks Investment Research
This leading designer and producer of innovative, niche footwear and accessories closed yesterday’s trading session at $22.05. The stock is trading above both its 50- and 200-day simple moving averages of $20.86 and $14.97, respectively, highlighting a continued uptrend. This technical strength, along with sustained momentum, indicates positive market sentiment and investors’ confidence in Wolverine’s financial health and growth prospects.
WWW Trades Above 50 & 200-Day Moving Averages
Image Source: Zacks Investment Research
Innovation and DTC Excellence Propel WWW’s Growth
Wolverine's growth strategy has centered on streamlining its brand portfolio and restructuring operations. By prioritizing its core brands and enhancing operational efficiencies, the company has strategically allocated resources to boost profitability.
Merrell, a flagship brand, reported a 1.4% year-over-year revenue increase in the third quarter of 2024, fueled by successful product launches like the Moab Speed 2 and Agility Peak 5. Looking ahead to 2025, the introduction of the Speed Arc Collection, featuring advanced materials and innovative designs, is set to further solidify Merrell’s leadership in the hiking and trail footwear market.
Saucony is also advancing its position by expanding into performance and lifestyle markets. The brand is preparing to release the Endorphin Elite 2 in spring 2025 while significantly increasing its distribution to an additional 900 lifestyle-focused retail locations. These efforts are strengthening brand equity and positioning Wolverine for sustainable growth in key market segments.
The company’s direct-to-consumer (DTC) channels have also delivered strong results, with Merrell and Saucony achieving mid-single-digit growth in the third quarter. This success is attributed to Wolverine’s investments in digital innovation and the enhancement of premium shopping experiences.
International Growth Fuels Wolverine’s Expansion Opportunity
International markets were a bright spot in the third quarter, with Merrell achieving mid-teens growth in EMEA and mid-single-digit growth in Asia-Pacific. These gains are attributed to focused strategies, such as key city activations in Tokyo, which included high-profile brand experiences in Shibuya and Harajuku. Saucony also experienced robust growth internationally, with significant gains in Asia-Pacific following its revamped business model in China. These results validate Wolverine’s targeted international expansion efforts and ability to localize its brand strategies for diverse consumer markets, providing a solid foundation for sustained global growth.
Wolverine’s turnaround efforts have emphasized operational efficiency and effective inventory management. In the third quarter, the company reduced inventory by 49.4% year over year to $285.5 million, bolstering cash flow and mitigating markdown risks. Wolverine projects an additional $85 million inventory reduction by year end, further improving its financial health.
The company has also modernized its supply chain, implemented cost-saving initiatives and optimized gross margins. Operating cost reductions have resulted in lower SG&A expenses, projected to drop from $716 million in 2023 to $650 million in 2024. These actions have driven gross margin expansion by 380 basis points (bps) year over year to 45.3% in the third quarter, supported by reduced supply-chain costs and minimized end-of-life inventory sales.
Wolverine’s adjusted operating profit increased by 28.7% year over year to $34.1 million, with the adjusted operating margin improving 210 bps to 7.7%. These results reflect the company’s ability to leverage revenue growth while maintaining financial discipline.
Moreover, the company has made remarkable strides in fortifying its balance sheet, with net debt reduced by $370 million year over year to $563 million in the third quarter. This disciplined approach has decreased interest expenses and provided the company with greater financial agility.
Optimistic Financial Outlook for Wolverine in 2024
Wolverine’s robust market position supports its positive financial trajectory. For 2024, the company expects the adjusted gross margin to improve by 460 bps year over year to 44.5%, with an adjusted operating margin projected at 7.2%, a 330-bps increase over 2023.
Adjusted earnings per share (EPS) are forecasted to range between 80 cents and 90 cents, exceeding prior guidance of 75 cents to 85 cents, despite a 10-cent headwind from foreign exchange fluctuations. This represents a significant jump from the adjusted EPS of 15 cents in 2023.
In the fourth quarter of 2024, Wolverine anticipates gross margin to rise 700 bps year over year to 44%, while the operating margin is expected at 9%. Adjusted EPS is projected to range from 31 cents to 41 cents, underscoring Wolverine’s financial momentum and ability to navigate market challenges effectively.
Estimate Revisions Favoring Wolverine Stock
Analysts have responded positively to Wolverine’s prospects, indicated in upward revisions in the Zacks Consensus Estimate for EPS. In the past 60 days, analysts have increased their estimates for the current financial year by 4 cents. The consensus estimate for earnings is pegged at 89 cents per share. The consensus estimate for the next financial year has also been raised 7 cents to $1.35 per share.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Conclusion
Investors may find WWW stock attractive backed by its strong strategic execution, financial resilience and market momentum. The company’s focus on operational efficiency, product innovation and DTC growth has propelled brand performance and international expansion, with Merrell and Saucony leading market share gains. Enhanced gross margins, effective inventory management and significant debt reduction reflect disciplined financial management. With share price momentum and upward earnings estimate revisions signaling market confidence, Wolverine stands out as a compelling investment opportunity in the competitive market. It currently sports a Zacks Rank #1 (Strong Buy).
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2025 earnings and sales indicates growth of 41.3% and 0.8%, respectively, from the fiscal 2024 figures. GAP has a trailing four-quarter average earnings surprise of 101.2%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 69.3% and 15%, respectively, from the fiscal 2024 levels. ANF has a trailing four-quarter average earnings surprise of 14.8%.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.6% and 13.6%, respectively, from the year-ago actuals. SHOO delivered a trailing four-quarter average earnings surprise of 9.8%.
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Wolverine Trades 11% Below 52-Week High: An Opportunity for Investors?
Wolverine World Wide, Inc.’s (WWW - Free Report) shares are currently trading 10.5% below its 52-week high of $24.64 attained on Dec. 11, 2024, making investors contemplate their next moves. In the past six months, WWW stock has gained 67.4% compared with the Zacks Shoes and Retail Apparel industry’s 0.3% growth.
The company’s ongoing strategic approach and product diversification have also helped it to outperform the broader Zacks Consumer Discretionary sector and the S&P 500 index’s growth of 16.5% and 9.3%, respectively, during the same period.
WWW Stock Past Six-Month Performance
Image Source: Zacks Investment Research
This leading designer and producer of innovative, niche footwear and accessories closed yesterday’s trading session at $22.05. The stock is trading above both its 50- and 200-day simple moving averages of $20.86 and $14.97, respectively, highlighting a continued uptrend. This technical strength, along with sustained momentum, indicates positive market sentiment and investors’ confidence in Wolverine’s financial health and growth prospects.
WWW Trades Above 50 & 200-Day Moving Averages
Image Source: Zacks Investment Research
Innovation and DTC Excellence Propel WWW’s Growth
Wolverine's growth strategy has centered on streamlining its brand portfolio and restructuring operations. By prioritizing its core brands and enhancing operational efficiencies, the company has strategically allocated resources to boost profitability.
Merrell, a flagship brand, reported a 1.4% year-over-year revenue increase in the third quarter of 2024, fueled by successful product launches like the Moab Speed 2 and Agility Peak 5. Looking ahead to 2025, the introduction of the Speed Arc Collection, featuring advanced materials and innovative designs, is set to further solidify Merrell’s leadership in the hiking and trail footwear market.
Saucony is also advancing its position by expanding into performance and lifestyle markets. The brand is preparing to release the Endorphin Elite 2 in spring 2025 while significantly increasing its distribution to an additional 900 lifestyle-focused retail locations. These efforts are strengthening brand equity and positioning Wolverine for sustainable growth in key market segments.
The company’s direct-to-consumer (DTC) channels have also delivered strong results, with Merrell and Saucony achieving mid-single-digit growth in the third quarter. This success is attributed to Wolverine’s investments in digital innovation and the enhancement of premium shopping experiences.
International Growth Fuels Wolverine’s Expansion Opportunity
International markets were a bright spot in the third quarter, with Merrell achieving mid-teens growth in EMEA and mid-single-digit growth in Asia-Pacific. These gains are attributed to focused strategies, such as key city activations in Tokyo, which included high-profile brand experiences in Shibuya and Harajuku. Saucony also experienced robust growth internationally, with significant gains in Asia-Pacific following its revamped business model in China. These results validate Wolverine’s targeted international expansion efforts and ability to localize its brand strategies for diverse consumer markets, providing a solid foundation for sustained global growth.
Operational Efficiency Powers WWW’s Financial Resilience
Wolverine’s turnaround efforts have emphasized operational efficiency and effective inventory management. In the third quarter, the company reduced inventory by 49.4% year over year to $285.5 million, bolstering cash flow and mitigating markdown risks. Wolverine projects an additional $85 million inventory reduction by year end, further improving its financial health.
The company has also modernized its supply chain, implemented cost-saving initiatives and optimized gross margins. Operating cost reductions have resulted in lower SG&A expenses, projected to drop from $716 million in 2023 to $650 million in 2024. These actions have driven gross margin expansion by 380 basis points (bps) year over year to 45.3% in the third quarter, supported by reduced supply-chain costs and minimized end-of-life inventory sales.
Wolverine’s adjusted operating profit increased by 28.7% year over year to $34.1 million, with the adjusted operating margin improving 210 bps to 7.7%. These results reflect the company’s ability to leverage revenue growth while maintaining financial discipline.
Moreover, the company has made remarkable strides in fortifying its balance sheet, with net debt reduced by $370 million year over year to $563 million in the third quarter. This disciplined approach has decreased interest expenses and provided the company with greater financial agility.
Optimistic Financial Outlook for Wolverine in 2024
Wolverine’s robust market position supports its positive financial trajectory. For 2024, the company expects the adjusted gross margin to improve by 460 bps year over year to 44.5%, with an adjusted operating margin projected at 7.2%, a 330-bps increase over 2023.
Adjusted earnings per share (EPS) are forecasted to range between 80 cents and 90 cents, exceeding prior guidance of 75 cents to 85 cents, despite a 10-cent headwind from foreign exchange fluctuations. This represents a significant jump from the adjusted EPS of 15 cents in 2023.
In the fourth quarter of 2024, Wolverine anticipates gross margin to rise 700 bps year over year to 44%, while the operating margin is expected at 9%. Adjusted EPS is projected to range from 31 cents to 41 cents, underscoring Wolverine’s financial momentum and ability to navigate market challenges effectively.
Estimate Revisions Favoring Wolverine Stock
Analysts have responded positively to Wolverine’s prospects, indicated in upward revisions in the Zacks Consensus Estimate for EPS. In the past 60 days, analysts have increased their estimates for the current financial year by 4 cents. The consensus estimate for earnings is pegged at 89 cents per share. The consensus estimate for the next financial year has also been raised 7 cents to $1.35 per share.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Conclusion
Investors may find WWW stock attractive backed by its strong strategic execution, financial resilience and market momentum. The company’s focus on operational efficiency, product innovation and DTC growth has propelled brand performance and international expansion, with Merrell and Saucony leading market share gains. Enhanced gross margins, effective inventory management and significant debt reduction reflect disciplined financial management. With share price momentum and upward earnings estimate revisions signaling market confidence, Wolverine stands out as a compelling investment opportunity in the competitive market. It currently sports a Zacks Rank #1 (Strong Buy).
Other Key Picks
Other top-ranked stocks are The Gap, Inc. (GAP - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2025 earnings and sales indicates growth of 41.3% and 0.8%, respectively, from the fiscal 2024 figures. GAP has a trailing four-quarter average earnings surprise of 101.2%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 69.3% and 15%, respectively, from the fiscal 2024 levels. ANF has a trailing four-quarter average earnings surprise of 14.8%.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.6% and 13.6%, respectively, from the year-ago actuals. SHOO delivered a trailing four-quarter average earnings surprise of 9.8%.