Wolverine World Wide, Inc. (WWW - Free Report) has taken additional measures to boost its financial position and liquidity. The company notified that it has amended Senior Credit Facility, including $171 million in aggregate principal amount of incremental 364-day term loans and the sale of $300 million of 6.375% Senior Notes due 2025. Proceeds from these actions are being mainly utilized to repay borrowings under the revolving credit facility.
Including the latest actions, Wolverine’s liquidity with cash and available borrowing on its revolver grew to roughly $940 million, higher than $483 million at the end of first-quarter 2020. Moreover, management is encouraged by its business model, fixed cost structure, e-commerce business and estimated positive operating cash flow for 2020.
Wolverine had earlier prioritized liquidity and asset management in the wake of the coronavirus pandemic. Management continues to envision its cash preservation endeavors to exceed $500 million, enabling the company to deliver about $150-$200 million operating cash flow in the current year. These activities include lowering of planned inventory receipts, drawing down of its revolving credit line, deferring capital spend for 2020 and curbing operating costs for rest of the year.
We note that Wolverine’s first-quarter 2020 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 this Zacks Rank #4 (Sell) company’s second straight sales miss. The bottom line also declined year over year. The company also continued to report weak gross and operating margins in the first quarter.
Shares of this Rockford, MI-based company fell 41.5%, much wider than the industry’s 14.9% decline over the past three months.
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