CEO says footwear company is not yet at 'full potential' as it pushes ahead with transformation plan
Wolverine World Wide Inc.'s stock was falling around 21% Wednesday to put it on track for its biggest one-day selloff in almost two years, after the footwear company's soft guidance offset a return to profitability in the fourth quarter.
The last time the stock (WWW) fell more was Aug. 3, 2023, when it closed down 26.7%.
The Rockford, Mich.-based company is in the midst of a turnaround aimed at stabilizing the business and inflecting back to growth. In the past two years, it sold its Keds, Sperry, and U.S. and non-U.S. Wolverine Leathers businesses.
Chief Executive Chris Hufnagel acknowledged that Wolverine has not yet "reached our full potential," but said the company is aiming to build on the momentum generated in 2024.
"We successfully completed the stabilization of the company and strengthened our balance sheet, finishing with our lowest debt level since the second quarter of 2021 and the cleanest inventory position we've had since the pandemic," he told analysts on the company's earnings call, according to a FactSet transcript.
Wolverine had net income of $24.6 million, or 29 cents a share, for the quarter, after a loss of $91.2 million, or $1.15 a share, in the year-earlier period. Adjusted for one-time items, it had EPS of 42 cents, matching the FactSet analyst consensus.
Revenue fell to $494.7 million from $526.7 million a year ago, also ahead of the $487.0 million FactSet consensus.
Gross margins improved by 740 basis points to 44%, from 36.6% a year ago. Operating margin improved to 8.0%, from negative 35.5% a year ago.
For 2025, Wolverine expects adjusted EPS to range from $1.05 to $1.20 on revenue of about $1.795 billion to $1.825 billion. Those numbers are below the FactSet consensus for EPS of $1.34 on revenue of $1.858 billion.
The guidance does not include any potential impact from tariffs, given the uncertainty around that policy for now.
By product line, sales of the core Wolverine brand rose 20.5% to $62.4 million in the quarter, while sales of Saucony running shoes and apparel were down 5.3%. Sales at Sweaty Betty, an activewear brand for women, fell 4.9%, and international sales were down 5.4%.
Sales of the Merrell brand of hiking boots rose 1% to $163.4 million.
In 2025, Merrell is expected to grow sales by midsingle digits, while Saucony is expected to grow in the midteens, driven by new launches and expanded distribution. The company is planning its first brick-and-mortar Saucony stores in Tokyo and London.
For the first quarter, Wolverine is expecting to deliver revenue of about $395 million, which compares with a FactSet consensus of $426 million. Adjusted EPS is expected to come to about 10 cents, while FactSet is expecting 25 cents.
The stock is down 33.5% in the year to date, while the S&P 500 SPX has gained 4%.
-Ciara Linnane
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