Driven by a focus on increasing long-term shareholder value, Wolverine Worldwide is divesting or licensing its Keds brand and Wolverine leather business segments and is initiating an unspecified headcount reduction. The staff cuts are projected to result in approximately $30 million in savings for the company in 2023, and the segment actions are part of the parent’s broader strategy to reduce complexity and prioritize growth brands in its portfolio, it said.
One month ago, when reporting third-quarter results, Wolverine said Keds’ Q3 revenues rose 36 percent on a currency-neutral basis due to strong growth outside the U.S. But Keds missed internal revenue targets for the period due to shipping delays in the U.S. In its formal announcement yesterday, the company described Keds and its Wolverine Leather businesses as low-profit contributors.
Wolverine Worldwide acquired Keds in May 2012 in its $1.23 billion acquisition of Collective Brands’ Performance & Lifestyle group that also included Sperry TopSider, Saucony and Stride Rite. In July, as part of a lawsuit settlement, the company sold its trademarks for Keds’ iconic Champion sneaker style to Hanesbrands Inc. for $90 million.
Organizational synergies, indirect cost savings and workforce reduction combined are expected to result in $45 million in savings for Wolverine in 2023. Additionally, the company says it will realize another $20 million in savings next year from supply chain cost-cutting initiatives that commenced earlier this year.
Through the first two months of the fourth quarter, Wolverine’s revenues are said to be in line with expectations. In early November, the company lowered its FY guidance to 14 percent currency-neutral revenue growth at the midpoint to a range of $2.67-2.695 million.
Shares in Wolverine Worldwide closed at $10.26 yesterday, down 64.4 percent since the beginning of 2022.
