Industry experts believe that the shoes and retail apparel industry is likely to remain healthy, courtesy of steady economic growth, a robust job market and rising disposable income. Such factors are also likely to drive the performance of Wolverine World Wide, Inc. (WWW - Free Report) , which holds a significant position in this space owing to its distinctive brand appeal.
Of late, this designer, manufacturer and retailer of footwear, apparel and accessories has displayed a stellar run on the bourses. This is quite evident from Wolverine’s share price performance in the past six months. The company has surged 35.5%, comfortably outperforming its industry’s and S&P 500 index’s growth of 22% and 10.6%, respectively. Further, the stock is hovering close to its 52-week high of $39.77.
Definitely, a remarkable earnings history along with well-chalked initiatives that have been bolstering the company’s portfolio and e-commerce operations drove the stock higher. Moreover, the company has been progressing well with its GLOBAL GROWTH AGENDA, which focuses on empowering brands.
Let’s take a closer look at the factors behind this Zacks Rank #2 (Buy) company’s impressive performance.
Initiatives on Track
Wolverine has been continuing well with its WAY FORWARD transformation initiative — a strategic platform aimed at driving growth and profitability amid a competitive market scenario. In fact, a significant portion of gross margin expansion during the first half of 2018 can be attributed to this initiative. The company also stepped into the next phase of the WAY FORWARD initiative — GLOBAL GROWTH AGENDA — in the first quarter of 2018.
As part of such initiatives, Wolverine made key incremental investments worth nearly $20 million in the first half of 2018. Incremental investments related to such growth initiatives are expected to be around $45 million for 2018. With the help of advanced technologies and accurate market insights, the company plans to develop brands that suit consumer needs. On the international front, the company is on track with making investments to bolster digital competencies.
Strong E-commerce and International Business
Wolverine has been utilizing its digital capabilities to increase speed of information and product flow. In fact, owing to such dedicated growth strategies in the digital spectrum, the company’s e-commerce business grew close to 20% in 2017. This, in turn, accelerated to reach a growth of nearly 24% in the first half of 2018.
This apart, the company has been progressing well on the international front. Notably, Wolverine’s global business network is spread across close to 200 nations and territories, with approximately 15,000 controlled points of distribution. In addition, the company plans to allocate 25% of its incremental investments to fuel growth for the company’s international brands. With such well-spun plans rolled up in its sleeves, it plans to achieve a high-single digit growth in revenues from the international business in 2018.
We expect the aforementioned factors to continue favoring Wolverine’s performance. In fact, the continued strength in bottom line has propelled management to uplift its earnings view for 2018. Moreover, splendid estimate revision trend for the current and next year instills optimism. Over the past 60 days, the Zacks Consensus Estimate for current- and next-year moved up by 6 cents and 5 cents to $2.14 and $2.34, respectively. All said, we expect the company to remain as a preferred stock for investors.
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