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Wolverine Boosts Shareholder Value Via New Share Buyback Plan

Zacks Equity Research

In an attempt to boost shareholder value, Wolverine World Wide, Inc.’s WWW board of directors authorized the buyback of additional shares worth up to $400 million. The plan is supplementary to the company’s share repurchase program, which was authorized in February 2019.

In February this year, the company’s board authorized the repurchase of $400 million worth of shares, to be carried out in the next four years. Management is left with nearly $220 million under this share repurchase plan. In the last reported quarter, the company repurchased shares worth approximately $104 million.

The company’s healthy cash flow and efficient capital allocation provide it with ample financial liquidity to return excess cash to its shareholders. This, in turn, has enabled Wolverine to remain focused on its balanced strategic approach to ensure a strong financial position.

The company’s endeavor to enhance shareholder value is also evident from its dividend paying policy. Earlier this month, the Rockford, MI-based company declared a quarterly dividend of 10 cents per share to shareholders of record as on Oct 1, 2019, payable on Nov 1, 2019. Markedly in February, the company had increased its quarterly dividend by 25% to 10 cents per share from 8 cents.

Apart from shareholder friendly moves, the company is gaining from advancements in its e-commerce business, backed by strong brands like Merrell, Ked, Sperry and Saucony. Moreover, management expects its online business to keep flourishing in the second half of fiscal 2019, which will lead to growth of almost 20%.

Additionally, Wolverine is on track with the global growth agenda, wherein it plans to make investments of nearly $38 million in 2019. Also, the company is focusing on inducing efficiency in sourcing capabilities. Sturdy international presence is another upside.

In the past three months, this Zacks Rank #3 (Hold) company has gained roughly 6.1%, outperforming its industry’s 4.9% growth. We note that, the stock has increased around 17% in the past one month.

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