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Wolverine Worldwide posts profit loss

Mar 7, 2023 United States
Wolverine Worldwide posts profit loss
Despite a sales growth, the Michigan-based company reported a fourth quarter and full year 2022 profit loss, impacted by higher transitory supply chain costs and excess inventory
“Despite a challenging year in 2022, we've taken important steps to become a more disciplined and agile company while focusing on long-term growth. Encouraging results from our 100-day action plan, initiated in the fourth quarter, include a reduction in inventory and debt levels, the sale of Keds, and the establishment of a new Profit Improvement Office to unlock savings to support growth acceleration in our highest potential brands”, stated Brendan Hoffman, Wolverine Worldwide’s President and Chief Executive Officer.


Fourth Quarter Results

In the three months to the 31st of December 2022, the company's revenue amounted to 665.0 million US dollars, reflecting an increase of 4.6% (or 8.4% on a constant currency basis), as compared to the same period of the previous year.

Wolverine highlighted that in this period the international business performed “especially” well, up by 22.2% (or 31.9% on a constant currency basis) year-over-year, totalling 281.5 million US dollars, whilst the direct-to-consumer revenue of 224.4 million US dollars was flat (up by 4.8% on a constant currency basis).

The company's fourth quarter gross margin was 33.7%, as compared to 41.3% in the same period of the prior year, reflecting “the acceleration of end-of-life inventory liquidation, increased promotions, and a higher mix of international distributor sales that carry relatively lower gross margin”.

Moreover, in the last quarter of 2022, Wolverine Worldwide reported a net loss of 361.6 million US dollars, or 4.59 US dollars per diluted share, on a comparable basis to the net loss of 15.0 million US dollars, or (0.18) US dollars per diluted share, registered in the same period of fiscal 2021.

Full Year Results

The US-based company reported revenue growth of 11.2% (or 14.1% on a constant currency basis) last year, reaching 2.68 billion US dollars, as compared to fiscal 2021.

Throughout 2022, the company's gross margin declined to 39.9% from 42.6% in the prior year, also reflecting “the acceleration of end-of-life inventory liquidation, increased promotions, and a higher mix of international distributor sales that carry relatively lower gross margin”.

Wolverine Worldwide posted a net loss of 189.1 million US dollars, or (2.37) US dollars per diluted share, as compared to the profit of 67.0 million US dollars, or 0.81 US dollars, recorded in the previous fiscal year.

Fiscal 2023 Outlook

“We enter 2023 with excellent visibility to costs savings and operational efficiencies that we believe will benefit the year. We expect that during the first half of the year, gross margin will continue to be impacted by expense timing of higher transitory supply chain costs from 2022 and the sell-off of end-of-life inventory. As a result of the proactive work started several months ago, we expect profitability to improve meaningfully in the second half of the year as supply chain costs and inventory levels normalize, and the Profit Improvement Office initiatives deliver benefits”, explained Mike Stornant, Executive Vice President and Chief Financial Officer.

For the current financial year, the company is anticipating reaching revenue in the range of 2.53 billion US dollars to 2.58 billion US dollars, reflecting a growth of approximately 0.0% to 2.0% (or 1.0% to 3.0% on a constant currency basis), and diluted earnings per share between 1.50 US dollars to 1.70 US dollars.


Image Credits: eyecmag.com


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