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Wolverine World Wide (WWW) Q3 Earnings Top, Sales Lag


Wolverine World Wide Inc. WWW reported mixed financial numbers for third-quarter 2016. The company reported earnings per share of 49 cents, beating the Zacks Consensus Estimate by a penny and also increased 2.1% year over year. This was the fourth straight quarter of positive earnings surprise for the company. On an adjusted currency basis, the company’s earnings per share increased 6% year over year to 51 cents.

However, Wolverine’s reported revenues of $603.7 million plunged 11.1% year over year and also came below the Zacks Consensus Estimate of $627 million, after surpassing the same in the preceding three quarters. The sharp decline in revenues was primarily due to dismal performance of the company’s Wolverine Outdoor and Lifestyle Group. Following the revenue miss, shares fell 3.5% on Oct 18.

On a reported basis, Lifestyle Group revenues were down 13.3% to $219.1 million. Revenues of the Heritage and Boston Groups also declined 1.5% to $86 million and 9% to $202.4 million, respectively. Moreover, revenues from the company’s other brands and multi-brand slumped 24.2% and 16.1% to $15.7 million and $80.5 million, respectively.

Adjusted gross margin on a constant currency basis came in at 40%, flat year over year. Wolverine’s adjusted operating margin on a constant currency basis increased 30 basis points to 12.2%.

WOLVERINE WORLD Price and EPS Surprise


Other Financial Aspects

Wolverine ended the quarter with cash and cash equivalents of $530.9 million, long-term debt of $657.7 million and shareholders’ equity of $1,040.7 million. Inventories during the quarter were down about 7.6% to $457.6 million. The company announced a fresh four-year share buyback program of $300 million, overriding the remaining balance of 2014 authorization. During the quarter, the company repurchased nearly 417,816 shares at an average price of $23.55 per share.


The Zacks Rank #3 (Hold) company’s projects 2016 revenues to decrease 8%–4.3% in the range of $2.475 billion to $2.575 billion.

Management continues to expect adjusted earnings per share for 2016 in the range of $1.30–$1.40. The Zacks Consensus Estimate is currently pegged at $1.36 per share, falling within the company’s guidance range. Moreover, on a constant currency basis adjusted earnings are estimated to be in the range of $1.48—$1.58 per share. The company anticipates inventory levels to decline low teens by the end of 2016 in comparison to 2015.

Stocks to Consider

Better-ranked stocks worth considering in the retail sector include DSW Inc. DSW, Foot Locker, Inc. FL and L Brands, Inc. LB. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

DSW has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings surprise of 24%.

Shares of Foot Locker have gained more than 16% in the past three months.

L Brands has a long-term earnings growth rate of 11.3%.

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