After the footwear company’s downbeat projection overshadowed a return to profitability in the fourth quarter, Wolverine World Wide Inc.’s stock was down about 21% on Wednesday, setting it up for its largest one-day selloff in almost two years.
The stock (WWW) finished down 26.7% on August 3, 2023, the last time it dropped more.
The company, which is based in Rockford, Michigan, is currently undergoing a turnaround with the goal of stabilizing the business and reviving growth. It sold its U.S. and non-U.S. Wolverine Leathers operations, as well as its Keds and Sperry companies, in the last two years.
Wolverine has not yet “reached our full potential,” according to CEO Chris Hufnagel, but the company is working to capitalize on the momentum it created in 2024.
During the company’s earnings call, he told analysts, “We successfully completed the stabilization of the company and strengthened our balance sheet, finishing with our lowest debt level since the second quarter of 2021 and the cleanest inventory position we’ve had since the pandemic,” A FactSet transcript shows.
Following a loss of $91.2 million, or $1.15 per share, in the same period last year, Wolverine’s net income for the quarter was $24.6 million, or 29 cents per share. Its EPS of 42 cents, adjusted for one-time charges, was in line with the FactSet analyst consensus.
Revenue dropped to $494.7 million from $526.7 million in the previous year, which was also more than the FactSet average of $487.0 million.
Compared to 36.6% a year ago, gross margins increased by 740 basis points to 44%. A year ago, the operating margin was negative 35.5%; it now stands at 8.0%.
Wolverine projects that, on revenue of roughly $1.795 billion to $1.825 billion in 2025, adjusted EPS will range from $1.05 to $1.20. These figures fall short of the FactSet estimate for $1.34 EPS on $1.858 billion in revenue.
Due to the current ambiguity surrounding that policy, the advise does not address any potential effects of tariffs.
Sales of Saucony running shoes and clothing decreased 5.3% during the quarter, while sales of the core Wolverine brand increased 20.5% to $62.4 million. International sales were down 5.4%, while Sweaty Betty, a women’s athletic brand, saw a 4.9% decline in sales.
Merrell hiking boot sales increased 1% to $163.4 million.
Due to new releases and increased distribution, Merrell’s sales are predicted to increase by the mid-single digits in 2025, while Saucony’s is predicted to grow by the midteens. The business intends to open its first physical Saucony stores in London and Tokyo.
Wolverine anticipates generating roughly $395 million in revenue for the first quarter, compared to the $426 million FactSet expectation. FactSet anticipates 25 cents, while adjusted EPS is anticipated to be about 10 cents.
The S&P 500 SPX has increased 4% so far this year, while the stock has fallen 33.5%.
