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, which suit consumer needs aptly on the back of advanced technologies and accurate market insights. It has also been enhancing its footprint across the international markets.
Management had initiated a 100-day action plan, including focus on inventory reduction, debt management, Keds sale and the creation of a profit improvement office to grab savings to drive growth. We note that the company will recognize $90 million of transitory supply chain in 2023 and incremental inventory liquidation costs not recurring in 2024.
The company expects an incremental $130 million in savings for 2024, which will yield a four-year run rate of $200 million. It looks forward to reinvest a portion of these savings into brand building and top-marketing capabilities, particularly for Merrell and Saucony. The company 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. Net debt is likely to be roughly $850 million by the end of the year. Further, the company focuses on 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.
Wolverine World Wide, Inc. Price and EPS Surprise
Wolverine World Wide, Inc. price-eps-surprise | Wolverine World Wide, Inc. Quote
With respect to the international markets, the company is 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. The company also expands its e-commerce capabilities globally.
The company has also been rolling out new products to aid incremental sales. Recently, it launched two University of Michigan branded boots, to be sold exclusively at The M Den. For each pair sold, WWW will give a portion of proceeds to the Champions Circle, the University of Michigan's NIL collective.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have gained 3.6% against the industry’s 5% decline. The Zacks Consensus Estimate for WWW 2024’s earnings per share (EPS) is pegged at $1.48, showing an increase of 208.8% year over year. This highlights analysts’ confidence in the stock.
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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 17.3%, on average.
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