Wolverine World Wide, Inc. provided an update on its preliminary, unaudited financial results for FY 2023 and its ongoing transformation efforts ahead of its presentation at the 2024 ICR Conference this week.
“We’re executing the stabilization phase of our strategic transformation with tremendous pace while redesigning Wolverine Worldwide for the future,” said Chris Hufnagel, President and CEO. “For the fourth quarter and full year, we expect to deliver financial results in line with our guidance – while achieving better-than-anticipated year-end debt and inventory levels. Importantly, the performance of our direct-to-consumer business met our expectations for the critical holiday period as well – led by Merrell, Saucony, Sweaty Betty and Wolverine. We enter the new year on increasingly firmer footing and with a focus on furthering our efforts to transform the company into a great builder of global brands, investing in product design and storytelling to fuel future growth, and ultimately, creating greater value for our shareholders.”
Preliminary and unaudited FY results
After lowering its outlook in November 2023, Wolverine Worldwide expects full-year and Q4 sales of approximately $2.24 billion and $527 million, respectively, and full-year and fourth-quarter sales of roughly $2.20 billion and $521 million, respectively, from continuing operations, which is in line with the guidance adjusted in November. The adjusted gross margin for the full year and the fourth quarter is expected to be over 39 percent and 36 percent, respectively, which is also in line with the forecast. The same applies to the adjusted pre-tax profits for the full year and the fourth quarter.
As of Dec. 30, 2023, the company also expects inventory of approximately $460 million compared to the November guidance of $490 million and net debt of approximately $750 million compared to the November guidance of approximately $850 million.
Corporate transformation update
In FY 2023, Wolverine Worldwide executed asset monetization transactions that raised nearly $250 million in cash, of which $91 million was received in Q4. The following measures were taken to simplify the business and reduce debt:
- On Dec. 28, 2023, the company completed the sale of its Kentucky distribution center, generating cash of $23 million in Q4 of 2023. The Saucony and Sperry brands will continue to operate in this facility under a lease agreement.
- Other previously announced asset monetization transactions in 2023 generated proceeds of approximately $227 million, including Keds, the Hush Puppies intellectual property in China, Wolverine Leathers and the new operating model for Merrell and Saucony in Greater China.
- The company’s progress in finding strategic alternatives for the Sperry brand remains on track.
As for specific brand proposals in FY 24, Merrell, which introduced key products in the Moab Speed 2, Agility Peak 5 and Wrapt, must grow its business beyond the trail, particularly with female consumers, Hufnagel said at the conference. Saucony, as with Merrell, will test new styles on its own platform before introducing them to consumers around the globe. On deck for Saucony this spring are the Endorphin Pro 4, the X Jae Tips and the Hurricane 24. Meanwhile, it’s critical for Sweaty Betty to become a head-to-toe brand. Currently, the UK-founded brand generates one-third of its revenues from leggings. Key FY24 focus areas beyond specific brand marketing also include modernizing various e-commerce platforms and planning systems and further SKU optimization, Hufnagel said.
