Wolverine World Wide Inc (WWW) Faces Headwinds as Q3 Earnings Align with Expectations
Wolverine World Wide Inc (NYSE:WWW) reports a revenue decline of 23.7% year-over-year in Q3 2023.
Gross margin improves slightly to 40.8%, while operating margin falls to 5.2%.
Adjusted diluted earnings per share drop significantly by 85.1% compared to the same quarter last year.
Company announces strategic actions including divestitures and a focus on profit improvement initiatives.
On November 9, 2023, Wolverine World Wide Inc (NYSE:WWW) released its third-quarter earnings report, revealing a challenging period yet meeting its own expectations. The company's revenue saw a significant decrease of 23.7% compared to the previous year, amounting to $527.7 million. This decline was even steeper on a constant currency basis, with a 24.7% drop. The ongoing business revenue, which excludes the impact of divested businesses, also fell by 21.1% on a constant currency basis.
Financial Performance Overview
The company's gross margin saw a modest improvement from 40.2% to 40.8%, attributed to profit improvement initiatives and channel mix. However, operating margin decreased from 8.5% to 5.2%, and diluted earnings per share plummeted by 77.1% to $0.11. The adjusted figures for the ongoing business were not much brighter, with adjusted operating margin and adjusted diluted earnings per share falling by 510 basis points and 85.1%, respectively.
Segment and Brand Revenue Insights
Wolverine World Wide Inc's (NYSE:WWW) segment revenues also faced declines, with the Active Group down by 17.5%, the Work Group by 22.1%, and the Lifestyle Group by a stark 46.6%. Notably, the Sweaty Betty brand stood out with a 19.0% increase in revenue. The company's international revenue decreased by 24.4%, and direct-to-consumer revenue dropped by 14.5% compared to the prior year.
Balance Sheet and Cash Flow Highlights
Inventory levels at the end of the quarter were down approximately 33% compared to the previous year, standing at $563.8 million. Net Debt was reported at $930 million, with liquidity around $400 million. The bank-defined leverage ratio was 3.4x.
Forward-Looking Statements and Adjustments
Looking ahead, Wolverine World Wide Inc (NYSE:WWW) has adjusted its full-year 2023 outlook, expecting revenue from the ongoing business to be between $2.19 billion and $2.20 billion, which would represent a decline of approximately 13% versus the prior year. The company anticipates a full-year gross margin of around 38.7% and an adjusted gross margin of approximately 39.1%. The adjusted diluted earnings per share are forecasted to be between $0.05 and $0.10, including a negative impact from foreign currency exchange rate fluctuations.
Wolverine World Wide Inc (NYSE:WWW) is actively pursuing the sale of non-core assets and is focused on driving profit improvement benefits, with an expected $215 million of annualized savings in 2024. The company's strategic review of the Sperry brand is ongoing, and it aims to achieve a year-end inventory target of $490 million.
The company's non-GAAP financial measures, such as adjusted financial results and constant currency information, are intended to provide a clearer picture of its performance by excluding certain items that may not be indicative of core operating results.
For more detailed financial information and reconciliations of non-GAAP measures, please refer to the financial tables provided in the earnings release.
Wolverine World Wide Inc (NYSE:WWW) will continue to navigate through market challenges with a focus on transformation efforts, aiming to position itself for profitable growth and enhanced shareholder value.
Explore the complete 8-K earnings release (here) from Wolverine World Wide Inc for further details.
This article first appeared on GuruFocus.
