Wolverine's (WWW) Q2 Earnings & Revenues Down Y/Y
Wolverine World Wide, Inc. WWW reported results for second-quarter 2023. Both the metrics fell year over year. The company posted second-quarter adjusted earnings of 19 cents a share, missing the consensus estimate of adjusted earnings of 20 cents per share. At constant currency, adjusted earnings per share came in at 21 cents. The company reported adjusted earnings of 65 cents per share.
In the past three months, shares of this Zacks Rank #4 (Sell) company have lost 26.4%, wider than the industry’s 7.7% fall.
Q2 Insights
Revenues of $589.1 million came ahead of the Zacks Consensus Estimate of $583 million but fell 17.4% year over year, driven by lower revenues at most of the segments and brands. Revenues dipped 17.3% in constant currency. Direct-to-consumer revenues of $132.4 million were down 20.3% year over year. WWW’s international business dropped 6.7% to $260.9 million. International revenues decreased 6.2% in constant currency.
Coming to segments, Active Group’s revenues dipped 10.5% year over year to $383.3 million, while the metric at Work Group tumbled 15.6% to $117.8 million. Revenues at Lifestyle Group and Other fell 38.2% and 47%, respectively, to $74.9 million and $13.1 million.
Wolverine World Wide, Inc. Price, Consensus and EPS Surprise
Wolverine World Wide, Inc. price-consensus-eps-surprise-chart | Wolverine World Wide, Inc. Quote
Brand wise, Merrell revenues slipped 15.7% year over year to $176.7 million, Saucony revenues grew 1.6% to $141.7 million, Sperry revenues decreased 23.5% to $57.4 million and Wolverine revenues fell 28.2% to $41.4 million. Sweaty Betty generated revenues of $44 million, down 7.2% year over year.
Margins
Adjusted gross profit was $226.4 million, down 23.2% year over year. Also, the adjusted gross margin contracted 470 basis points year over year to 39.2%.
Adjusted SG&A expenses edged down 11.7% to $192.8 million. Adjusted operating income came in at $33.6 million, down from adjusted operating income of $76.5 million.
Other Financials
Wolverine ended the quarter with cash and cash equivalents of $176.5 million, long-term debt of $718.5 million and stockholders' equity of $366.9 million.
Net debt was $930 million and total liquidity was nearly $370 million at the end of the second quarter. Inventory at the end of the reported quarter was $647.9 million, up 7% from the year-earlier quarter.
During first-half 2023, Wolverine has paid out cash dividends of $16.4 million.
Outlook
Management highlighted that the trading background is challenging, mainly in the global wholesale channels. Thus, it has lowered its revenue and earnings view for the back half. However, 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. It also has plans to sell at least $50 million of non-core assets in the next months to pay down debt. Net debt is likely to be roughly $850 million by the end of the year.
For 2023, revenues from the ongoing business are now projected in the range of $2.26 billion to $2.28 billion, showing a decline of about 10-10.7% year over year. This is down from $2.53-$2.58 billion guided earlier. Further, the gross margin is likely to be 39.4% and the adjusted gross margin is anticipated to be 40% for the year. It had earlier anticipated the gross margin to be 41.3% and the adjusted gross margin to be 42% for the year.
Operating margin is estimated to be nearly 4.8% and adjusted operating margin is expected to be 5%. Earlier, it projected operating margin to be 8.7% and adjusted operating margin to be 8.5%. The effective tax rate is likely to be 18.2%.
Earnings per share are now envisioned to be between 43 cents and 53 cents and adjusted earnings per share are projected to be in the bracket of 45-55 cents. This guidance includes nearly 11 cents adverse impact of foreign currency exchange rate fluctuations. Previously, management had guided earnings per share of $1.50-$1.70 and adjusted earnings per share of $1.40-$1.60.
Key Picks
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RCL has a trailing four-quarter earnings surprise of 28.5%, on average. The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates increases of 53.6% and 177.7%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy), at present.
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Ralph Lauren, a footwear and accessories dealer, has a Zacks Rank of 2 at present. RL has a trailing four-quarter earnings surprise of 17.4%, on average.
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