ROCKFORD — Wolverine World Wide Inc. will divest its Keds brand and Wolverine Leathers business, while also implement staff reductions, in an effort to drive cost savings in 2023.
Company officials today announced the moves, which could result in about $30 million in savings in 2023. The company did not specify the number of job cuts, which started this week.
An announcement called Keds and Wolverine Leathers “low-profit contributors” to the company, which produces and licenses a wide variety of outdoor, active and casual footwear and apparel.
“We believe the recent changes to our group reporting structure and the announcement of strategic alternatives for Keds and Wolverine Leathers, as part of our regular assessment of the portfolio, will put the business on an accelerated path to improved profitability and restore Wolverine as a best-in-class brand house,” Wolverine President and CEO Brendan Hoffman said in a statement.
Hoffman added that the move is part of a broader initiative toward “portfolio simplification and prioritization.”
The expected $30 million cost savings comes on top of other “organizational synergies” and indirect cost savings, as well as $20 million expected through new supply chain initiatives Wolverine started earlier this year.
As well, the company plans to rely on working capital in the coming months to support growth. Earlier this week, Wolverine World Wide finalized a new accounts receivable securitization program that could generate $175 million in accelerated cash flow.
Wolverine’s portfolio includes brands such as Merrell, Saucony and Chaco. The company is also the footwear licensee for Cat and Harley-Davidson.
In its third-quarter earnings report last month, the company reported 8.6-percent revenue growth from the same period in 2021.
However, revenues and profits were below expectations, “reflecting ongoing supply chain disruption, heightened promotional activity at retail, and deteriorating macro conditions,” Hoffman said in an earnings release last month. “We are facing congestion in our own U.S. distribution centers and inland transportation networks and many wholesale customers are currently dealing with heavier inventories and warehouse constraints. These headwinds have resulted in certain shipping delays that impacted most of our brands.”
While Merrell revenues experienced a 33.6-percent increase, Wolverine’s Saucony, Sperry, Wolverine and Sweaty Betty all had lower sales from the year prior.
The company also is grappling with high inventory, which ended the third quarter at nearly $881 million, up 113.8 percent compared to relatively low levels a year ago.