13 May Wolverine Worldwide Raises Full-Year Outlook On Strong First-Quarter Results
Wolverine World Wide Inc. lifted its annual guidance after reporting adjusted earnings grew 45 percent in the first quarter on a 16 percent sales gain. Merrell revenue grew nearly 25 percent, and Saucony revenue was up nearly 60 percent.
“We believe 2021 will be a breakthrough year for the company, and our first-quarter performance was an excellent start,” said Blake W. Krueger, Wolverine Worldwide’s Chairman and CEO. “In the first quarter, Merrell revenue grew nearly 25 percent, and Saucony revenue was up nearly 60 percent compared to last year, powered by our accelerated digital strategy and big new product stories that are resonating with consumers. Our ongoing investment in digital fueled eCommerce growth of 84 percent, well ahead of our expectations. Our brands are well-positioned in trending, performance-oriented product categories like running, hiking, and work; and their momentum remains strong. We anticipate growth to continue to accelerate moving forward.”
First-Quarter 2021 Review
- Reported revenue was $510.7 million, up 16.3 percent versus the prior year. On a constant-currency basis, revenue was up 14.3 percent versus the prior year. Owned e-commerce reported revenue grew 83.6 percent versus the prior year. Results were about flat with Wall Street’s consensus target of $512 million;
- Reported gross margin was 43.5 percent, compared to 41.4 percent in the prior year. Adjusted gross margin was 44.3 percent, compared to 41.4 percent in the prior year;
- Reported operating margin was 11.4 percent, compared to 3.8 percent in the prior year. Adjusted operating margin was 10.2 percent, compared to 6.9 percent in the prior year;
- Reported diluted earnings per share were $0.45, compared to $0.16 in the prior year. Adjusted diluted earnings per share were $0.40, and, on a constant currency basis, were $0.40, compared to $0.28 in the prior year;
- Net earnings came to $38.5 million against $13 million a year ago. Adjusted earnings were $33.3 million, up 44.8 percent from $23 million a year ago. Adjusted earnings were in line with Wall Street’s consensus target;
- Inventory at the end of the quarter was down 20.8 percent versus the prior year; and
Cash flow from operating activities generated $26.3 million in the quarter or $102.9 million more than in the prior year.
- Total debt at the end of the quarter was $720.4 million, or $505.7 million less than in the prior year, and total liquidity at the end of the quarter was $1.2 billion.
Among its segments, sales at Wolverine Michigan Group grew 20.1 percent to $297.7 million and expanded 18.2 percent on a currency-neutral basis. The Wolverine Michigan Group includes Merrell, Cat, Wolverine, Chaco, Hush Puppies, Bates, Harley-Davidson, and Hytest.
Sales in the Wolverine Boston Group increased 10.3 percent to $200.9 million and advanced 8.2 percent on a currency-neutral basis. The Wolverine Boston Group consists of Sperry, Saucony, Keds and the Kids’ footwear business, which includes the Stride Rite licensed business, as well as Kids’ footwear offerings from Saucony, Sperry, Keds, Merrell, Hush Puppies, and Cat.
“The company drove strong financial results for the first quarter, delivering meaningful revenue growth and gross margin expansion in the face of certain supply chain obstacles that have plagued the industry,” said Mike Stornant, senior vice president and chief financial officer. “Demand for our brands is strong, as evidenced by our better-than-expected eCommerce growth and our robust wholesale order book. Core inventory levels continue to increase in Q2 to support the business trends, and we expect to be well-positioned to chase upside opportunities later in the year, giving us the confidence to raise our outlook for the year.”
Full-Year 2021 Outlook
For the full 2021 fiscal year, the company now expects revenue in the range of $2,240 million to $2,300 million, growth of 25 percent to 28 percent versus the prior year, up $50 million from our outlook in February and exceeding 2019 revenue at the high end of the range. The company remains focused on delivering its aspirational target of $500 million in owned eCommerce revenue, more than doubling 2019 levels. Reported diluted earnings per share are now expected to be in the range of $1.70 to $1.85 and adjusted diluted earnings per share are now expected to be in the range of $1.95 to $2.10.
Previously, revenue was projected in the range of $2,190 million to $2,250 million, representing growth of 22 percent to 26 percent versus the prior year, approaching 2019 revenue at the high end of the range. Diluted earnings per share were expected to be in the range of $1.75 to $1.90, and adjusted diluted earnings per share in the range of $1.90 to $2.05.
This outlook assumes no meaningful deterioration of current market conditions related to the COVID-19 pandemic during the remainder of 2021.