World Footwear

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Wolverine reports earnings in line with expectations

Oct 22, 2015 United States
Wolverine reports earnings in line with expectations
The US-based footwear giant reported financial results for the third quarter ended on the 12th of September. Revenue and earnings in line with forecasts
"We again delivered earnings in line with our expectations for the quarter, while continuing to fuel our long-term strategic investments", stated Blake W. Krueger, Wolverine Worldwide's Chairman, Chief Executive Officer and President, adding: "Our earnings performance is a testament to the power of our diversified brand portfolio and disciplined business model and our ability to deliver solid results in a challenging global macroeconomic environment.  Looking ahead, the Company remains focused on accelerating the growth of our brands around the world through product innovation and deepening our consumer connections through our demand creation investment strategy."

Adjusted revenue grew 0.7% after adjusting for the impact of foreign exchange, retail store closures and termination of the Patagonia license agreement. On a reported basis, revenue reached 678.9 million US dollars, a decline of 4.5% versus the prior year.

Gross margin was 40.0%, better than projected and flat with the prior year's gross margin despite challenging foreign exchange headwinds.

Adjusted operating margin of 11.9% was better than expected but 190 basis points lower than the prior year, due primarily to planned incremental brand investment and higher pension expense.  Reported operating margin was 11.2%.

Adjusted diluted earnings per share were 0.48 US dollars, in line with guidance, compared to an adjusted 0.63 US dollars per share in the prior year.  Reported diluted earnings per share were 0.44 US dollars, compared to 0.57 US dollars per share in the prior year.

"We are pleased to deliver a strong earnings performance in light of softer-than-expected revenue for the quarter", stated Mike Stornant, Senior Vice President and Chief Financial Officer, adding: "The Company also delivered better-than-expected gross margin in the quarter, despite very challenging foreign currency headwinds in many key international markets.  Our operating margin was also well ahead of our expectation, benefiting from continued discipline over discretionary spending without compromising our demand creation investments, and we continued to generate positive cash flow."

The company is expecting certain trends and conditions experienced during the third quarter to continue putting pressure on the company's top line performance during the fourth quarter of fiscal 2015.  As a result, the company is updating its full-year guidance with reported revenue now expected to be in the range of 2.69 billion US dollars to 2.71 billion US dollars, representing a decline in the range of approximately 2.6% to 1.8% versus the prior year.

Adjusted diluted earnings per share is expected to be in the range of 1.44 US dollars to 1.47 US dollars. Constant currency adjusted diluted earnings per share is expected in the range of 1.57 US dollars to 1.60 US dollars.

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