Wolverine Worldwide raised its guidance for the full year for the second time after achieving strong results in the second quarter ended July 3, led by the record quarterly sales performance by its two largest brands, Merrell and Saucony, on which the group has been investing more than on the rest of its portfolio.
The group’s revenues for the three months ended July 3 stood at $631.9 million, up by a reported 81.0 percent versus the prior year, which was heavily impacted by the Covid-19 pandemic, and 11 percent higher than in the same period of 2019. The top line easily surpassed an analyst consensus of $567.3 million. On a constant-currency basis, second-quarter revenues were up by 77.7 percent.
Wolverine’s direct-to-consumer (DTC) revenues increased by 17.5 percent from the year-earlier quarter and were up by 68.8 percent versus 2019. Revenues from the group’s own e-commerce operations slipped by 2.7 percent versus the prior year but were up by 90.7 percent as compared to 2019. Sales at the group’s own stores surged by 380.5 percent as compared to one year earlier and were 19.2 percent higher than in 2019.
Merrell’s revenues jumped by 88 percent year-on-year in the quarter, while Saucony recorded a 129 percent increase. Together, the two brands saw revenues rise by more than 40 percent as compared to 2019.
Two-thirds of the group’s revenues came from performance hiking, running and work footwear, all of which have been enjoying strong demand lately. Merrell’s sales of performance footwear more than doubled, boosted by several extension of the Moab style and led by tripled sales of trail running shoes. The brand’s sales of lifestyle footwear went up by a strong double-digit rate, with the iconic Jungle Moc nearly doubling and the new Hydro Moc tripling.
Saucony’s sales of running shoes more than doubled, led by new models, and the brand’s sales of trail running shoes nearly tripled. The lifestyle-oriented Saucony Originals category scored a very strong double-digit increase. Saucony’s sales in EMEA were up significantly.
Wolverine, which also owns the Sperry, Hush Puppies and many other brands, stressed that the growth was broad-based across brands and geographical regions. In particular, Sperry bounced back in the quarter with triple-digit growth, including a 50 percent gain in DTC revenues driven by its stores. Higher sales at full price improved margins. The group’s management sees boat shoes returning as a fashion item, led by Sperry’s new injection-molded styles.
The company’s chief financial officer, Mike Stornant, said that all regions “grew nicely” in the quarter, with the U.S. and EMEA regions “meaningfully beating” expectations. Merrell’s sales soared by 180 percent in the U.S., and they nearly doubled in EMEA and the Asia-Pacific region.
Wolverine reported net earnings of $44.4 million for the quarter compared with a loss of $1.9 million in the same period a year ago. The reported gross margin of 42.8 percent was 0.6 percentage points higher than a year ago. Excluding $11.0 million in exceptional air freight charges caused by production and shipping delays, the adjusted gross margin would have widened to 44.5 percent from 42.2 percent a year earlier, due to a favorable product mix and higher average selling prices.
The group has been suffering from the Covid-related restrictions in Vietnam, which accounts for about 40 percent of its total production. About half of its suppliers in the country are shut down at present.
Nevertheless, after raising its guidance in releasing its first-quarter figures, the company did so again in connection with its second-quarter report, mentioning an earlier and very strong inflow of wholesale orders that is also auguring well for the first part of 2022. Wolverine now anticipates an indicative net profit of around $160 million for the full financial year on revenues of $2,340 million to $2,400 million, with growth of 31 percent to 34 percent as compared to 2020 and up $150 million from the original outlook it had provided in February.
