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Wolverine (WWW) Q1 Earnings Beat Estimates, Revenues Rise Y/Y

Wolverine World Wide, Inc. WWW reported strong results for first-quarter 2022 despite supply-chain disruptions and macro headwinds. Both the top and the bottom line beat the Zacks Consensus Estimate and improved year over year. A robust portfolio of iconic brands coupled with operational strategies contributed to WWW’s performance. Also, its women’s activewear brand Sweaty Betty fueled growth.

Q1 Insights

Wolverine posted first-quarter adjusted earnings of 41 cents a share that increased 2.5% from the year-ago quarter’s level and beat the Zacks Consensus Estimate of 39 cents.

Wolverine World Wide, Inc. Price, Consensus and EPS Surprise

Wolverine World Wide, Inc. Price, Consensus and EPS Surprise
Wolverine World Wide, Inc. Price, Consensus and EPS Surprise

Wolverine World Wide, Inc. price-consensus-eps-surprise-chart | Wolverine World Wide, Inc. Quote

Revenues of $614.8 million surpassed the Zacks Consensus Estimate of $605 million and increased 20.4% year over year, courtesy of healthy wholesale and international distributor sales. Excluding Sweaty Betty, revenues increased 9.9% year over year to $561.2 million.

We note that Wolverine Michigan Group’s revenues rose 10.6% year over year to $329.3 million, while Wolverine Boston Group’s revenues grew 5.7% to $212.3 million. Other revenues jumped to $73.2 million from $12.1 million in the year-ago period.

Including Sweaty Betty, direct-to-consumer (DTC) revenues advanced 24% year over year and represented 35% of total revenues. DTC e-commerce revenues grew 16% from the prior-year level, while DTC store revenues jumped 60%. Excluding Sweaty Betty, DTC revenues fell 14%, reflecting an e-commerce decrease of 16% and a store revenue decline of 8%.

In the reported quarter, Merrell revenues dipped 1.5% year over year to $147.9 million, Saucony revenues grew 3.7% to $106.4 million, Sperry revenues increased 18.7% to $67.4 million and Wolverine revenues rose 12.2% to $58.8 million. Sweaty Betty generated revenues of $53.6 million.

While Merrell’s demand was solid across all geographic regions, Saucony slightly surpassed management’s expectations. Saucony’s lifestyle business has also been performing impressively in Italy so far. Sweaty Betty is focused on category leading innovative fashion elements to technical activewear as well as product introductions.

Sperry benefited from healthier go to trends, a solid performance in U.S. wholesale with gains from certain international markets. Wolverine brand registered 12% growth in the quarter.

Management is focused on accelerating its international business. In the reported quarter, international revenues surged 35% year over year. Excluding Sweaty Betty, international revenues grew 10%, backed by growth in Wolverine’s third-party distributor business, recovery in the top markets and a solid performance in China joint venture.

Excluding Sweaty Betty, Wolverine’s third-party businesses in Asia, EMA and Latin America generated revenue growth of 40%, 60% and 90%, respectively, year over year. WWW’s own business in EMA and Canada decreased 21% and 28%, respectively, due to the impacts of supply-chain constraints.Wolverine's Merrell brand registered a low single-digit decline in revenues.

However, the brand’s lifestyle category grew mid-single-digits while the work category increased by roughly 30%. Merrell’s DTC business rose 10% compared from the year-ago quarter’s reading. Merrell's global business remains fundamentally sound, with a strong order book entering 2022.

Wolverine’s Saucony brand registered revenue growth of approximately 25%. A relatively strong inventory position helped mitigate the impact of Vietnam factory closures. Saucony continues to increase its DTC mix, with e-commerce revenues surging roughly 38% from the prior-year period’s level.


Gross profit was $261.3 million, up 15.5% year over year. However, gross margin contracted 180 basis points (bps) year over year to 42.5% due to higher supply-chain costs and a revenue mix shift toward the international distributor business.

Adjusted SG&A expenses jumped 21.2% to $211.3 million. Higher variable expenses, the addition of Sweaty Betty and higher labor rates in distribution centers drove the increase.

Adjusted operating profit dipped 3.7% year over year to $50 million, while adjusted operating margin decreased 210 bps to 8.1%.

Other Financials

Wolverine ended the quarter with cash and cash equivalents of $149.6 million, a long-term debt of $729.6 million and a stockholders' equity of $615.3 million. Total debt was $1,094.6 million at the end of the reported quarter. WWW had a total liquidity, including cash and available borrowings under its revolving line of credit of nearly $800 million.

Inventory at the end of the first quarter was $483.3 million, reflecting an increase of 50.6% year over year. Excluding Sweaty Betty, inventory rose 36.1% from the prior-year period’s level.

In the first quarter, Wolverine had repurchased 1.4 million shares for an average price of $24.37 per share. WWW had $413 million available under the share buyback plan.


Management remains encouraged about the solid start to 2022. Sturdy demand for brands and an improving inventory flow are likely to

aid results. It reaffirmed revenue and earnings outlook for the year. Wolverine continues to envision 2022 revenues in the range of $2.775-$2.850 billion, indicating growth of approximately 15-18% year over year. Wolverine guided adjusted earnings between $2.50 and $2.65 per share, implying an increase of 19.4-26.5% from the year-ago reported figure.

Management expects 2022 gross margin of 43%, indicating a fall from an adjusted gross margin of 44.1% reported in fiscal 2021. It projected an operating margin of 10.2% and an adjusted operating margin of about 11%, up approximately 35 bps from the 2021 figure.

Management expects Merrell brand to deliver growth in low teens for the second quarter with sequential improvements in the third and the fourth on product launches. In 2022, Merrell is likely to deliver growth in the high teens’ range. Saucony will deliver a double-digit revenue increase in the second quarter and high teens’ growth in the current year.

Wolverine anticipates Sweaty Betty revenues to decline mid-single digits in the second quarter, with a return to a double-digit increase in the second half and low teens’ growth for the whole year. Management expects Sperry to increase mid-single digits in the second quarter and grow in the low teens for the current year. Wolverine brand’s revenues are likely to grow in the high teens for the second quarter and mid teens for the full year.

Price Performance

Shares of this currently Zacks Rank #4 (Sell) stock have fallen 21.2% in the past six months compared with the industry’s decline of 15.1%.

Eye These Solid Picks

A few better-ranked stocks in the Consumer Discretionary space are Oxford Industries OXM, G-III Apparel GIII and Gildan Activewear GIL.

Oxford Industries currently sports a Zacks Rank # 1 (Strong Buy). OXM has a trailing four-quarter earnings surprise of 112.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Oxford Industries’ current financial-year sales and EPS suggests growth of 10.2% and 13%, respectively, from the corresponding year-ago reported numbers.

G-III Apparel currently has a Zacks Rank of 1. GIII has a trailing four-quarter earnings surprise of 160.6%, on average.

The Zacks Consensus Estimate for G-III Apparel 's current financial-year sales suggests growth of 8.7% while the same for EPS indicates a rise of 5.2% from the respective year-ago reported figures.

Gildan Activewear has a Zacks Rank #2 (Buy) at present. GIL has an expected long-term earnings growth rate of 8%.

The Zacks Consensus Estimate for Gildan Activewear’s 2022 sales and EPS suggests growth of 8.9% and 3.3%, respectively, from the corresponding year-ago reported figures. GIL has a trailing four-quarter earnings surprise of 66.6%, on average.

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