Company Accelerates Transformation Efforts
and Updates Fiscal 2023 Guidance
Wolverine World Wide, Inc. (NYSE: WWW) today reported financial
results for the third quarter ended September 30, 2023.
“In the third quarter, we achieved several critical milestones
as we took decisive action to stabilize and transform the Company,
while delivering revenue and earnings in-line with our
expectations,” said Chris Hufnagel, President and Chief Executive
Officer of Wolverine Worldwide. “We continued to reshape our
portfolio, reduce our inventory, and redesign the Company to become
consumer-obsessed brand builders – focused squarely on building
compelling products and telling amazing stories. We announced
additional details on these actions in another press release this
morning. While market conditions remain challenging, we're taking
the necessary steps to reinvigorate our brands and position the
Company for profitable growth as conditions improve. We're
confident in our brands, platforms, and most importantly, our
people. We're executing more boldly and at a greater pace to
improve our profitability and enable future investments focused on
our biggest growth opportunities – all aimed at delivering greater
value for our shareholders.”
FINANCIAL HIGHLIGHTS AND FULL-YEAR OUTLOOK
Financial results and guidance for 2023, and comparable results
from 2022, in each case, for our ongoing business exclude the
impact of Keds, which was sold in February 2023, the U.S. Wolverine
Leathers business, which was sold in August 2023, the non-U.S.
Wolverine Leathers business, 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 financial results for
2023 and 2022. For visibility regarding this impact on our 2023
operating results, the Company will report actual results
reflecting its 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 it owns and operates the
business.
THIRD-QUARTER 2023 FINANCIAL HIGHLIGHTS
(in millions)
September 30, 2023
October 1, 2022
Y/Y Change
Constant Currency
Change
Reported Segment Revenue
Results:
Active Group
$328.6
$398.2
(17.5)%
(19.0)%
Work Group
$123.0
$157.8
(22.1)%
(22.6)%
Lifestyle Group
$62.8
$117.7
(46.6)%
(46.8)%
Other
$13.3
$17.7
(24.9)%
(24.9)%
Total Revenue
$527.7
$691.4
(23.7)%
(24.7)%
Ongoing Total Revenue
$519.5
$649.7
(20.0)%
(21.1)%
Supplemental Brand Revenue
Information
Merrell
$157.0
$207.3
(24.3)%
(25.2)%
Saucony
$116.4
$135.3
(14.0)%
(14.6)%
Sperry
$46.2
$78.9
(41.4)%
(41.5)%
Wolverine
$56.3
$59.1
(4.7)%
(4.7)%
Sweaty Betty
$45.0
$37.8
19.0%
11.1%
Reported:
Gross Margin
40.8%
40.2%
60 bps
Operating Margin
5.2%
8.5%
(330) bps
Diluted Earnings Per Share
$0.11
$0.48
(77.1)%
Non-GAAP and Ongoing business:
Adjusted Gross Margin
41.2%
41.2%
0 bps
Adjusted Operating Margin
4.3%
9.4%
(510) bps
Adjusted Diluted Earnings Per Share
$0.07
$0.47
(85.1)%
Constant Currency Earnings Per Share
$0.11
$0.47
(76.6)%
Revenue of $527.7 million declined 23.7% versus the prior
year and declined 24.7% on a constant currency basis. Revenue from
the ongoing business was $519.5 million and declined 21.1% on a
constant currency basis.
The Company's international revenue of $229.0 million was down
24.4% compared to the prior year and international revenue from the
ongoing business of $221.8 million was down 22.3% compared to the
prior year, or 24.6% on a constant currency basis.
Direct-to-Consumer revenue of $136.6 million was down 14.5%
compared to the prior year and down 12.8% for the ongoing business
compared to the prior year.
Gross margin was 40.8% compared to 40.2% in the prior
year and improved due to profit improvement initiatives and channel
mix, partially offset by the sale of higher-cost inventory due to
transitory supply chain costs from 2022 and higher mix of closeout
sales in the quarter.
Selling, General & Administrative expenses were
$188.1 million, or 35.6% of revenue. Adjusted SG&A expenses of
$191.7 million or 36.9% of adjusted revenue, were 510 basis points
higher than the prior year.
Inventory at the end of the quarter was $563.8 million
and was down approximately 33% compared to the prior year.
Net Debt at the end of the quarter was $930 million, and
liquidity was approximately $400 million. The Company's
bank-defined leverage ratio was 3.4x.
FOURTH QUARTER AND FULL YEAR 2023 OUTLOOK
"Fourth quarter brand performance is expected to be mixed across
the portfolio,” said Mike Stornant, Executive Vice President and
Chief Financial Officer. “The Saucony and Sweaty Betty businesses
have stabilized and are showing signs of improvement. However,
Merrell continues to operate in a challenged outdoor category, and
our Work Group brands continue to experience headwinds in wholesale
demand. As a result, we are reducing our fourth quarter revenue
outlook to a range of $515 million to $525 million and adjusted
diluted earnings per share to a range of ($0.30) to ($0.25) for our
ongoing business.”
“We are driving additional profit improvement benefits and now
expect the Profit Improvement Office to deliver approximately $215
million of annualized savings in 2024. We are also improving our
balance sheet metrics and are on track to achieve our year-end
inventory target of $490 million. The strategic alternatives review
for the Sperry brand is progressing, and we are pursuing the sale
of other non-core assets in Q4.”
Full year 2023 outlook is as follows:
- Revenue from our ongoing business is expected to be
approximately $2.19 billion to $2.20 billion, representing a
decline of approximately 13% versus the prior year
- Gross margin is expected to be approximately 38.7%, and
adjusted gross margin is expected to be approximately 39.1%
- Operating margin is expected to be approximately 4.8%,
and adjusted operating margin is expected to be approximately
3.4%
- The effective tax rate is expected to be approximately
25%, and the adjusted tax rate is expected to be approximately
18%.
- Diluted earnings per share are expected to be between
$0.35 and $0.40, and adjusted diluted earnings per share are
expected to be between $0.05 and $0.10. These full-year EPS
expectations include an approximate $0.18 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 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 and costs
associated with Sweaty Betty® integration. 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 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; revenue from our
ongoing business, reported and adjusted gross margin; reported and
adjusted operating margin; effective tax rate; reported and
adjusted diluted earnings per share; the impact of foreign currency
exchange rate fluctuations on diluted earnings per share; and the
year-end inventory target; as well as statements regarding the
Company's execution of its strategies to improve profitability and
enable future investments focused on its biggest growth
opportunities, 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, including the disposition of the Keds® business and
of Hush Puppies® intellectual property in China,
Hong Kong and Macau, 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
September 30,
2023
October 1, 2022
September 30,
2023
October 1, 2022
Revenue
$
527.7
$
691.4
$
1,716.2
$
2,019.8
Cost of goods sold
312.3
413.6
1,036.7
1,173.6
Gross profit
215.4
277.8
679.5
846.2
Gross margin
40.8
%
40.2
%
39.6
%
41.9
%
Selling, general and administrative
expenses
203.3
216.8
610.8
657.3
Gain on sale of business, trademarks and
intangible assets
(57.7
)
—
(77.8
)
(90.0
)
Impairment of long-lived assets
40.2
—
55.8
—
Environmental and other related costs, net
of recoveries
2.3
2.2
(28.0
)
32.6
Operating expenses
188.1
219.0
560.8
599.9
Operating expenses as a % of revenue
35.6
%
31.7
%
32.7
%
29.7
%
Operating profit
27.3
58.8
118.7
246.3
Operating margin
5.2
%
8.5
%
6.9
%
12.2
%
Interest expense, net
15.5
12.5
47.4
31.3
Other expense, net
2.4
2.7
3.2
2.2
Total other expenses
17.9
15.2
50.6
33.5
Earnings before income taxes
9.4
43.6
68.1
212.8
Income tax expense
0.4
4.8
16.7
41.1
Effective tax rate
4.6
%
10.9
%
24.5
%
19.3
%
Net earnings
9.0
38.8
51.4
171.7
Less: net earnings (loss) attributable to
noncontrolling interests
0.4
(0.2
)
(0.2
)
(1.6
)
Net earnings attributable to Wolverine
World Wide, Inc.
$
8.6
$
39.0
$
51.6
$
173.3
Diluted earnings per share
$
0.11
$
0.48
$
0.64
$
2.12
Supplemental information:
Net earnings used to calculate diluted
earnings per share
$
8.4
$
38.2
$
50.4
$
169.9
Shares used to calculate diluted earnings
per share
79.5
78.9
79.4
80.2
WOLVERINE WORLD WIDE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(In millions)
September 30,
2023
October 1, 2022
ASSETS
Cash and cash equivalents
$
160.4
$
136.4
Accounts receivables, net
272.0
440.0
Inventories, net
563.8
880.9
Current assets held for sale
16.1
—
Other current assets
84.9
94.5
Total current assets
1,097.2
1,551.8
Property, plant and equipment, net
126.5
126.0
Lease right-of-use assets
148.7
165.0
Goodwill and other indefinite-lived
intangibles
702.4
1,185.1
Other noncurrent assets
156.5
142.7
Total assets
$
2,231.3
$
3,170.6
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable and other accrued
liabilities
$
433.0
$
547.8
Lease liabilities
38.7
33.5
Current maturities of long-term debt
10.0
10.0
Borrowings under revolving credit
agreements
370.0
740.0
Total current liabilities
851.7
1,331.3
Long-term debt
716.3
725.2
Lease liabilities, noncurrent
141.3
147.5
Other noncurrent liabilities
159.3
292.4
Stockholders' equity
362.7
674.2
Total liabilities and stockholders'
equity
$
2,231.3
$
3,170.6
WOLVERINE WORLD WIDE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) (In millions)
Year-To-Date Ended
September 30,
2023
October 1, 2022
OPERATING ACTIVITIES:
Net earnings
$
51.4
$
171.7
Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities:
Depreciation and amortization
26.3
25.2
Deferred income taxes
(1.6
)
2.5
Stock-based compensation expense
11.8
26.4
Pension and SERP expense
1.2
7.0
Impairment of long-lived assets
55.8
—
Environmental and other related costs, net
of cash payments and recoveries received
(68.8
)
(35.8
)
Gain on sale of business, trademarks and
intangible assets
(77.8
)
(90.0
)
Other
(1.1
)
(4.9
)
Changes in operating assets and
liabilities
9.8
(592.3
)
Net cash provided by (used in) operating
activities
7.0
(490.2
)
INVESTING ACTIVITIES:
Additions to property, plant and
equipment
(18.5
)
(23.5
)
Proceeds from sale of business, trademarks
and other assets
136.0
90.0
Investment in joint ventures
—
(2.8
)
Other
(1.3
)
4.5
Net cash provided by investing
activities
116.2
68.2
FINANCING ACTIVITIES:
Payments under revolving credit
agreements
(620.0
)
(153.0
)
Borrowings under revolving credit
agreements
565.0
668.0
Payments on long-term debt
(7.5
)
(7.5
)
Payments of debt issuance costs
(0.9
)
—
Cash dividends paid
(24.5
)
(24.7
)
Purchase of common stock for treasury
—
(81.3
)
Employee taxes paid under stock-based
compensation plans
(5.8
)
(7.4
)
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
(91.5
)
402.5
Effect of foreign exchange rate
changes
(2.5
)
(5.8
)
Increase (decrease) in cash and cash
equivalents
29.2
(25.3
)
Cash and cash equivalents at beginning of
the year
135.5
161.7
Cash and cash equivalents at end of the
quarter
$
164.7
$
136.4
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.
Q3 2023 RECONCILIATION TABLES RECONCILIATION OF REPORTED
REVENUE TO ADJUSTED REVENUE ON A CONSTANT CURRENCY
BASIS* (Unaudited) (In millions)
GAAP Basis 2023-Q3
Foreign Exchange
Impact
Constant Currency Basis
2023-Q3
GAAP Basis 2022-Q3
Reported Change
Constant Currency
Change
REVENUE
Active Group
$
328.6
$
(5.9
)
$
322.7
$
398.2
(17.5
)%
(19.0
)%
Work Group
123.0
(0.8
)
122.2
157.8
(22.1
)%
(22.6
)%
Lifestyle Group
62.8
(0.2
)
62.6
117.7
(46.6
)%
(46.8
)%
Other
13.3
—
13.3
17.7
(24.9
)%
(24.9
)%
Total
$
527.7
$
(6.9
)
$
520.8
$
691.4
(23.7
)%
(24.7
)%
RECONCILIATION OF REPORTED
REVENUE TO ADJUSTED REVENUE* (Unaudited) (In
millions)
GAAP Basis
Divestiture (1)
As Adjusted
Revenue - Fiscal 2023 Q3
$
527.7
$
8.2
$
519.5
Revenue - Fiscal 2022 Q3
$
691.4
$
41.7
$
649.7
Revenue Lifestyle Group - Fiscal 2023
Q3
$
62.8
$
—
$
62.8
Revenue Lifestyle Group - Fiscal 2022
Q3
$
117.7
$
27.7
$
90.0
(1) Q3 2023 adjustments reflect the
Wolverine Leathers business results included in the consolidated
condensed statement of operations. Q3 2022 adjustments reflect
results for the Keds business, Wolverine Leathers business and Hush
Puppies prior to the license model change 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 Q3
$
215.4
$
0.4
$
(1.6
)
$
214.2
Gross margin
40.8
%
41.2
%
Gross Profit - Fiscal 2022 Q3
$
277.8
$
0.7
$
(11.0
)
$
267.5
Gross margin
40.2
%
41.2
%
(1) Q3 2023 adjustment reflects $0.4
million of costs associated with divestitures. Q3 2022 adjustment
reflects $0.7 million of costs associated with Sweaty Betty®
integration.
(2) Q3 2023 adjustments reflect the
Wolverine Leathers business results included in the consolidated
condensed statement of operations. Q3 2022 adjustments reflect
results for the Keds business, Wolverine Leathers business and Hush
Puppies prior to the license model change 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 Q3
$
188.1
$
4.1
$
(0.5
)
$
191.7
Selling, general and administrative
expenses - Fiscal 2022 Q3
$
219.0
$
(2.6
)
$
(10.0
)
$
206.4
(1) Q3 2023 adjustments reflect $57.7
million gain on the sale of businesses, trademarks and intangible
assets, partially offset by $38.3 million for a non-cash impairment
of the Sperry® trade name, $2.3 million of environmental and other
related costs net of recoveries, $9.0 million of reorganization
costs, $2.0 million of Sperry® store closure costs and $2.0 million
of costs associated with divestitures. Q3 2022 adjustments reflect
$2.2 million of environmental and other related costs net of
recoveries and $0.4 million of costs associated with Sweaty Betty®
integration.
(2) Q3 2023 adjustments reflect the
Wolverine Leathers business results included in the consolidated
condensed statement of operations. Q3 2022 adjustments reflect
results for the Keds business, Wolverine Leathers business and Hush
Puppies prior to the license model change 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 Q3
$
27.3
$
(3.7
)
$
(1.1
)
$
22.5
Operating margin
5.2
%
4.3
%
Operating Profit - Fiscal 2022 Q3
$
58.8
$
3.3
$
(1.0
)
$
61.1
Operating margin
8.5
%
9.4
%
(1) Q3 2023 adjustments reflect $57.7 million gain on the sale
of businesses, trademarks and intangible assets, partially offset
by $38.3 million for a non-cash impairment of the Sperry® trade
name, $2.3 million of environmental and other related costs net of
recoveries, $9.0 million of reorganization costs, $2.0 million of
Sperry® store closure costs and $2.4 million of costs associated
with divestitures. Q3 2022 adjustments reflect $2.2 million of
environmental and other related costs net of recoveries and $1.1
million of costs associated with Sweaty Betty® integration.
(2) Q3 2023 adjustments reflect the Wolverine Leathers business
results included in the consolidated condensed statement of
operations. Q3 2022 adjustments reflect results for the Keds
business, Wolverine Leathers business and Hush Puppies prior to the
license model change 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 Q3
$
0.11
$
(0.03
)
$
(0.01
)
$
0.07
$
0.04
$
0.11
EPS - Fiscal 2022 Q3
$
0.48
$
—
$
(0.01
)
$
0.47
(1) Q3 2023 adjustment reflects gain on the sale of businesses,
trademarks and intangible assets, partially offset by for a
non-cash impairment of the Sperry® trade name, environmental and
other related costs net of recoveries, reorganization costs,
Sperry® store closure costs and costs associated with divestitures.
Q3 2022 adjustments reflect environmental and other related costs
net of recoveries and costs associated with Sweaty Betty®
integration.
(2) Q3 2023 adjustments reflect the Wolverine Leathers business
results included in the consolidated condensed statement of
operations. Q3 2022 adjustments reflect results for the Keds
business, Wolverine Leathers business and Hush Puppies prior to the
license model change 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 Q3
$
563.8
$
—
$
563.8
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
Q4 (1)
Inventory - 2023
$
725.9
$
647.9
$
563.8
$
490.0
Inventory - 2022 (2)
$
451.3
$
605.7
$
838.8
$
745.2
Percentage Change
60.8
%
7.0
%
(32.8
)%
(34.2
)%
(1) Q4 2023 represent the Company's reported inventory outlook
for the 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 financial impact of
completed and planned divestitures, and the impact of the
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 of the divestitures and transition to a
license model on the Company's ongoing business.
Q1
Q2
Q3
Q4
2023 YTD
Revenue - Impact
Keds business (1)
$
6.5
$
—
$
—
$
—
$
6.5
Wolverine Leathers business (2)
12.5
10.9
8.2
—
31.6
Total Revenue - Impact
$
19.0
$
10.9
$
8.2
$
—
$
38.1
Operating profit - Impact
Keds business (1)
$
(1.9
)
$
—
$
—
$
—
$
(1.9
)
Wolverine Leathers business (2)
1.4
0.8
1.1
—
3.3
Total Operating profit - Impact
$
(0.5
)
$
0.8
$
1.1
$
—
$
1.4
Net earnings per share - Impact
$
(0.01
)
$
0.01
$
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 divested the U.S. Wolverine Leathers
business in August 2023 and is currently in an active process to
sell the non-U.S. 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 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
$2,238 - $2.248
$(45)
$2,193 - $2,203
Gross Margin - Fiscal 2023 Full Year
38.7 %
0.4 %
39.1 %
Operating Margin - Fiscal 2023 Full
Year
4.8 %
— %
(1.4) %
3.4 %
Dilutive EPS - Fiscal 2023 Full Year
$0.35 -$0.40
$(0.02)
$(0.28)
$0.05 - $0.10
Fiscal 2023 Full Year Supplemental
information:
Net Earnings
$28 -$32
$(2)
$(22)
$4 - $8
Net Earnings used to calculate diluted
earnings per share
$28 - $32
$(2)
$(22)
$4 - $8
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, Sperry® store
closure costs and costs associated with divestitures partially
offset by gain from the sale of the business, trademarks and
intangible assets 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 businesses,
trademarks and intangible assets, Sperry® store closure costs,
costs associated with divestitures and costs associated with Sweaty
Betty® integration were excluded. 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 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
$
10.0
$
13.0
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
$
11.0
$
14.0
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
$
8.0
$
7.0
Selling, general and administrative
Benefit
$
50.0
$
5.0
$
8.0
$
12.0
$
25.0
Operating Profit Benefit
$
75.0
$
8.0
$
15.0
$
20.0
$
32.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109626294/en/
Alex Wiseman (616) 863-3974
Wolverine World Wide (NYSE:WWW)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
Wolverine World Wide (NYSE:WWW)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024