We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wolverine World Wide, Inc.’s (WWW - Free Report) first-quarter 2020 earnings outshined the Zacks Consensus Estimate defying coronavirus concerns. However, the top line bore the brunt of the pandemic, as the metric lagged the consensus mark and also fell year over year. March revenues were mainly affected, which hurt the overall top line in the quarter. This also marked the company’s second straight sales miss. The bottom line also declined year over year. Consequently, shares of the Rockford, MI-based company fell 4.7% during the trading session on Apr 22. In the past three months, shares of this Zacks Rank #5 (Strong Sell) stock have lost 46.4%, wider than the industry’s 16.3% decline.
Although management did not provide any updates with respect to 2020 guidance, its proactive measures will help the company address the coronavirus-induced challenges. It anticipates the combined e-commerce and third-party online businesses to represent between 50% and 60% of its U.S. revenues in the current year. Management also projects that the international business will perform better than its traditional U.S. wholesale distribution. Also, brands like Merrell and Saucony will perform well on the nature of their product offerings.
Q1 Highlights
Wolverine’s first-quarter adjusted earnings of 28 cents per share outpaced the Zacks Consensus Estimate of 18 cents. However, the metric plunged 42.9% from the year-ago quarter. On a constant-currency (cc) basis, adjusted earnings were 29 cents per share.
Moreover, revenues of $439.3 million missed the consensus estimate of $469 million and fell 16.1% year over year. On a cc basis, revenues declined 15.6% mainly due to the ill impacts of the pandemic. Although revenues and profits advanced as planned for the first two months of the quarter,the pandemic-induced store closures mainly hurt revenues in March, which is generally the strongest month in the quarter.
Gross profit amounted to $181.8 million, down nearly 17.4% year over year. Also, gross margin contracted 70 basis points (bps) year over year to 41.4%, mainly owing to the impact of new tariffs.
Further, adjusted selling, general and administrative expenses contracted 7.1% to $151.6 million. However, adjusted operating profit fell nearly 47% to $30.3 million, with adjusted operating margin contracting 400 bps to 6.9%.
Segmental Performance
Revenues at Wolverine Michigan Group declined 18.1% (or 17.6% at cc) year over year to $247.8 million owing to softness across all brands. While Merrell was down low double-digits, Wolverine decreased high teens and Cat was down double digits. Also, Chaco declined double-digits and the smaller brands in the Group were also hit by the virus outbreak.
Wolverine Boston Group’s revenues fell 11.1% (or 10.6% at cc) to $182.1 million from the year-ago quarter on softness in the Sperry brand. The brand declined double-digits in the quarter. However, the Saucony brand reported high double-digit growth year over year.
Other Financials
The company ended the quarter with cash and cash equivalents of $472.6 million, long-term debt of $423.6 million and stockholders' equity of $735.9 million. Net inventories in the reported quarter increased 8.4% to $405.3 million. Further, net cash used in operating activities were $76.6 million during the first quarter.
We note that Wolverine has prioritized liquidity and asset management with response to the prevailing backdrop. More than $500 million cash preservation activities have been implemented, enabling the company to deliver about $150-$200 million operating cash flow in the current year. These activities include lowering of planned inventory receipts by nearly $300 million, drawing down the balance on its revolving credit line with a total of $367 million, deferring $25 million in capital spend for 2020, and curbing operating costs by an anticipated $100 million for rest of 2020.
Activision Blizzard, Inc. , also a Zacks Rank #2 stock, boasts an expected long-term earnings growth rate of 12.2%
Central Garden & Pet Company (CENT - Free Report) has a long-term earnings growth rate of 5.9% and a Zacks Rank #2.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Wolverine's (WWW) Q1 Earnings Beat Despite Coronavirus Woes
Wolverine World Wide, Inc.’s (WWW - Free Report) first-quarter 2020 earnings outshined the Zacks Consensus Estimate defying coronavirus concerns. However, the top line bore the brunt of the pandemic, as the metric lagged the consensus mark and also fell year over year. March revenues were mainly affected, which hurt the overall top line in the quarter. This also marked the company’s second straight sales miss. The bottom line also declined year over year. Consequently, shares of the Rockford, MI-based company fell 4.7% during the trading session on Apr 22. In the past three months, shares of this Zacks Rank #5 (Strong Sell) stock have lost 46.4%, wider than the industry’s 16.3% decline.
.jpg)
Although management did not provide any updates with respect to 2020 guidance, its proactive measures will help the company address the coronavirus-induced challenges. It anticipates the combined e-commerce and third-party online businesses to represent between 50% and 60% of its U.S. revenues in the current year. Management also projects that the international business will perform better than its traditional U.S. wholesale distribution. Also, brands like Merrell and Saucony will perform well on the nature of their product offerings.
Q1 Highlights
Wolverine’s first-quarter adjusted earnings of 28 cents per share outpaced the Zacks Consensus Estimate of 18 cents. However, the metric plunged 42.9% from the year-ago quarter. On a constant-currency (cc) basis, adjusted earnings were 29 cents per share.
Moreover, revenues of $439.3 million missed the consensus estimate of $469 million and fell 16.1% year over year. On a cc basis, revenues declined 15.6% mainly due to the ill impacts of the pandemic. Although revenues and profits advanced as planned for the first two months of the quarter,the pandemic-induced store closures mainly hurt revenues in March, which is generally the strongest month in the quarter.
Gross profit amounted to $181.8 million, down nearly 17.4% year over year. Also, gross margin contracted 70 basis points (bps) year over year to 41.4%, mainly owing to the impact of new tariffs.
Further, adjusted selling, general and administrative expenses contracted 7.1% to $151.6 million. However, adjusted operating profit fell nearly 47% to $30.3 million, with adjusted operating margin contracting 400 bps to 6.9%.
Segmental Performance
Revenues at Wolverine Michigan Group declined 18.1% (or 17.6% at cc) year over year to $247.8 million owing to softness across all brands. While Merrell was down low double-digits, Wolverine decreased high teens and Cat was down double digits. Also, Chaco declined double-digits and the smaller brands in the Group were also hit by the virus outbreak.
Wolverine Boston Group’s revenues fell 11.1% (or 10.6% at cc) to $182.1 million from the year-ago quarter on softness in the Sperry brand. The brand declined double-digits in the quarter. However, the Saucony brand reported high double-digit growth year over year.
Other Financials
The company ended the quarter with cash and cash equivalents of $472.6 million, long-term debt of $423.6 million and stockholders' equity of $735.9 million. Net inventories in the reported quarter increased 8.4% to $405.3 million. Further, net cash used in operating activities were $76.6 million during the first quarter.
We note that Wolverine has prioritized liquidity and asset management with response to the prevailing backdrop. More than $500 million cash preservation activities have been implemented, enabling the company to deliver about $150-$200 million operating cash flow in the current year. These activities include lowering of planned inventory receipts by nearly $300 million, drawing down the balance on its revolving credit line with a total of $367 million, deferring $25 million in capital spend for 2020, and curbing operating costs by an anticipated $100 million for rest of 2020.
Key Picks in Broader Consumer Discretionary Space
BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) has an expected long-term earnings growth rate of 11% and currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Activision Blizzard, Inc. , also a Zacks Rank #2 stock, boasts an expected long-term earnings growth rate of 12.2%
Central Garden & Pet Company (CENT - Free Report) has a long-term earnings growth rate of 5.9% and a Zacks Rank #2.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>