Wolverine Worldwide's third-quarter (Q3) total revenue plummeted to $527.7m, a 23.7% drop and a 24.7% decline on a constant currency basis.
The company's gross margin rose to 40.8% from 40.2% in 2022, largely due to improved profitability and distribution channel changes, despite higher inventory sales and closeout sales.
Wolverine Worldwide experienced a 24.4% decrease in international revenue to $229m, with ongoing business revenue falling by 22.3% or 24.6% on a constant currency basis.
“In the third quarter, we achieved several critical milestones as we took decisive action to stabilise and transform the company while delivering revenue and earnings in line with our expectations,” said Chris Hufnagel, president and CEO of Wolverine Worldwide.
“While market conditions remain challenging, we're taking the necessary steps to reinvigorate our brands and position the company for profitable growth as conditions improve,” Hufnagel adds.
Wolverine Worldwide’s key Q3 results
- Total revenue declined to $527.7m
- Operating income dropped to $27.3m from $58.8m in 2022
- Net income also declined to $9m from $38.8m the year before
Executive vice president, Mike Stornant expects Wolverine Worldwide‘s fourth-quarter brand performance to be “mixed across the portfolio.”
Stornant adds that whilst the Saucony and Sweaty Betty businesses are stabilising and improving, Merrell faces challenges in the outdoor category and Work Group brands face wholesale demand headwinds.
Wolverine Worldwide updates outlook
As a result, Wolverine Worldwide is reducing its fourth-quarter revenue outlook to a range of $515m to $525m and adjusted diluted earnings per share to a range of $0.30 to $0.25 for our ongoing business.
For the full year 2023 outlook the company predicts a 13% decline in ongoing business revenue from $2.19bn to $2.20bn. Gross margin is expected to be approximately 38.7%, and adjusted gross margin will be 39.1%.
Diluted earnings per share are expected to be between 35 cents and 40 cents and adjusted diluted earnings per share are expected to be between 5 cents and 10 cents.
Wolverine Worldwide updates strategic transformation
The company announced it was taking further action to implement its ongoing strategic transformation into a brand-led and consumer-obsessed growth company.
Specifically, Wolverine Worldwide said it will take decisive steps to stabilise the business by divesting non-core assets, paying down debt, reducing inventory, and right-sizing its cost structure.
The company said it has identified initiatives that are expected to deliver $215m in annualised savings, including a global workforce restructuring.
Key changes made by the company in connection with redesigning the organisation include:
- The Collective – a new strategic centre that includes a reimagined innovation, insights, and trends team; an internal creative and public relations team; and an in-house creative production studio.
- Global licensing – a new global licensing function to unlock the portfolio’s full commercial opportunity around the world. This team will oversee and manage all the company’s licensed businesses, including Hush Puppies and Stride Rite, along with apparel and accessories programmes.
- Integrated planning – a new global planning function designed to improve integrated demand, inventory, and supply chain management, while enhancing the company’s ability to respond to shifts in consumer and market dynamics.
- Product lifecycle management and digital product design – a new set of advanced digital product management, design, and development tools to further enhance the company’s product capabilities and efficiencies.
- North American commercial structure – a consolidated North American commercial structure, aligning the company’s Canadian operations with those in the US to drive efficiency and alignment.
Hufnagel commented: “We are moving with speed and urgency to transform the company, which will enable us to capitalise on our biggest growth opportunities.
“We are committed to taking the necessary actions to best position the company for future profitable growth.
“Decisions like these that affect our team are difficult, and we are committed to supporting each team member through this transition.”
