Saucony, Merrell brands excel as consumers adapt to outdoor trend

Yahoo Finance’s Brian Sozzi, Julie Hyman, and Myles Udland discuss how Wolverine Worldwide has been navigating COVID-19 and future outlook with Wolverine Worldwide President, Brendan Hoffman.

Video Transcript

MYLES UDLAND: It's been a busy period for retailers. Got a number of companies out with earnings this morning. One company out with earnings a couple of weeks ago is Wolverine Worldwide. I'm joined now by the company's president, Brendan Hoffman, to discuss the company's quarter and the outlook as we head into the holiday season. Brendan, it's great to speak with you. So I want to get your thoughts and any color you can give us on how you guys are setting up for what's set to be a pretty interesting holiday season. We continue to see indications of a longer and earlier holiday period. Are those trends that you have been seeing and are prepping for as we get down to the meat of it?

BRENDAN HOFFMAN: Yeah, I think absolutely, Miles. We're excited about the pivot we've made to lean on our own e-commerce branded sites amongst our 11 brands. And as we reported a few weeks ago, the acceleration in digital up over 50% last quarter, up over 100% in Q2, continues. And we think for us, we leading into Black Friday and Cyber Monday, it's going to blow away our records, for sure.

MYLES UDLAND: Brendan, as someone who used to work a specialty running shop, one of your brands, near and dear to my heart-- that, of course, is Saucony-- I'd love to talk a bit more about the trends going on in the running space during the pandemic and what you've seen with that business overall. Because the technology that goes into the shoes now, the competition in this space has evolved quite a bit in the last 5 and 10 years.

BRENDAN HOFFMAN: You said it. I mean, we're catching some tailwinds now with everyone getting outdoors and taking up running. And Saucony is prime in the middle of that. As you mentioned, the technology has really advanced over the last few years. And innovation has been top of mind for Saucony and, quite frankly, many of our brands.

And we came out with the Endorphin franchise earlier. That's been a huge home run for us. And really, just making sure we can have the supply meet the demand based on everything we're seeing, both on our own websites and around stores, as you mentioned, specialty stores around the world which have really embraced running, and Saucony specifically.

BRIAN SOZZI: Brendan, you are no stranger to the department store scene-- former CEO of Bon Ton, former CEO of Lord Taylor. Wolverine Worldwide has long played in the department store space. Now that you've been with the company for a few months here in your current capacity, how are you thinking about rebuilding the Wolverine brand looking forward? Clearly, it's going to need more points of distribution.

BRENDAN HOFFMAN: Well, I think it's an evolution when it comes to the Wolverine stable of brands. Certainly, my department store experience, my e-com experience, I think, are going to benefit me and the company a great deal as we become more at our own direct-to-consumer businesses, leaning heavily on e-commerce, as I mentioned, but also our own brick-and-mortar stores.

But then we have some great wholesale partners, whether it be some of the department stores that are continuing to reinvent themselves or the sporting goods stores like Dick's and Academy or Tractor Supply and the work and Fleet Farm. So it's nice to see the diversity of the wholesale channel that Wolverine and our brands are able to lean on so that, at the end of the day, while we're pivoting towards direct to consumer-- and it's not going to be an either/or. Or I really believe it will be an and. We're going to become much better retailers and e-tailers, and I think that's going to enhance our business with our wholesale channels. We'll have a more focused assortment we'll. Have better assets to share with them. So it won't be just the department stores. It will be across all the different wholesale channels, really, around the world.

JULIE HYMAN: Brendan, it's Julie here. As you focus on that diversity of distribution, I want to ask about the diversity of the portfolio also. Because you guys have a lot of different brands-- not just Saucony or Wolverine, the namesake, but also things like Merrell and Stride Rite and Keds. Does that portfolio feel right to you? In other words, are you looking and growing it? Where do you think that perhaps you need some other brands to come in and compliment it? Or conversely, is there anything that you want to maybe right-size about the brands that you have?

BRENDAN HOFFMAN: Yeah, great question. Well, I'm early days here, only a couple months in, but I think you hit on things that certainly I've been thinking about on the board and Blake had been talking about. One-- we love the brands we have. You mentioned Merrell, which is benefiting from the outdoor trend, number one in hike. Some of the other brands we have, like Wolverine and Cat, are great in the work setting. So they're benefiting with some tailwinds.

And then we have other brands, like I say, I grew up with, Sperry and Keds, that I've known my whole life and I think are underdeveloped and definitely don't have the same tailwinds that some of the other brands we have do, but I think have great brand equity and can become lifestyle brands, especially as we embrace doing a lot of this more directly to our customers.

So I think we have tremendous optimism with the portfolio we have. But as you mentioned, we're constantly listening and looking to see how we can add to our portfolio and right-size. So I think all those things you mentioned, Julie, are on the table.

BRIAN SOZZI: Brent, just building off what Julie just asked, do you think Wolverine should be in the business of licensing Harley Davidson footwear? I would make the argument that Harley is not invested in their power brand, and the company continues to undergo a major transformation.

BRENDAN HOFFMAN: Yeah. Well, we've had a long-standing relationship with Harley Davidson, and we're very pleased with the performance we've seen, again, selling more through our own Harley Davidson branded side, but also finding new partners through wholesale to distribute the line for us. So we only have a couple of licenses, so it's definitely different when you don't own the brand.

But again, the company has been doing that for years, so I'm very pleased with the relationship with Harley Davidson. And they been great supporters. And they're doing some innovative stuff with their electronic bike, so I'm very optimistic that that business will be able to continue to growing our portfolio.