Wolverine World Wide Inc., whose portfolio includes footwear brands Merrell, Saucony, Sperry and Stride Rite, posted a strong and profitable performance in the second quarter.
The footwear, apparel and accessories company beat Wall Street expectations in earnings, but lagged on the revenue side.
Wolverine World Wide expects growth in the second half, but headwinds from supply chain issues, inflation, shifting consumer preferences and the industry promotional environment that warming led management to revise downwards its forecasts for sales and results for the full year.
In the quarter ended July 2, net income tripled to $124.5 million from $44.4 million in the year-ago quarter.
Total revenue for the quarter increased 12.9% to $713.6 million from $631.9 million a year ago.
Executives told WWD they were pleased with Wolverine World Wide’s performance in the second quarter and that the business remains healthy and resilient.
“We are pleased with the continued growth we are seeing, particularly the strength of our performance and work brands,” Brendan Hoffman, president and CEO of Wolverine World Wide, told WWD.
Mike Stornant, Executive Vice President and Chief Financial Officer, cited “great growth over last year, overall. We’ve seen positives, particularly at Merrell and in our international business.”
He said the company had “very good earnings performance. The gross margin exceeded our expectations and Street’s expectations.
He noted that the revised revenue guidance is close to the original guidance, while the company has “a more conservative view on earnings. The fundamentals of the business are in place. »
For all of 2022, revenue is now expected to be between $2.74 billion and $2.79 billion, down from a previous forecast of between $2.775 billion and $2.85 billion.
Diluted earnings per share are expected to be between $2.30 and $2.45, and adjusted diluted earnings per share are between $2.50 and $2.65. Previously, guidance called for diluted earnings per share of between $2.62 and $2.72 and adjusted diluted earnings per share of between $2.10 and $2.20.
Last quarter, the Merrell brand grew 14% to $203.6 million. Wolverine rose 16.3% to $57.7 million. Saucony rose 7.2% to $135.5 million. However, Sperry fell 13.4% to $70.1 million.
According to Stornant, since the company is well positioned with Saucony and Merrell in the performance, running and outdoor footwear markets, it has been able to capitalize on consumers’ continued appetite for these categories.
Wolverine, the company’s largest workwear brand, also has a strong market share in the United States and has had good results with work boots.
As for Sperry’s shortfall, Stornant attributed it to some slowdown in consumer spending on casual lifestyle products.
In a statement released earlier on Wednesday, Hoffman said, “Despite a slowdown in shipments in June, we are pleased to have delivered record organic revenue in the quarter. We are encouraged by the 14% growth in our largest Merrell brand and the 45% growth of our international business.
“We faced unexpected headwinds from high customer inventory, a stronger US dollar and ongoing supply chain delays, but our operating margin was better than expected in the quarter. “, said Hoffman. “While we continue to expect a sequential acceleration in growth in the second half, we now have a revised outlook for the second half of this year which assumes higher promotional activity and elevated inventory across our wholesale channels. .
“The company performed well in the first half of 2022. Several factors impacted our outlook for the second half, including some negative trends that accelerated in June,” Stornant said in its prepared statement. “We now expect a stronger US dollar, inflation, excess inventory across all channels and changing consumer behavior to have a more significant negative impact on our industry and the business for the remainder. We are adjusting our outlook for the full year accordingly.
In other results, excluding Sweaty Betty, revenue reached $666.2 million, a record for the quarter and up 17.2% from 2019.
International business increased 45.3% to $295.2 million including Sweaty Betty and 26.4% to $256.8 million excluding Sweaty Betty.
Direct-to-consumer revenue including Sweaty Betty increased 21.1% to $166.2 million, and excluding Sweaty Betty decreased 8.2% to $125.9 million.
The operating margin, which Hoffman called, reached 23.5%, up 1,340 basis points from 10.1% a year ago.