Wolverine to Pursue Sale of More ‘Non-Core’ Assets Following Continued Revenue Decline in Q3
Shares for Wolverine Worldwide were up more than 4 percent at market close today following the news of further cost cutting after another tough quarter.
The Rockford, Mich.-based company reported revenues in the third quarter fell 23.7 percent to $527.7 million versus $691.4 million the same time last year. The company’s international revenue dropped 24.4 percent to $229.0 million compared to the prior year, while its direct-to-consumer revenue was down 14.5 percent to $136.6 million compared to the same period last year. Net earnings in Q3 were $9.0 million down from $38.8 million in the third quarter of 2022.
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By brand, Sperry — which could soon be sold — faced the most hardship in the third quarter, with revenue falling 41.4 percent to $46.2 million. Merrell was down 24.3 percent to $157.0 million, while Saucony’s revenue dropped 14 percent to $116.4 million. The company’s namesake Wolverine brand dipped 4.7 percent in the period to $56.3 million. Sweaty Betty was the bright spot, seeing revenues increase 19 percent to $45.0 million.
According to Wolverine Worldwide’s EVP and CFO Mike Stornant, the company’s Saucony and Sweaty Betty businesses have “stabilized” and are showing signs of improvement. However, Merrell continues to “operate in a challenged outdoor category,” and its Work Group brands continue to experience headwinds in wholesale demand.
The CFO also noted that the company’s strategic alternatives review for the Sperry brand is progressing, and that Wolverine is pursuing the sale of other non-core assets in the fourth quarter. (He did not elaborate on which assets he was referring to.) This follows the company’s recent sale of Keds as well as the Hush Puppies intellectual property in China, Hong Kong, and Macau, and the sale of its North American Wolverine Leathers business to New Balance.
This news comes at the same time the company announced a new round of layoffs as part of a plan to deliver approximately $215 million of annualized savings in 2024.
Chris Hufnagel, president and CEO of Wolverine Worldwide, said in a statement that the company took “decisive action” to stabilize and transform the business.
“While market conditions remain challenging, we’re taking the necessary steps to reinvigorate our brands and position the company for profitable growth as conditions improve,” Hufnagel said. “We’re confident in our brands, platforms, and most importantly, our people. We’re executing more boldly and at a greater pace to improve our profitability and enable future investments focused on our biggest growth opportunities – all aimed at delivering greater value for our shareholders.”
Looking ahead, Wolverine Worldwide is reducing its fourth quarter revenue outlook to a range of $515 million to $525 million and adjusted diluted earnings per share to a declining range of $0.25 to $0.30.
For the full fiscal year, the company expects revenue to be approximately $2.19 billion to $2.20 billion, representing a decline of approximately 13 percent versus the prior year.
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