Wolverine World Wide, Inc. (NYSE: WWW) today reported financial
results for the second quarter ended July 1, 2023. The Company also
announced that Chris Hufnagel was promoted to President and Chief
Executive Officer in a separate release today.
“I would like to express my appreciation to our Chairman, Tom
Long and the entire Board of Directors for their confidence in me.
I’m truly honored to be the Company’s next CEO," said Chris
Hufnagel, President and Chief Executive Officer. “I’m confident
that we have the right team and brand playbook to quickly improve
the performance of the Company.”
"Our second half outlook, as reflected in our updated annual
guidance, is disappointing but we are confident that the work we
are undertaking will drive significant profit improvement in 2024
and quickly set a strong growth foundation for the Company,”
continued Hufnagel. “The current adversity has not only deepened
our conviction that our strategic direction is more correct than
ever, but that we must execute it with greater boldness and
speed.”
Last year, Wolverine unveiled a new corporate strategy and began
to redesign the business to focus its portfolio on its biggest
opportunities, while creating cost savings for reinvestment in its
priority brands. As part of the redesign, in May the Company
announced the evaluation of strategic alternatives for the Sperry
brand, which allows the Company to now focus on its Active and Work
Groups.
Wolverine also outlined new important elements of the Company’s
transformation, including the consolidation of its US offices and
streamlining the organization in line with the new focus. These
efforts come in addition to previously announced profit
improvements already underway.
FINANCIAL HIGHLIGHTS AND FULL-YEAR OUTLOOK
Financial results and guidance for 2023, and comparable results
from 2022 for our ongoing business exclude the impact of Keds,
which was sold in February 2023, and Wolverine Leathers, which is
the subject of a sale process, and reflect an adjustment for the
transition of our Hush Puppies North America business to a
licensing model in the second half of 2023. Tables have been
provided in the back of this release showing the impact of these
adjustments on operating results for 2023 and 2022 assuming these
events occurred on the first day of the relevant period. For
visibility regarding this impact on our 2023 operating results, we
will report actual results reflecting our ongoing businesses and
separately report results for Keds, which will be limited to the
period through February 3, 2023 and Wolverine Leathers to the
extent we own and operate the business.
SECOND-QUARTER 2023 FINANCIAL HIGHLIGHTS
(in millions)
July 1, 2023
July 2, 2022
Y/Y Change
Constant Currency
Change
Reported Segment Revenue
Results:
Active Group
$383.3
$428.3
(10.5)%
(10.2)%
Work Group
$117.8
$139.5
(15.6)%
(15.9)%
Lifestyle Group
$74.9
$121.1
(38.2)%
(38.1)%
Other
$13.1
$24.7
(47.0)%
(47.0)%
Total Revenue
$589.1
$713.6
(17.4)%
(17.3)%
Ongoing Total Revenue
$578.2
$671.9
(13.9)%
(13.8)%
Supplemental Brand Revenue
Information
Merrell
$176.7
$209.7
(15.7)%
(15.5)%
Saucony
$141.7
$139.4
1.6%
2.6%
Sperry
$57.4
$75.0
(23.5)%
(23.4)%
Wolverine
$41.4
$57.7
(28.2)%
(28.3)%
Sweaty Betty
$44.0
$47.4
(7.2)%
(7.3)%
Reported:
Gross Margin
38.7%
43.0%
(430) bps
Operating Margin
7.8%
23.5%
(1,570) bps
Diluted Earnings Per Share
$0.30
$1.53
(80.4)%
Non-GAAP and Ongoing business:
Adjusted Gross Margin
39.2%
43.9%
(470) bps
Adjusted Operating Margin
5.8%
11.4%
(560) bps
Adjusted Diluted Earnings Per Share
$0.19
$0.65
(70.8)%
Constant Currency Earnings Per Share
$0.21
$0.65
(67.7)%
Revenue of $589.1 million declined 17.4% versus the prior
year and declined 17.3% on a constant currency basis. Revenue from
the ongoing business was $578.2 million and declined 13.8% on a
constant currency basis.
The Company's international revenue from the ongoing business of
$260.9 million was down 6.7% compared to the prior year, or 6.2% on
a constant currency basis. Direct-to-Consumer revenue of $132.4
million was down 20.3% compared to the prior year and down 16.4%
for the ongoing business compared to the prior year.
Gross margin was 38.7% compared to 43.0% in the prior
year reflecting the sale of higher-cost inventory due to transitory
supply chain costs from 2022, the acceleration of end-of-life
inventory liquidation, and increased promotions.
Selling, General & Administrative expenses were
$181.7 million, or 30.8% of adjusted revenue. Adjusted SG&A
expenses of $192.8 million or 33.3% of adjusted revenue, were 80
basis points higher than the prior year.
Inventory at the end of the quarter was $647.9 million
and was down approximately $97.3 million sequentially from the
fourth quarter of fiscal 2022.
Net Debt at the end of the quarter was $930 million, and
liquidity was approximately $370 million. The Company's
bank-defined leverage ratio was 3.5x.
FULL-YEAR 2023 OUTLOOK
"The trading environment is challenging, especially in global
wholesale channels where order demand has slowed as retailers
manage their businesses more cautiously,” said Mike Stornant,
Executive Vice President and Chief Financial Officer. “As a result,
we have reduced our revenue and earnings outlook for the back half
of the year.”
“We remain focused on improving our balance sheet metrics while
driving further profit improvement benefits. We now expect the
Profit Improvement Office to deliver at least $70 million in
savings for 2023. We are on track to deliver our year-end inventory
target of $520 million, which will set the business up for new
product and cleaner trading in 2024. In order to accelerate debt
pay down, we have plans to sell at least $50 million of non-core
assets over the coming months.”
- Revenue from our ongoing business is expected to be in
the range of $2.26 billion to $2.28 billion, representing a decline
of approximately 10.7% to 10.0% versus the prior year
- Gross margin is expected to be approximately 39.4% and
adjusted gross margin is expected to be approximately 40.0%
- Operating margin is expected to be approximately 4.8%,
and adjusted operating margin is expected to be approximately
5.0%
- The effective tax rate is expected to be approximately
18.2%.
- Diluted earnings per share are expected to be between
$0.43 to $0.53 and adjusted diluted earnings per share are expected
to be between $0.45 to $0.55. These full-year EPS expectations
include an approximate $0.11 negative impact from foreign currency
exchange rate fluctuations.
- Diluted weighted average shares are expected to be
approximately 79.4 million.
- Net Debt at year-end is expected to be approximately
$850 million resulting in bank-defined leverage of approximately
3x.
NON-GAAP FINANCIAL MEASURES
Measures referred to in this release as “adjusted” financial
results and "ongoing business" are non-GAAP measures that exclude
environmental and other related costs net of recoveries, impairment
of long-lived assets, reorganization costs, debt modification
costs, gain on the sale of Champion trademarks, costs associated
with Sweaty Betty® integration and financial results from the Keds
business and Wolverine Leathers business. The Company also presents
constant currency information, which is a non-GAAP measure that
excludes the impact of fluctuations in foreign currency exchange
rates. The Company calculates constant currency basis by converting
the current-period local currency financial results using the prior
period exchange rates and comparing these adjusted amounts to the
Company's current period reported results. The Company believes
providing each of these non-GAAP measures provides valuable
supplemental information regarding its results of operations,
consistent with how the Company evaluates performance.
The Company has provided a reconciliation of each of the above
non-GAAP financial measures to the most directly comparable GAAP
financial measure. The Company believes these non-GAAP measures
provide useful information to both management and investors because
they increase the comparability of current period results to prior
period results by adjusting for certain items that may not be
indicative of core operating results and enable better
identification of trends in our business. The adjusted financial
results are used by management to, and allow investors to, evaluate
the operating performance of the Company on a comparable basis.
Management does not, nor should investors, consider such non-GAAP
financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP.
EARNINGS CALL INFORMATION
The Company will host a conference call today at 8:30 a.m. EST
to discuss these results and current business trends. The
conference call will be broadcast live and accessible under the
“Investor Relations” tab at www.wolverineworldwide.com. A replay of
the conference call will be available on the Company’s website for
a period of approximately 30 days.
ABOUT WOLVERINE WORLDWIDE
Founded in 1883 on the belief in the possibility of opportunity,
Wolverine World Wide, Inc. (NYSE:WWW) is one of the world’s leading
marketers and licensors of branded casual, active lifestyle, work,
outdoor sport, athletic, children's and uniform footwear and
apparel. Through a diverse portfolio of highly recognized brands,
our products are designed to empower, engage and inspire our
consumers every step of the way. The Company’s portfolio includes
Merrell®, Saucony®, Sweaty Betty®, Sperry®, Hush Puppies®,
Wolverine®, Chaco®, Bates®, HYTEST®, and Stride Rite®. Wolverine
Worldwide is also the global footwear licensee of the popular
brands Cat® and Harley-Davidson®. Based in Rockford, Michigan, for
140 years, the Company's products are carried by leading retailers
in the U.S. and globally in approximately 170 countries and
territories. For additional information, please visit our website,
www.wolverineworldwide.com or visit us on Facebook, LinkedIn, and
Instagram.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements,
including statements regarding the Company’s outlook for 2023
including: reported and constant currency revenue; reported and
adjusted gross margin; reported and adjusted operating margin;
effective tax rate; reported and adjusted diluted earnings per
share; and reported inventory; as well as statements regarding the
acceleration, and expected results, of the Company's work to
redesign the Company, expected significant profit improvement in
2024, the amount and timing of transitory supply chain and excess
inventory expenses and profit improvement initiative savings; and
the Company’s plans to sell non-core assets and repay debt. In
addition, words such as “estimates,” “anticipates,” “believes,”
“forecasts,” “step,” “plans,” “predicts,” “focused,” “projects,”
“outlook,” “is likely,” “expects,” “intends,” “should,” “will,”
“confident,” variations of such words, and similar expressions are
intended to identify forward-looking statements. These statements
are not guarantees of future performance and involve certain risks,
uncertainties, and assumptions (“Risk Factors”) that are difficult
to predict with regard to timing, extent, likelihood, and degree of
occurrence. Risk Factors include, among others: changes in general
economic conditions, employment rates, business conditions,
interest rates, tax policies, inflationary pressures and other
factors affecting consumer spending in the markets and regions in
which the Company’s products are sold; the inability for any reason
to effectively compete in global footwear, apparel and
consumer-direct markets; the inability to maintain positive brand
images and anticipate, understand and respond to changing footwear
and apparel trends and consumer preferences; the inability to
effectively manage inventory levels; increases or changes in
duties, tariffs, quotas or applicable assessments in countries of
import and export; foreign currency exchange rate fluctuations;
currency restrictions; supply chain or other capacity constraints,
production disruptions, quality issues, price increases or other
risks associated with foreign sourcing; the cost and availability
of raw materials, inventories, services and labor for contract
manufacturers; the effects of COVID-19 and other health crises, on
the Company’s business, operations, financial results and
liquidity, including the duration and magnitude of such effects,
and numerous factors that the Company cannot accurately predict,
including: the duration and scope of health crisis, the negative
impact on global and regional markets, unemployment rates, consumer
confidence and discretionary spending, governmental action, and the
effects of health crisis on the Company’s supply chain and
customers; labor disruptions; changes in relationships with,
including the loss of, significant wholesale customers; risks
related to the significant investment in, and performance of, the
Company’s consumer-direct operations; risks related to expansion
into new markets and complementary product categories; the impact
of seasonality and unpredictable weather conditions; increases in
the Company’s effective tax rates; failure of licensees or
distributors to meet planned annual sales goals or to make timely
payments to the Company; the risks of doing business in developing
countries, and politically or economically volatile areas; the
ability to secure and protect owned intellectual property or use
licensed intellectual property; the impact of regulation,
regulatory and legal proceedings and legal compliance risks,
including compliance with federal, state and local laws and
regulations relating to the protection of the environment,
environmental remediation and other related costs, and litigation
or other legal proceedings relating to the protection of the
environment or environmental effects on human health; the potential
breach of the Company’s databases or other systems, or those of its
vendors, which contain certain personal information, payment card
data or proprietary information, due to cyberattack or other
similar events; strategic actions, including new initiatives and
ventures, acquisitions and dispositions, and the Company’s success
in integrating acquired businesses, and implementing new
initiatives and ventures; the risk of impairment to goodwill and
other intangibles; changes in future pension funding requirements
and pension expenses; and additional factors discussed in the
Company’s reports filed with the Securities and Exchange Commission
and exhibits thereto. The foregoing Risk Factors, as well as other
existing Risk Factors and new Risk Factors that emerge from time to
time, may cause actual results to differ materially from those
contained in any forward-looking statements. Given these or other
risks and uncertainties, investors should not place undue reliance
on forward-looking statements as a prediction of actual results.
Furthermore, the Company undertakes no obligation to update, amend,
or clarify forward-looking statements.
WOLVERINE WORLD WIDE,
INC.
CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except earnings
per share)
Quarter Ended
Year-To-Date Ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Revenue
$
589.1
$
713.6
$
1,188.5
$
1,328.4
Cost of goods sold
361.3
406.5
724.4
760.0
Gross profit
227.8
307.1
464.1
568.4
Gross margin
38.7
%
43.0
%
39.0
%
42.8
%
Selling, general and administrative
expenses
195.5
229.2
407.5
440.5
Gain on sale of business and
trademarks
—
(90.0
)
(20.1
)
(90.0
)
Impairment of long-lived assets
15.6
—
15.6
—
Environmental and other related costs, net
of recoveries
(29.4
)
—
(30.3
)
30.4
Operating expenses
181.7
139.2
372.7
380.9
Operating expenses as a % of revenue
30.8
%
19.5
%
31.4
%
28.7
%
Operating profit
46.1
167.9
91.4
187.5
Operating margin
7.8
%
23.5
%
7.7
%
14.1
%
Interest expense, net
16.1
10.1
31.9
18.8
Other expense (income), net
(0.4
)
0.6
0.8
(0.5
)
Total other expenses
15.7
10.7
32.7
18.3
Earnings before income taxes
30.4
157.2
58.7
169.2
Income tax expense
6.0
32.7
16.3
36.3
Effective tax rate
19.8
%
20.8
%
27.8
%
21.5
%
Net earnings
24.4
124.5
42.4
132.9
Less: net earnings (loss) attributable to
noncontrolling interests
0.4
(0.1
)
(0.6
)
(1.4
)
Net earnings attributable to Wolverine
World Wide, Inc.
$
24.0
$
124.6
$
43.0
$
134.3
Diluted earnings per share
$
0.30
$
1.53
$
0.53
$
1.63
Supplemental information:
Net earnings used to calculate diluted
earnings per share
$
23.5
$
122.1
$
42.0
$
131.7
Shares used to calculate diluted earnings
per share
79.5
79.9
79.3
80.9
WOLVERINE WORLD WIDE,
INC.
CONSOLIDATED CONDENSED BALANCE
SHEETS
(Unaudited)
(In millions)
July 1, 2023
July 2, 2022
ASSETS
Cash and cash equivalents
$
176.5
$
149.3
Accounts receivables, net
241.5
420.0
Inventories, net
647.9
639.5
Current assets held for sale
19.1
—
Other current assets
78.9
84.5
Total current assets
1,163.9
1,293.3
Property, plant and equipment, net
134.3
127.5
Lease right-of-use assets
155.4
166.7
Goodwill and other indefinite-lived
intangibles
748.9
1,219.8
Other noncurrent assets
154.8
141.7
Total assets
$
2,357.3
$
2,949.0
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable and other accrued
liabilities
$
530.0
$
561.7
Lease liabilities
39.2
33.0
Current maturities of long-term debt
10.0
10.0
Borrowings under revolving credit
agreements
385.0
490.0
Total current liabilities
964.2
1,094.7
Long-term debt
718.5
727.4
Lease liabilities, noncurrent
146.7
150.9
Other noncurrent liabilities
161.0
314.2
Stockholders' equity
366.9
661.8
Total liabilities and stockholders'
equity
$
2,357.3
$
2,949.0
WOLVERINE WORLD WIDE,
INC.
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Year-To-Date Ended
July 1, 2023
July 2, 2022
OPERATING ACTIVITIES:
Net earnings
$
42.4
$
132.9
Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities:
Depreciation and amortization
17.1
16.8
Deferred income taxes
(0.6
)
3.0
Stock-based compensation expense
7.8
19.3
Pension and SERP expense
0.8
4.7
Impairment of long-lived assets
15.6
—
Environmental and other related costs, net
of cash payments and recoveries received
(41.0
)
(35.0
)
Gain on sale of business and
trademarks
(20.1
)
(90.0
)
Other
(0.9
)
(2.6
)
Changes in operating assets and
liabilities
24.8
(297.0
)
Net cash provided by (used in) operating
activities
45.9
(247.9
)
INVESTING ACTIVITIES:
Additions to property, plant and
equipment
(14.2
)
(16.1
)
Proceeds from sale of business, trademarks
and other assets
81.9
90.0
Other
(0.7
)
4.8
Net cash provided by investing
activities
67.0
78.7
FINANCING ACTIVITIES:
Payments under revolving credit
agreements
(475.0
)
(107.0
)
Borrowings under revolving credit
agreements
435.0
372.0
Payments on long-term debt
(5.0
)
(5.0
)
Payments of debt issuance costs
(0.9
)
—
Cash dividends paid
(16.4
)
(16.8
)
Purchase of common stock for treasury
—
(81.3
)
Employee taxes paid under stock-based
compensation plans
(5.7
)
(7.2
)
Proceeds from the exercise of stock
options
0.1
1.4
Contributions from noncontrolling
interests
2.1
7.0
Net cash provided by (used in) financing
activities
(65.8
)
163.1
Effect of foreign exchange rate
changes
(2.5
)
(6.3
)
Increase (decrease) in cash and cash
equivalents
44.6
(12.4
)
Cash and cash equivalents at beginning of
the year
135.5
161.7
Cash and cash equivalents at end of the
quarter
$
180.1
$
149.3
The following tables contain information regarding the non-GAAP
financial measures used by the Company in the presentation of its
financial results:
WOLVERINE WORLD WIDE,
INC.
Q2 2023 RECONCILIATION
TABLES
RECONCILIATION OF REPORTED
REVENUE TO ADJUSTED
REVENUE ON A CONSTANT CURRENCY
BASIS*
(Unaudited)
(In millions)
GAAP Basis 2023-Q2
Foreign Exchange
Impact
Constant Currency Basis
2023-Q2
GAAP Basis 2022-Q2
Reported Change
Constant Currency
Change
REVENUE
Active Group
$
383.3
$
1.5
$
384.8
$
428.3
(10.5
)%
(10.2
)%
Work Group
117.8
(0.5
)
117.3
139.5
(15.6
)%
(15.9
)%
Lifestyle Group
74.9
0.1
75.0
121.1
(38.2
)%
(38.1
)%
Other
13.1
—
13.1
24.7
(47.0
)%
(47.0
)%
Total
$
589.1
$
1.1
$
590.2
$
713.6
(17.4
)%
(17.3
)%
RECONCILIATION OF REPORTED
REVENUE
TO ADJUSTED REVENUE*
(Unaudited)
(In millions)
GAAP Basis
Divestiture (1)
As Adjusted
Revenue - Fiscal 2023 Q2
$
589.1
$
10.9
$
578.2
Revenue - Fiscal 2022 Q2
$
713.6
$
41.7
$
671.9
Revenue Lifestyle Group - Fiscal 2023
Q2
$
74.9
$
—
$
74.9
Revenue Lifestyle Group - Fiscal 2022
Q2
$
121.1
$
24.0
$
97.1
(1) Q2 2023 and Q2 2022 adjustments reflect the Keds business
and Wolverine Leathers business results included in the
consolidated condensed statement of operations.
RECONCILIATION OF REPORTED
GROSS MARGIN
TO ADJUSTED GROSS MARGIN
*
(Unaudited)
(In millions)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Gross Profit - Fiscal 2023 Q2
$
227.8
$
—
$
1.4
$
226.4
Gross margin
38.7
%
39.2
%
Gross Profit - Fiscal 2022 Q2
$
307.1
$
0.1
$
12.3
$
294.7
Gross margin
43.0
%
43.9
%
(1) Q2 2022 adjustment reflects $0.1
million of costs associated with Sweaty Betty® integration.
(2) Q2 2023 and Q2 2022 adjustment reflect
the Keds business and Wolverine Leathers business results included
in the consolidated condensed statement of operations.
RECONCILIATION OF REPORTED
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
TO ADJUSTED SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES*
(Unaudited)
(In millions)
GAAP Basis
Adjustment (1)
Divestiture (2)
As Adjusted
Selling, general and administrative
expenses - Fiscal 2023 Q2
$
181.7
$
11.7
$
(0.6
)
$
192.8
Selling, general and administrative
expenses - Fiscal 2022 Q2
$
139.2
$
89.3
$
(10.1
)
$
218.4
(1) Q2 2023 adjustments reflect $29.4
million of environmental and other related costs net of recoveries,
partially offset by $15.6 million impairment of long-lived assets
and $2.1 million of reorganization costs. Q2 2022 adjustments
reflect $90.0 million gain on the sale of the Champion trademarks,
partially offset by $0.7 million of costs associated with Sweaty
Betty® integration.
(2) Q2 2023 and Q2 2022 adjustment reflect
the Keds business and Wolverine Leathers business results included
in the consolidated condensed statement of operations.
RECONCILIATION OF REPORTED
OPERATING MARGIN
TO ADJUSTED OPERATING
MARGIN
(Unaudited)
(In millions)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Operating Profit - Fiscal 2023 Q2
$
46.1
$
(11.7
)
$
(0.8
)
$
33.6
Operating margin
7.8
%
5.8
%
Operating Profit - Fiscal 2022 Q2
$
167.9
$
(89.2
)
$
(2.2
)
$
76.5
Operating margin
23.5
%
11.4
%
(1) Q2 2023 adjustments reflect $29.4
million of environmental and other related costs net of recoveries,
partially offset by $15.6 million impairment of long-lived assets
and $2.1 million of reorganization costs. Q2 2022 adjustments
reflect $90.0 million gain on the sale of the Champion trademarks,
partially offset by $0.8 million of costs associated with Sweaty
Betty® integration.
(2) Q2 2023 and Q2 2022 adjustment reflect
the Keds business and Wolverine Leathers business results included
in the consolidated condensed statement of operations.
RECONCILIATION OF REPORTED
DILUTED EPS TO ADJUSTED
DILUTED EPS ON A CONSTANT
CURRENCY BASIS*
(Unaudited)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Foreign Exchange
Impact
As Adjusted
EPS On a Constant Currency
Basis
EPS - Fiscal 2023 Q2
$
0.30
$
(0.10
)
$
(0.01
)
$
0.19
$
0.02
$
0.21
EPS - Fiscal 2022 Q2
$
1.53
$
(0.87
)
$
(0.01
)
$
0.65
(1) Q2 2023 adjustment reflects
environmental and other related costs net of recoveries, partially
offset by impairment of long-lived assets, reorganization costs and
debt modification costs. Q2 2022 adjustment reflect income from the
sale of the Champion trademarks and costs associated with Sweaty
Betty® integration.
(2) Q2 2023 and Q2 2022 adjustment reflect
the Keds business and Wolverine Leathers business results included
in the consolidated condensed statement of operations.
RECONCILIATION OF REPORTED
INVENTORY
TO ADJUSTED INVENTORY*
(Unaudited)
(In millions)
GAAP Basis
Divestiture (1)
As Adjusted
Inventory - 2023 Q2
$
647.9
$
—
$
647.9
Inventory - 2023 Q1
$
725.9
$
—
$
725.9
Inventory - 2022 Q4
$
745.2
$
—
$
745.2
Inventory - 2022 Q3
$
880.9
$
42.1
$
838.8
Inventory - 2022 Q2
$
639.5
$
33.8
$
605.7
Inventory - 2022 Q1
$
483.3
$
32.0
$
451.3
(1) Adjustments reflect the Keds business and Wolverine Leathers
business inventory included in the consolidated condensed balance
sheet.
QUARTERLY REPORTED
INVENTORY
AND ADJUSTED
INVENTORY*
(Unaudited)
(In millions)
Q1
Q2
Q3 (1)
Q4 (1)
Inventory - 2023
$
725.9
$
647.9
$
630.0
$
520.0
Inventory - 2022 (2)
$
451.3
$
605.7
$
838.8
$
745.2
Percentage Change
60.8
%
7.0
%
(24.9
)%
(30.2
)%
(1) Q3 2023 and Q4 2023 represent the
Company's reported inventory outlook for each period end.
(2) Q1, Q2 and Q3 2022 inventory amounts
are adjusted for the Keds business and Wolverine Leathers
business.
DIVESTITURE FINANCIAL SUMMARY
(Unaudited) (In millions, except per share
amounts)
In order to provide visibility regarding the anticipated
financial impact of completed and planned divestitures, and the
anticipated impact of the planned transition of Hush Puppies® from
a wholesale model to a license model on July 1, 2023, the Company
has provided additional information within the supplemental table
below. The items included in the tables represent amounts that are
reflected in the reported fiscal 2023 and 2022 results that are
related to businesses the Company has sold or announced that the
Company does not intend to include the business in the Company's
long-term plans. The Company believes providing the following
information is helpful to better understand the impact to the
Company's go-forward business.
Q1
Q2
Q3
Q4
2023
YTD
Revenue - Impact
Keds business (1)
$
6.5
$
—
$
—
$
—
$
6.5
Wolverine Leathers business (2)
12.5
10.9
—
—
23.4
Total Revenue - Impact
$
19.0
$
10.9
$
—
$
—
$
29.9
Operating profit - Impact
Keds business (1)
$
(1.9
)
$
—
$
—
$
—
$
(1.9
)
Wolverine Leathers business (2)
1.4
0.8
—
—
2.2
Total Operating profit - Impact
$
(0.5
)
$
0.8
$
—
$
—
$
0.3
Net earnings per share - Impact
$
(0.01
)
$
0.01
$
—
$
—
$
—
Q1
Q2
Q3
Q4
2022
Full-Year
Revenue - Impact
Keds business (1)
$
20.4
$
24.0
$
21.3
$
17.1
$
82.8
Wolverine Leathers business (2)
18.5
17.7
14.0
8.4
58.6
Hush Puppies (3)
—
—
6.4
4.9
11.3
Total Revenue - Impact
$
38.9
$
41.7
$
41.7
$
30.4
$
152.7
Operating profit - Impact
Keds business (1)
$
1.5
$
0.5
$
0.4
$
(0.9
)
$
1.5
Wolverine Leathers business (2)
1.4
1.7
0.9
0.4
4.4
Hush Puppies (3)
—
—
(0.3
)
(1.4
)
(1.7
)
Total Operating profit - Impact
$
2.9
$
2.2
$
1.0
$
(1.9
)
$
4.2
Net earnings per share - Impact
$
0.03
$
0.02
$
0.01
$
(0.02
)
$
0.04
(1)
The Keds® business line item reflects the revenue and
operating profit from sale of Keds® products that will not reoccur
after the Company's first period in fiscal 2023 as a result of the
sale of the global Keds® business effective February 4, 2023.
(2)
The Wolverine Leathers business line item reflects revenue
and operating profit from the Wolverine Leathers business that will
not reoccur after the Wolverine Leathers business is sold. The
Company is currently in an active process to sell the Wolverine
Leathers business.
(3)
The Hush Puppies® line item represents financial results
associated with the Hush Puppies® United States and Canada
operations prior to the planned transition from a wholesale model
to a license model on July 1, 2023, net of estimated license
revenue.
2023 GUIDANCE RECONCILIATION
TABLES
RECONCILIATION OF REPORTED
GUIDANCE TO ADJUSTED TO GUIDANCE,
REPORTED DILUTED EPS GUIDANCE
TO ADJUSTED DILUTED EPS
GUIDANCE AND SUPPLEMENTAL
INFORMATION*
(Unaudited)
(In millions, except earnings
per share)
GAAP Basis
Divestiture
Adjustments (1)
Other
Adjustments (2)
As Adjusted
Revenue - Fiscal 2023 Full Year
$2,307 - $2,327
$(47
)
$2,260 - $2,280
Gross Margin - Fiscal 2023 Full Year
39.4
%
0.6
%
40.0
%
Operating Margin - Fiscal 2023 Full
Year
4.8
%
—
%
0.2
%
5.0
%
Dilutive EPS - Fiscal 2023 Full Year
$0.43 - $0.53
$(0.01
)
$0.03
$0.45 - $0.55
Fiscal 2023 Full Year Supplemental
information:
Net Earnings
$35 - $43
$(1
)
$3
$37 - $45
Net Earnings used to calculate diluted
earnings per share
$34 - $42
$(1
)
$3
$36 - $44
Shares used to calculate diluted earnings
per share
79.4
79.4
(1) 2023 adjustments reflect financial
results for the Keds® business and Wolverine Leathers.
(2) 2023 adjustments reflect impairment of
long-lived assets, debt modification costs, reorganization costs,
partially offset by gain from the sale of the Keds® business and
estimated environmental and other related costs net of recoveries
and reorganization costs.
* To supplement the consolidated condensed financial statements
presented in accordance with Generally Accepted Accounting
Principles ("GAAP"), the Company describes what certain financial
measures would have been if environmental and other related costs
net of recoveries, impairment of long-lived assets, reorganization
costs, debt modification costs, gain on the sale of Champion
trademarks, costs associated with Sweaty Betty® integration and
financial results from the Keds business and Wolverine Leathers
business were excluded. The Company believes these non-GAAP
measures provide useful information to both management and
investors by increasing comparability to the prior period by
adjusting for certain items that may not be indicative of the
Company's core ongoing operating business results and to better
identify trends in the Company's ongoing business. The adjusted
financial results are used by management to, and allow investors
to, evaluate the operating performance of the Company on a
comparable basis.
The constant currency presentation, which is a non-GAAP measure,
excludes the impact of fluctuations in foreign currency exchange
rates. The Company believes providing constant currency information
provides valuable supplemental information regarding results of
operations, consistent with how the Company evaluates performance.
The Company calculates constant currency by converting the
current-period local currency financial results using the prior
period exchange rates and comparing these adjusted amounts to the
Company's current period reported results.
Management does not, nor should investors, consider such
non-GAAP financial measures in isolation from, or as a substitution
for, financial information prepared in accordance with GAAP. A
reconciliation of all non-GAAP measures included in this press
release, to the most directly comparable GAAP measures are found in
the financial tables above.
The supplemental information included below about transitory
supply chain expenses and profit improvement initiative savings are
intended to show the quarterly timing of the impact of these items
on Gross Profit, Selling, general and administrative expense and
Operating profit. The transitory costs are more prominent in the
first half of the year and the cost savings are more prominent in
the back half the year.
TRANSITORY SUPPLY CHAIN
AND
EXCESS INVENTORY EXPENSES -
2023 IMPACT
(Unaudited)
(In millions)
Costs from 2022 that will be
expensed in 2023
Expected additional expense in
2023
Total Impact on 2023
Q1
Q2
Q3
Q4
Gross Profit Impact
$
45.0
$
20.0
$
65.0
$
23.0
$
19.0
$
11.0
$
12.0
Selling, general and administrative
Impact
$
3.0
$
2.0
$
5.0
$
2.0
$
1.0
$
1.0
$
1.0
Operating Profit Impact
$
48.0
$
22.0
$
70.0
$
25.0
$
20.0
$
12.0
$
13.0
PROFIT IMPROVEMENT
INITIATIVES
2023 SAVINGS IMPACT
(Unaudited)
(In millions)
Total Savings in 2023
Q1
Q2
Q3
Q4
Gross Profit Benefit
$
25.0
$
3.0
$
7.0
$
7.0
$
8.0
Selling, general and administrative
Benefit
$
45.0
$
5.0
$
8.0
$
14.0
$
18.0
Operating Profit Benefit
$
70.0
$
8.0
$
15.0
$
21.0
$
26.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810903568/en/
Alex Wiseman (616) 863-3974
Wolverine World Wide (NYSE:WWW)
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From Nov 2023 to Dec 2023
Wolverine World Wide (NYSE:WWW)
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From Dec 2022 to Dec 2023
