Published in Breaking News

Wolverine posts ‘better-than-expected’ second quarter, despite 7.4% dip in sales

BY Tuesday, July 26, 2016 09:17am

ROCKFORD — Footwear and apparel marketer Wolverine World Wide Inc. reported better-than-expected results for its second quarter, although sales were down compared to last year.

The Rockford-based Wolverine (NYSE: WWW) said it generated $583.7 million in revenue for the quarter, off 7.4 percent compared to the $630.1 million it reported in the same period a year ago.

When taking into account planned retail store closures and Wolverine’s exit from its Cushe brand, the company said adjusted underlying revenues declined 5.2 percent.

For the quarter, the company reported net earnings of $24.1 million, down $1.1 million from last year, and diluted earnings per share of 24 cents, even with the prior period. The company’s earnings per share beat analysts’ consensus estimates by 2 cents.

Adjusted for restructuring and impairment costs, Wolverine’s earnings would have been 30 cents per share on a constant currency basis.

The company said it ended the quarter with $221.7 million in cash on its balance sheet. Inventories were down nearly 2.9 percent compared to the prior year.

Chairman, CEO and President Blake Krueger credited Wolverine’s “relentless focus on the consumer, product innovation, and compelling storytelling” for helping the company outperform expectations in the quarter.

“While the global retail environment continues to be volatile, our diversified business model — built around an industry-leading portfolio of brands — served us well in the quarter, and we expect that it will continue to be a critical competitive advantage for us in the future,” Krueger said in a statement.

In the company’s first quarterly conference call with brokerage analysts after the so-called Brexit vote in the U.K. to leave the European Union, Krueger said Wolverine has seen some volatility in the reaction of consumers, who “froze in place for a few days after the vote.” However, it’s been difficult for the company to separate the effects of Brexit from the impact that terrorism events in Europe have had over the last few months, he said.

“After the initial mini-panic died down, things settled down fairly quickly,” Krueger said of the Brexit vote, noting that the Europe, Middle East and Africa market represents 13 percent of Wolverine’s sales, with the U.K. “substantially smaller than that.”

The company is bracing for continued currency headwinds in 2017 and beyond, he said.

Through mid-year, the company reported revenues of $1.16 billion, off 7.9 percent compared to the January-to-June period of 2015.

Wolverine also reaffirmed its guidance for the 2016 fiscal year, for which it expects to generate $2.475 billion to $2.575 billion in revenues, a decline of 5 percent to 1 percent, and diluted earnings per share of $1.16 to $1.26.

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