Wolverine's (WWW) Strategic Growth Efforts Appear Encouraging
Wolverine World Wide, Inc. WWW looks encouraging, thanks to its robust business strategies. The company focuses on developing brands that suit consumer needs aptly on the back of advanced technologies and accurate market insights. It has been enhancing its footprint across the international markets.
The company has announced a strategic transformation plan to drive long-term growth. This includes the unveiling of a global licensing function to oversee and manage all its licensed businesses and setting up an integrated planning mechanism to improve integrated demand, inventory and supply-chain management.
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Management had earlier initiated an action plan, including a focus on inventory reduction, debt management, Keds' sales and the creation of a profit improvement office to grab savings. We note that the company’s 2024 results will reflect a benefit of $60 million from 2023 transitory supply-chain costs. Wolverine expects the profit-improvement office to generate annual savings of $215 million, including $75 million expected in 2023 and an incremental $140 million in 2024.
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 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 approximately $850 million by the end of this year.
Wolverine World Wide, Inc. Price and Consensus
Wolverine World Wide, Inc. price-consensus-chart | Wolverine World Wide, Inc. Quote
The company remains on track to deliver the year-end inventory goal of $490 million. Management also has plans to sell $65 million of non-core assets in the following months to pay down debt. The company has been focusing on the brand structure, increasing efficiency by removing costs, strategic review of its portfolio, improving working capital and lowering leverage. Wolverine remains confident in accomplishing a target of 12% operating margin in the near term.
Wolverine remains committed to enhancing its footprint across the international markets. As part of long-term business growth strategies, the company is also striving to develop an efficient sourcing structure and diversify its global business. Management sees major opportunities across the owned and JV-operated markets. Wolverine plans to invest in key growth markets and continues to invest in the international regions, with joint ventures for Merrell and Saucony and expanding e-commerce capabilities globally.
Over the past three months, shares of this Zacks Rank #3 (Hold) stock have gained 22.5% compared with the industry’s 16.2% growth. The Zacks Consensus Estimate for WWW 2024’s earnings per share (EPS) is pegged at $1.06, reflecting an increase of 523.5% year over year. This highlights analysts’ confidence in the stock.
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