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Wolverine's (WWW) Brands & E-Commerce Aid Customer Wins

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·5-min read
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A diversified global business model, immense brand strength, sturdy digital measures and international expansion are aiding Wolverine World Wide, Inc. WWW to sail through tough times. Wolverine has been strengthening its direct-to-consumer (“DTC”) business. Steady product innovations and launches are added positives. It has been reinforcing the digital capabilities to enhance product flow and strengthening its distribution centers.

For 2022, the Zacks Consensus Estimate for Wolverine’s sales and earnings per share (EPS) is currently pegged at $2.82 billion and $2.58 each. These estimates suggest growth of 16.7% and 23.4%, respectively, from the year-ago period’s corresponding figures. This reflects analysts’ optimism about the company. A Value Score of B for this Zacks Rank #3 (Hold) stock further speaks volumes.

This Rockford, MI-based company’s shares have increased 6.3% in the past month compared to its industry’s 2.1% gain. Last month, Wolverine reported strong results for first-quarter 2022 despite supply-chain disruptions and macro headwinds. Both the top and the bottom line beat the Zacks Consensus Estimate and improved year over year. A robust portfolio of iconic brands and operational strategies contributed to WWW’s performance. International revenues surged 35% year over year in the reported quarter. Excluding Sweaty Betty, international revenues grew 10%, backed by growth in Wolverine’s third-party distributor business, recovery in the top markets and a solid performance by the China joint venture.

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Let’s Delve Deeper

Among Wolverine’s sales channels, e-commerce is the key growth driver. Management has been expanding digital content, and enhancing flow of information and management of consumer databases. Speed-to-market initiatives, deployment of the digital product development tools, expansion of e-commerce platforms and frequent introduction of products have been contributing to its performance. During the first quarter of 2022, DTC e-commerce revenues jumped 16% from last-year levels, whereas DTC store revenues were up 60%. Management expects the DTC businesses to approach 30% of global revenues across its international markets to surpass 35% of global revenues for 2022.

Coming to brand progress, Wolverine focuses on developing brands that suit consumer needs aptly on the back of advanced technologies and accurate market insights. In the first quarter, Saucony revenues grew 3.7% year over year to $106.4 million, Sperry revenues increased 18.7% to $67.4 million, while Wolverine revenues rose 12.2% to $58.8 million. Sweaty Betty generated revenues of $53.6 million. While Merrell’s demand was solid across all geographic regions, Saucony slightly surpassed management’s expectations.

Saucony’s lifestyle business has also been performing impressively in Italy. Sweaty Betty is focused on category-leading innovative fashion elements to technical activewear and product introductions. Sperry benefited from healthier go-to trends, a solid performance in U.S. wholesale with gains from certain international markets. Wolverine brand registered 12% growth in the quarter.

Management expects the Merrell brand to deliver growth in the low teens for the second quarter with sequential improvements in the third and the fourth on product launches. In 2022, Merrell is likely to deliver growth in the high teens range. Saucony will deliver a double-digit revenue increase in the second quarter and high teens growth in the current year. It expects Sperry to increase mid-single digits in the second quarter and grow in the low teens for the current year. Wolverine brand’s revenues are likely to grow in the high teens for the second quarter and mid-teens for the whole year.

What Else?

Despite the aforesaid tailwinds, Wolverine has been witnessing the ongoing supply-chain challenges, and a tough macro and geopolitical backdrop. It is also battling higher adjusted SG&A expenses for a while now. During the first quarter of 2022, adjusted SG&A expenses jumped 21.2% on increased variable costs, the addition of Sweaty Betty and higher labor rates in distribution centers. This has been hurting WWW’s margins.

Nonetheless, Wolverine’s prudent strategies are likely to keep driving the performance ahead. Sturdy demand for brands and an improving inventory flow are likely to aid results in 2022. Wolverine envisions 2022 revenues in the range of $2.775-$2.850 billion, indicating growth of approximately 15-18% from the year-ago reported figure. Wolverine projected adjusted earnings between $2.50 and $2.65 per share, implying an increase of 19.4-26.5% from the year-ago reported figure.

Eye These Solid Picks Too

Rocky Brands (RCKY), a key designer and marketer of premium-quality footwear and apparel, currently sports a Zacks Rank #1 (Strong Buy). RCKY delivered an earnings surprise of 17% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Rocky Brands’ 2022 sales and EPS suggests growth of 23.1% and 22.8%, respectively, from the year-ago corresponding figures.

Delta Apparel DLA is a manufacturer of activewear and lifestyle apparel products. DLA flaunts a Zacks Rank #1 at present.

The Zacks Consensus Estimate for Delta Apparel’s current financial-year sales and EPS suggests growth of 14.6% and 45.8%, respectively, from the year-ago corresponding figures. DLA has a trailing four-quarter earnings surprise of 41.1%, on average.

Caleres CAL, a footwear dealer, flaunts a Zacks Rank #1 at present. CAL has a trailing four-quarter earnings surprise of 62.9%, on average.

The Zacks Consensus Estimate for Caleres’ current financial-year sales and EPS suggests growth of 5.2% and 1.8%, respectively, from the year-ago corresponding figures.


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