Yahoo Finance Wolverine (WWW) Reports Wider Q4 Loss, Revenues Rise Y/Y
Wolverine World Wide, Inc. WWW reported a wider-than-expected loss per share during fourth-quarter 2022. The top line met the Zacks Consensus Estimate and increased year over year.
Management initiated a 100-day action plan in the reported quarter. This focuses on inventory reduction, debt management, Keds sale and the creation of a Profit Improvement Office to grab savings to drive growth. WWW remains confident in accomplishing a 12% operating margin in 2024.
Shares of this currently Zacks Rank #3 (Hold) stock have increased 35.5% in the past three months compared with the industry’s 12.4% growth.
Q4 Insights
Wolverine posted a fourth-quarter adjusted loss of 15 cents a share, wider than the Zacks Consensus Estimate of a loss of 14 cents. At constant currency, loss per share came in at 10 cents. The company reported earnings of 37 cents per share.
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Revenues of $665 million matched the Zacks Consensus Estimate but increased 4.6% year over year, courtesy of healthy international sales as well as higher revenues at most of the segments and brands. Revenues jumped 8.4% in constant currency. Direct-to-consumer (DTC) revenues of $224.4 million were flat year over year. WWW’s international business was robust in the reported quarter and improved 22.2% to $281.5 million. International revenues increased 31.9% in constant currency.
Coming to segments, Active Group’s revenues rose 16.8% year over year to $397.6 million, while the metric at Work Group grew 3.3% to $154.5 million. Revenues at Lifestyle Group and Other fell 20.6% and 35.1%, respectively, to $100.7 million and $12.2 million.
Brand wise, Merrell revenues surged 27% year over year to $193.9 million, Saucony revenues increased 24.8% to $121.3 million, Sperry revenues decreased 28% to $68 million and Wolverine revenues rose 9.6% to $71.8 million. Sweaty Betty generated revenues of $72.8 million, down 7% year over year.
Margins
Adjusted gross profit was $225.2 million, down 16.4% year over year. Also, the adjusted gross margin contracted 850 basis points (bps) year over year to 33.9%.
Adjusted SG&A expenses increased 6.2% to $238.3 million. Adjusted operating loss came in at $13.1 million against an adjusted operating income of $45 million.
Other Financials
Wolverine ended the quarter with cash and cash equivalents of $131.5 million, long-term debt of $723 million and stockholders' equity of $339 million. Net debt was $1.02 billion at the end of the reported quarter. WWW had total liquidity of nearly $685 million at the end of the fourth quarter. Inventory at the end of the reported quarter was $745.2 million, down $90 million from the previous quarter.
During 2022, Wolverine paid out cash dividends of $32.8 million.
Outlook
Management issued the view for 2023. During the first half, the gross margin is likely to be impacted by the expense timing of elevated transitory supply-chain expenses from 2022 and the sell-off of the end-of-life inventory. Management expects the profitability to grow significantly in the second half as supply-chain costs and inventory levels normalize, and gain from the Profit Improvement Office efforts.
For 2023, revenues from the ongoing business are projected in the range of $2.53-$2.58 billion, representing an increase of 0-2% and constant currency growth of 1-3%. Further, the gross margin is likely to be at 41.2% and the adjusted gross margin is anticipated to be 42% for the year. The operating margin is estimated to be nearly 8.7% and the adjusted operating margin is expected to be 8.5%.
Earnings per share (EPS) are envisioned to be between $1.50 and $1.70 and adjusted EPS in the bracket of $1.40-$1.60. This guidance includes nearly 14 cents of the adverse impact of foreign currency exchange rate fluctuations.
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