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Wolverine World Wide Sees Q1 Revenue And Margins Top Expectations

Wolverine World Wide Sees Q1 Revenue And Margins Top Expectations

Wolverine World Wide Inc. reported revenue and operating margin exceeded expectations in the first quarter ended April 2 as sales grew 20 percent. Excluding the acquisition of Sweaty Betty, sales grew 9.9 percent, led by Sperry. Wolverine reiterated its outlook for the year.

“We delivered strong financial results in the quarter despite continued supply chain challenges and macro headwinds,” said Brendan Hoffman, Wolverine Worldwide’s President and Chief Executive Officer. “Revenue and operating margin exceeded expectations, despite gross margin pressure related to higher supply chain costs and channel mix shift. We are encouraged to see continued strong demand across brands and have upcoming product launches and powerful marketing initiatives planned to drive further excitement among consumers. Looking ahead, we remain committed to advancing our primary growth strategies, with a more focused approach on execution as we capitalize on a favorable industry backdrop in outdoor, performance and work categories.”

First-Quarter 2022 Financial Highlights

  • Revenue increased 20.4 percent to $614.8 million reflected strong wholesale and international distributor sales. Direct-to-Consumer revenue increased 24 percent including Sweaty Betty and decreased 14 percent excluding Sweaty Betty. On a non-GAAP organic basis (excluding Sweaty Betty), sales grew 9.9 percent to $561.2 million.
  • In the Michigan Group (Merrell, Cat, Wolverine, Chaco, Hush Puppies, Bates, Harley-Davidson, and Hytest), sales grew 10.6 percent to $329.3 million. In the Boston Group (Sperry, Saucony, Keds, and the Stride Rite kids licensed business), sales were up 5.7 percent to $212.3 million. Other revenue reached $73.2 million against $12.1 million, reflecting the addition of Sweaty Betty.
  • Among major brands, Merrell’s sales were $147.9 million, down 1.5 percent; Saucony’s sales reached $106.4 million, up 3.7 percent; Sperry’s revenues totaled $67.4 million, up 18.7 percent; and Sweaty Betty had sales of $53.6 million. Sweaty Betty was acquired on August 2, 2021.
  • Gross margin of 42.5 percent, down 100 basis points, was in line with its internal plan and includes incremental supply chain costs and a revenue mix shift toward the international distributor business. On a non-GAAP organic basis (excluding Sweaty Betty), organic gross margins declined 280 basis points to 41.5 percent from 44.3 percent. 
  • Selling, General & Administrative expenses of $241.7 million includes $30 million of net costs related to a legacy environmental matter. Adjusted SG&A expenses of $211.3 million are up $37 million due to an increase in variable costs on higher revenue, the addition of Sweaty Betty, and higher labor costs in its distribution centers.
  • Net earnings declined to $9.7 million, or 12 cents a share, from $38.5million, or 45 cents, a year ago.  The operating margin eroded 820 basis points to 3.2 percent.
  • On a non-GAAP basis, adjusted EPS came to 41 cents a share against 40 cents a year ago, a gain of 2.5 percent. On a non-GAAP organic basis (excluding Sweaty Betty), operating margins declined 110 basis points to 9.1 percent from 10.2 percent.

Sales of $614.8 million surpassed Wall Street’s consensus estimate of $603.12 million. Adjusted EPS of 41 cents topped Wall Street’s consensus estimate of 39 cents.

Non-GAAP results exclude environmental and other related costs net of recoveries and costs related to the COVID-19 pandemic including air freight costs.

Balance Sheet Highlights

  • Inventory at the end of the quarter was $483.3 million, up 50.6 percent versus the prior year. Excluding Sweaty Betty inventory increased 36.1 percent versus the prior year.
  • Total debt at the end of the quarter was $1,094.6 million. Total liquidity including cash and available borrowings under the company’s revolving line of credit was approximately $800 million.
  • Share repurchases: During the first quarter, approximately 1.4 million shares were repurchased at an average price of $24.37 per share. At the end of the quarter, the company had nearly $413 million available under its board-approved share repurchase plan.


“We are encouraged by the strong start to the year with revenue and earnings per share exceeding our expectations,” said Mike Stornant, Executive Vice President and Chief Financial Officer. “Looking forward, the continued strong demand for our brands combined with improving inventory flow supports our reiteration of full-year revenue and EPS guidance.”

  • Revenue is expected to be in the range of $2.775 billion to $2.850 billion, representing growth of approximately 15.0 percent to 18.0 percent.
  • Diluted earnings per share are expected to be between $2.30 to $2.45 and adjusted diluted earnings per share are expected to be between $2.50 to $2.65, representing growth of 19.4 percent to 26.5 percent.
  • Gross margin is expected to be approximately 43.0 percent.
  • Operating margin is expected to be approximately 10.2 percent and adjusted operating margin is expected to be approximately 11.0 percent, up approximately 35 bps versus 2021.
  • The effective tax rate is expected to be approximately 21 percent.
  • Diluted weighted average shares are expected to be approximately 81.4 million.