A two-year deleveraging drive, led by growth at Saucony and Merrell, has lifted the US footwear group’s credit rating — but tariff costs and a competitive women’s activewear market remain key risks.
S&P Global Ratings raised its issuer credit rating on Wolverine World Wide Inc. to ‘B+’ from ‘B’ on March 13, citing a substantial reduction in the Michigan-based footwear company’s debt burden over the past two years. The ratings agency also lifted its rating on the company’s revolving credit facility to ‘BB’ from ‘BB-’ and its senior unsecured notes to ‘B’ from ‘B-’. The outlook is stable.
The upgrade reflects a material improvement in Wolverine’s financial position: adjusted leverage fell to 3.9x at the end of 2025 from 5.3x a year earlier. According to S&P, the ratio has fallen by more than 5x over the past two years, with earnings before interest, taxes, depreciation and amortization (EBITDA) margins rising approximately 720 basis points from 2023 levels.
Saucony and Merrell carry the portfolio
The primary catalyst for the turnaround has been stronger-than-expected performance at Saucony and Merrell, Wolverine’s two highest-profile running and outdoor brands. Both contributed to the company exceeding its own guidance on revenue, earnings, gross margin and operating margin for 2025. S&P expects continued investment in marketing and distribution at Saucony, alongside cost-reduction and debt-repayment efforts, to sustain leverage near current levels.
The company ended 2025 with over $200 million (approximately €184 million*) in cash, a position S&P described as providing additional financial flexibility ahead of a 2029 debt maturity.
Tariffs test the recovery
S&P’s stable outlook is conditioned on Wolverine maintaining leverage of roughly 4x, EBITDA margins above 10 percent, and revenue growth of 2–5 percent over the next two years. The agency warns that achieving those targets will require absorbing significantly higher tariff costs in 2026, forecast at approximately $65 million (approximately €60 million) — an incremental increase of around $50 million (approximately €46 million) compared to last year.
While potential adjustments to US trade policy could reduce some of that burden in the second half of 2026, S&P noted that Wolverine’s premium-but-not-ultra-premium positioning limits its ability to pass higher costs directly to consumers.
Sweaty Betty, work boots, and a crowded market
Beyond the headline upgrade, the rating report highlights several areas of lingering concern. Sweaty Betty, Wolverine’s women’s activewear brand, is moving toward a direct-to-consumer (DTC) model in the US and expanding selectively in international markets, but it competes in one of the most contested segments in sportswear — against Lululemon, Vuori, Alo Yoga, Fabletics and Beyond Yoga, among others. S&P expects the brand’s unit economics to improve in 2026 and 2027 without anticipating outright market share gains.
The company’s namesake work brand, also called Wolverine, posted a 9 percent revenue decline in 2025, having missed a wave of consumer interest in Western workwear. S&P considers the brand to be near a trough and better positioned to adapt to emerging trends, though revenue is expected to remain flat this year.
On the governance front, S&P flagged the possibility that activist investors could push for more aggressive capital allocation policies, including debt-funded acquisitions or accelerated share buybacks — scenarios the agency considers downside risks to the current rating.
