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Wolverine Worldwide ends 2023 in the red but is optimistic about a turnaround

Feb 23, 2024 United States
Wolverine Worldwide ends 2023 in the red but is optimistic about a turnaround
The company posted a revenue decline of 20.8% year-over-year and a diluted loss per share of 1.15 US dollars in the fourth quarter of 2023, but is optimistic about the outcome of its turnaround plan
“We are effectively executing our transformation plan with great pace – having largely completed the stabilization phase of our turnaround. We finished the year with revenue and earnings in-line with guidance, and inventory and debt levels better than expected. Most importantly, Wolverine Worldwide is a much different company than it was just six months ago, with a healthier balance sheet, enhanced efficiency to deliver higher profit and investment, and a redesigned organizational structure to strengthen our brand-building capabilities”, commented Chris Hufnagel, President and Chief Executive Officer of Wolverine Worldwide.

Fourth Quarter Results

In the three months ended on the 30th of December 2023, the company’s revenue totalled 526.7 million US dollars, down by 20.8% on a reported basis and by 21.3% on a constant currency basis, as compared to the same period of fiscal 2022.

By segment, the active group, which includes the Merrell and Saucony brands, recorded a fourth revenue decline of 14.2% or 15.2% on a constant currency basis year-over-year to 341.3 million US dollars. The work group, which includes Wolverine footwear, reported in this period a revenue decrease of 18.9% or 19.7% year-over-year on a constant currency basis to 125.3 million US dollars. Revenue in the other group fell by 46.8& or 44.8% on a constant currency basis to 60.1 million US dollars.

In the fourth quarter of the last fiscal year, Wolverine Worldwide’s gross margin improved to 36.6% from 33.7% in a similar period of the prior fiscal year “due to less promotional e-commerce sales and inventory markdown provisions as a result of much healthier inventory levels”.

The company reported a diluted loss per share of 1.15 US dollars in the last quarter of 2023, on a comparable basis to a diluted loss per share of 4.59 US dollars in the same quarter of the previous year.


Full Year Results

Wolverine Worldwide’s revenue for the year amounted to 2.24 billion US dollars, representing a decrease of 16.5% or 16.3% on a constant currency basis, as compared to the prior fiscal year.

Its full year gross margin contracted to 38.9% from 39.9% in 2022 and “reflects sales of higher-cost inventory due to transitory costs from 2022 and acceleration of end-of-life inventory liquidations”.

In 2023, the company recorded a diluted loss per share of 0.51 US dollars, on a comparable basis to a diluted loss per share of 2.37 US dollars in fiscal 2022.


Fiscal 2024 Outlook

Our expectation of improved Fiscal 2024 profitability reflects the comprehensive stabilization work completed over the last six months. We expect to deliver incremental cost benefits of 140 million US dollars from recent profit improvement initiatives, allowing reinvestment into demand creation, enhanced technology, among other new capabilities needed to drive sustained growth”, explained Mike Stornant, Executive Vice President and Chief Financial Officer.

For fiscal 2024, the company expects its revenue from the ongoing business to reach approximately 1.70 billion to 1.75 billion US dollars, a decline of 14.7% to 12.2% or 14.3% to 11.8% on a constant currency basis. In addition, the gross margin should improve by about 460 basis points to 44.5%, as compared to 2023.


Image Credits: hashtaglegend.com

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