The footwear, apparel and accessories company beat Wall Street expectations on the bottom line but missed on the revenue side.
Wolverine World Wide expects growth in the second half, but headwinds revolving around supply chain issues, inflation, changing consumer preferences and the industry’s promotional environment which is heating up caused management to trim its forecasts for the full-year top and bottom lines.
In the quarter ended July 2, net earnings tripled to $124.5 million, from $44.4 million in the year-ago quarter.
Related Articles
Total revenue for the quarter rose 12.9 percent to $713.6 million from $631.9 million a year ago.
You May Also Like
Diluted earnings per share are expected to be between $2.30 to $2.45, and adjusted diluted earnings per share are seen between $2.50 to $2.65. Previously, the forecast called for diluted earnings per share of between $2.62 to $2.72 and adjusted diluted earnings per share of between $2.10 to $2.20.
Last quarter, the Merrell brand rose 14 percent to $203.6 million. Wolverine rose 16.3 percent to $57.7 million. Saucony rose 7.2 percent to $135.5 million. However, Sperry declined $13.4 percent to $70.1 million.
According to Stornant, because the company is well positioned with Saucony and Merrell in the performance, running and outdoor footwear markets, it’s been able to capitalize on the continued consumer appetite for those categories.
In a statement released earlier on Wednesday, Hoffman said, “Despite a slowdown in June shipments, we are pleased with delivering record organic revenue in the quarter. We are encouraged by 14 percent growth in our largest brand Merrell, and 45 percent growth in our international business.
“We faced unplanned headwinds related to elevated customer inventory, a stronger U.S. dollar, and some lingering supply chain delays, but our operating margin was better-than-expected in the quarter,” Hoffman said. “While we continue to expect sequential growth acceleration in the second half, we now have a revised outlook for the back-half of this year that assumes higher promotional activity and elevated inventory in our wholesale channels.
“The company has performed well in the first half of 2022. Several factors have impacted our outlook for the second half, including certain negative trends that accelerated in June,” Stornant indicated in his prepared statement. “We now expect a stronger U.S. dollar, inflation, excess inventory across channels and changing consumer behavior will have a more meaningful negative impact on our industry and the company for the remainder of the year. We are adjusting our full-year outlook accordingly.”
In other results, excluding Sweaty Betty, revenue reached $666.2 million, a record for the quarter and up 17.2 percent compared to 2019.
The international business was up 45.3 percent to $295.2 million including Sweaty Betty, and up 26.4 percent to $256.8 million excluding Sweaty Betty.
Direct-to-consumer revenue including Sweaty Betty was up 21.1 percent to $166.2 million, and excluding Sweaty Betty was down 8.2 percent to $125.9 million.
The operating margin, which Hoffman called out, rose to 23.5 percent, up 1,340 basis points from 10.1 percent a year ago.