Wolverine (WWW) Unveils Moves for Portfolio Transformation
Wolverine World Wide, Inc. WWW has been making continuous moves to aid overall growth. In the latest developments, the company has stated additional steps for the ongoing transformation of its brand portfolio. This comprises the sale of the Hush Puppies intellectual property in China, Hong Kong and Macau, as well as the sale of the Wolverine Leathers business in the United States. These actions are expected to reshape the company’s portfolio and streamline the organization, thus allowing it to grab meaningful opportunities. This transaction, which is likely to conclude in the coming weeks after being subjected to the satisfaction of the customary closing conditions, will also enrich the shareholders’ value.
Wolverine has inked a deal to sell the Hush Puppies trademarks, patents, copyrights and domains in China, Hong Kong and Macau to the present sublicensee, Beijing Jiaman Dress Co., Ltd., for roughly $58.8 million. Per the transaction, these parties have entered into a License and Cooperation agreement for mutual engagement and brand stewardship of the Hush Puppies brand across the region. This will allow the company to own and operate the Hush Puppies brand in the rest of the world.
We note that Wolverine has concluded the sale of the U.S. Wolverine Leathers business to its long-time customer, New Balance, for $6 million. The aforesaid moves follow the recently completed sale of Keds to Designer Brands, Inc., as well as the strategic alternatives process for its Sperry brand.
What’s More?
Management had earlier initiated a 100-day action plan, including a focus on inventory reduction, debt management, Keds sale and the creation of a profit improvement office to grab savings to drive growth. Management expects an incremental $130 million in savings for 2024, which yields a four-year run rate of $200 million. The company looks forward to reinvesting a portion of these savings into brand building and top marketing capabilities, particularly for Merrell and Saucony. It anticipates further inventory improvement in 2024, backed by tighter SKU management and a better operations planning system. Driven by the operational efficiencies and deleverage efforts, management projects net debt to be below $700 million by the end of the next year.
Further, the company expects the profit improvement office to generate a minimum of $70 million in savings for 2023. It remains on track to deliver the year-end inventory goal of $520 million. Management also has plans to sell at least $50 million of non-core assets in the next months to pay down debt. Further, the company focuses on the brand structure, increasing efficiency by removing costs, strategic review of its portfolio, and improving working capital and lowering leverage. Wolverine remains confident in accomplishing a 12% operating margin in 2024.
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However, shares of this Zacks Rank #4 (Sell) company have lost 42.8% over the past three months, wider than the industry’s 4.1% fall.
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