Wolverine Worldwide Q2 revenues rise, narrows full-year guidance

Tuesday, 21 July 2015

REPORT Wolverine Worldwide reporting its financial results for its second quarter ended June 20, 2015 said that its consolidated revenue increased to 630.1 million dollars, representing growth of 2.7 percent versus the prior year and 4.9 percent on a constant currency basis. Adjusting for the impact of foreign exchange, retail store closures and termination of the Patagonia license agreement, adjusted revenue grew 6.9 percent against the prior year.

“The global demand for our family of brands remains strong and I am pleased to report that our top-line growth accelerated in the quarter and exceeded our internal expectations,” commented Blake W. Krueger, Wolverine Worldwide's Chairman, Chief Executive Officer and President.

Other highlights include growth of 12.2 percent from the Heritage Group or 14.6 percent in constant currency and growth of 5.7 percent from the Performance Group or 9.4 percent in constant currency. U.S. wholesale revenue growth was in the mid-single digits. Gross margin was 39.1 percent, a decrease of 100 basis points versus the prior year's gross margin, in line with company expectations. Adjusted operating margin decreased 90 basis points versus the prior year to 8.1 percent, due primarily to higher pension expense and planned incremental brand investment.

Reported operating margin declined 40 basis points versus the prior year to 7.6 percent. Adjusted diluted earnings per share were 0.27 dollars, compared to an adjusted 0.31 dollars per share in the prior year and well ahead of company expectations for the quarter. Reported diluted earnings per share were 0.24 dollars, compared to 0.27 dollars per share in the prior year.

“The strong performance in the quarter was highlighted by mid-single digit revenue growth in our US wholesale business, double-digit growth in EMEA and growth exceeding 50 percent in the Asia Pacific region, each on a constant currency basis," commented Mike Stornant, Senior Vice President and Chief Financial Officer.

In July 2014, the company announced a Strategic Realignment Plan for its consumer-direct operations. As part of this effort, the company decided to close approximately 140 stores by the end of fiscal 2015. Now total closures by year end are expected to number approximately 120, and that approximately 55 additional under-performing stores are expected to be closed over the next five years at their natural lease expiration. The company is also consolidating offices and infrastructure in Canada to streamline operations. This initiative was launched this past quarter and is expected to conclude by mid-2016.

The company is narrowing its full-year revenue guidance and reaffirming its adjusted earnings per share guidance with consolidated reported revenue expected in the range of 2.82 billion dollars to 2.85 billion dollars, representing growth in the range of approximately 2 percent to 3 percent against the prior year. Constant currency revenue growth is expected in the range of approximately 5 percent to 6 percent. Adjusted diluted earnings per share is expected in the range of 1.53 dollars to 1.60 dollars and constant currency adjusted diluted earnings per share is expected in the range of 1.68 dollars to 1.75 dollars.

Related News