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Wolverine (WWW) Boosts Activewear With Sweaty Betty Buyout

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Well-known apparel and footwear company, Wolverine World Wide, Inc. WWW, has been strengthening its portfolio through acquisitions and brand building. Commencing on such efforts, the company acquired Sweaty Betty, a globally-renowned fitness and lifestyle brand. The deal will help the company broaden digital presence as well as boost market share in the fast-expanding and highly-competitive women’s activewear. Wolverine closed the acquisition of Sweaty Betty on Aug 2, through an all-cash transaction valued at nearly $410 million.

Shares of the company were up 4.7% during the trading session on Aug 3, following the announcement of the acquisition. This Zacks Rank #2 (Buy) company’s shares have increased 10.4% in the past six months compared with the industry’s rise of 17.3%.

Sweaty Betty Buyout Looks Prudent

Sweaty Betty has been growing globally and gaining popularity owing to its high-quality product offerings, including a wide collection of innovative tops, bottoms, swimwear, outerwear and accessories. The brand has strong expertise on women’s activewear and apparel needs. It is also known to provide best-in-class digital execution. More than 80% of the brands’ revenues is generated from direct-to-consumer channels.

Management expects Sweaty Betty to be a prudent fit in Wolverine’s portfolio. The deal aligns well with the company’s scope of broadening activewear offerings and boosting presence in international markets. It is also likely to support the company’s shift from a traditional wholesaler to a digital-focused apparel player.

The demand for activewear, loungewear and related accessories has increased amid the pandemic, thanks to consumers focus on fitness, health and well being. Such market trends, further compliments Wolverine’s latest acquisition. Sweaty Betty will join Wolverine’s diverse brand portfolio, which includes names like Merrell, Saucony, Sperry, Keds and many more. Management expects the buyout to be accretive to earnings in the first year.

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Strategic Efforts Bodes Well

Wolverine focuses on developing brands that suit consumer needs aptly, on the back of advanced technologies and accurate market insights. Apart from boosting portfolio strength, Wolverine’s long-term business growth strategies include developing efficient sourcing structure and diversifying business. The company is also keen on bolstering e-commerce capabilities through expanding distribution centre capacities. The company has been utilizing its digital capabilities to enhance speed of information and product flow. Such efforts are likely to keep Wolverine well-positioned in the retail apparel space.

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Foot Locker, Inc. FL, with a Zacks Rank #2, has a long-term earnings growth rate of 4%.


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