The US performance footwear group regained profitability in Q1, led by strong sales from its trail and running brands despite tariff-related uncertainty.
Parent company Wolverine Worldwide returned to profitability in Q1, bolstered by double-digit growth from its two largest brands, Merrell and Saucony. However, the company withdrew its FY25 financial outlook due to uncertainty surrounding proposed US tariffs and their potential impact on costs and inventory planning.
Wolverine said its sourcing diversification efforts over recent years have significantly reduced production reliance on China, which accounted for nearly 40 percent of output in 2019. Part of the company’s strategy going forward is balancing margin protection with brand investments.
Wolverine reported $19.7 million in operating profit for Q1, compared to a year-ago loss of $3.1 million. Net income was $11.1 million versus a $13.7 million loss, as total revenues expanded 4.4 percent to $412.3 million. Group gross margin improved by 140 basis points year-over-year to 47.3 percent.
“We’ve implemented disciplined distribution strategies while simultaneously cleaning up the marketplace,” said President and CEO Chris Hufnagel. “And we are beginning to build brand heat momentum through compelling new brand campaigns, key city activations, innovative collaborations and investments in retail marketing on the sales floor.”
On a constant-currency basis, Merrell sales rose 14.4 percent in Q1 to $150.6 million as the company continues “modernizing the trail as a leader in the category.” Merrell continues to gain market share and is expanding its lifestyle business in the US while targeting younger consumers, including women.
To help offset potential tariff impacts, Merrell will implement mid-single-digit price hikes on selected products, while Wolverine also evaluates other mitigation strategies. So far, the company reports no drop in sentiment from consumers or wholesale customers.
At Saucony, Q1 sales rose 31.3 percent in constant currency to $129.8 million, led by strong growth in North America. New versions of the Ride and Guide models contributed to performance gains, and gross margin improved nearly 400 basis points year-over-year. Saucony’s lifestyle segment is also expanding into new retailers, including Foot Locker, Journeys and Snipes.
Combined, Merrell and Saucony contributed to Wolverine’s Active Group revenue of $326.7 million in Q1, up 13.9 percent in constant currency.
