Expects net debt and inventory to be better
than guidance
Wolverine World Wide, Inc. (NYSE: WWW) today, in advance of its
presentation at the 2024 ICR Conference, provides an update on its
preliminary, unaudited financial results for its fiscal year 2023,
along with an update on its continuing transformation efforts.
“We’re executing the stabilization phase of our strategic
transformation with tremendous pace, while redesigning Wolverine
Worldwide for the future,” said Chris Hufnagel, President and Chief
Executive Officer. “For the fourth quarter and full year, we expect
to deliver financial results in line with our guidance – while
achieving better-than-anticipated year-end debt and inventory
levels. Importantly, the performance of our direct-to-consumer
business met our expectations for the critical holiday period as
well – led by Merrell, Saucony, Sweaty Betty and Wolverine. We
enter the new year on increasingly firmer footing, and with a focus
on furthering our efforts to transform the Company into a great
builder of global brands, investing in product design and
storytelling to fuel future growth, and ultimately, creating
greater value for our shareholders.”
Fiscal year 2023 financial results:
The Company expects the following preliminary and unaudited
financial results for its ongoing business as of December 30,
2023:
- Full year and fourth quarter reported revenue of approximately
$2.24 billion and $527 million, respectively - in line with
November guidance. Full year and fourth quarter revenue for its
ongoing business of approximately $2.20 billion and $521 million,
respectively - in line with November guidance;
- Full year and fourth quarter adjusted gross margin above 39%
and 36%, respectively - in line with November guidance;
- Full year and fourth quarter adjusted pre-tax earnings in line
with our expectations.
Also, as of December 30, 2023, the Company expects:
- Inventory of approximately $460 million compared to November
guidance of $490 million; and
- Net debt of approximately $750 million compared to November
guidance of approximately $850 million.
Key transformation updates:
In fiscal 2023, the Company executed asset monetization
transactions generating nearly $250 million in cash, of which $91
million was received in the fourth quarter of 2023. These actions,
listed below, have simplified the business and enabled debt
paydown.
- On December 28, 2023, the Company finalized the sale of its
Kentucky distribution center, generating $23 million of cash in the
fourth quarter of 2023. Saucony and Sperry brands will continue to
operate out of this facility under a lease agreement;
- Other previously announced asset monetization transactions in
2023 generated approximately $227 million in proceeds, including
Keds, Hush Puppies intellectual property in China, Wolverine
Leathers, and the new operating model for Merrell and Saucony in
Greater China;
- The Company’s progress on pursuing strategic alternatives for
the Sperry brand remains on track.
ICR Conference
The Company will provide additional details about these
preliminary, unaudited results when it presents at the 2024 ICR
Conference being held at the Grande Lakes Orlando Resort on Monday,
January 8, 2024 at 10:00 AM ET. The presentation will be webcast
live and available for replay at the investor relations section of
the Company’s website www.wolverineworldwide.com.
This release does not present all necessary information for an
understanding of the Company’s full year and fourth quarter fiscal
2023 results and the Company’s financial condition as of December
30, 2023. The expected results described in this release are
preliminary and unaudited estimates based on information available
to management as of the date of this release and are subject to
change upon completion of the Company’s standard year-end closing
procedures. As the Company completes its year-end financial close
process and finalizes its financial statements, it will be required
to make significant judgments, which may result in changes to these
preliminary and unaudited estimates. Any changes to the expected
results described in this release may be material.
The Company noted that it expects to report final, audited
results for the fourth quarter and fiscal 2023 year and provide its
financial outlook and strategic priorities for fiscal 2024 in
February 2024, and does not intend to update the financial
information set forth above before releasing the final, audited
results.
Non-GAAP Information
Measures referred to in this release as “adjusted” financial
results and the financial results of the "ongoing business" are
non-GAAP measures. Adjusted financial results exclude environmental
and other related costs net of recoveries, impairment of long-lived
assets, reorganization costs, debt modification costs, gain on the
sale of businesses, trademarks and intangible assets, Sperry® store
closure costs, costs associated with divestitures. The financial
results of the ongoing business exclude financial results from the
Keds business, Wolverine Leathers business and reflect an
adjustment for the transition of our Hush Puppies North America
business to a licensing model in the second half of 2023.
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.
The Company has provided a reconciliation of the non-GAAP
revenue financial measure to the directly comparable GAAP financial
measure at the end of the release. The Company is not providing a
reconciliation of its forward-looking full year and fourth quarter,
fiscal 2023 non-GAAP preliminary expected results with respect to
adjusted gross margin and adjusted pretax earnings because it does
not currently have sufficient information to accurately estimate
all of the variables and individual adjustments for such
reconciliation. As such, the Company cannot, without unreasonable
effort, estimate on a forward-looking basis the impact these
variables and individual adjustments will have on its reported
results. The Company has provided fiscal 2023 expected adjusted
pre-tax earnings as the final tax provision is not compete.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements,
including preliminary, unaudited estimates of results for the full
year and fourth quarter of fiscal 2023 as well as statements
regarding the Company’s plans to publicly announce more detailed
results for the full year and fourth quarter of fiscal 2023, the
Company's strategic transformation, including the expected benefits
of the divestiture of non-core assets such as an enhanced ability
to invest in the Company’s brands, estimated debt pay-down and
inventory as of year end, and the strategic process for the Sperry
brand. 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: the risk that the Company will be able to
successfully implement its growth and profit improvement
strategies; 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 the COVID-19
pandemic and other health crises and containment efforts on the
Company’s business, operations, financial results and liquidity,
including the duration and magnitude of such effects; 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; effects of changes in general
economic conditions and/or the credit markets on the Company’s
distributors, suppliers and retailers; 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; problems affecting the
Company’s supply chain or distribution system, including service
interruptions at shipping and receiving ports; 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.
The following table contain information regarding the non-GAAP
financial measures used by the Company in the presentation of its
financial results:
WOLVERINE WORLD WIDE, INC.
Q4 AND FULL-YEAR 2023 RECONCILIATION
TABLE
RECONCILIATION OF REPORTED REVENUE TO
ADJUSTED REVENUE* (Unaudited) (In millions)
GAAP Basis
Divestiture (1)
As Adjusted
Revenue - Fiscal 2023 Q4
$
527
$
6
$
521
Revenue - Fiscal 2023
$
2,243
$
43
$
2,200
(1) 2023 adjustments reflect the Wolverine Leathers and the Keds
business results included in the consolidated condensed statement
of operations.
* To supplement the financial information presented in
accordance with Generally Accepted Accounting Principles ("GAAP"),
the Company describes what certain financial measures would have
been if the financial results exclude financial results from the
Keds business and Wolverine Leathers business. The Company believes
the non-GAAP measure 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.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20240108136953/en/
Alex Wiseman, (616) 863-3974
Wolverine World Wide (NYSE:WWW)
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