The US shoe and clothing group Wolverine World Wide Inc. was unable to meet market expectations in the third quarter of the 2022/23 financial year, despite strong growth in sales and earnings. In view of the current numbers and adverse conditions, the company lowered its annual forecasts on Wednesday and announced comprehensive structural reforms.
In the months July to September, group sales amounted to 691.4 million US dollars (688.9 million euros). Although it exceeded the level of the same quarter of the previous year by 8.6 percent (currency-adjusted +12.2 percent), it was lower than the analysts had expected in advance. Although the shoe label Merrell achieved a strong increase in sales (+33.6 percent) to 198.6 million US dollars, the other important group brands Saucony, Sperry, Wolverine and Sweaty Betty all had to accept declining sales.
Earnings only increase due to special effects
The company was only able to increase its earnings because high one-off charges had adversely affected the results in the same quarter of the previous year. The reported operating profit grew by 38.4 percent to 58.8 million US dollars, adjusted for special effects, however, it fell by 10.4 percent. Quarterly net income attributable to shareholders increased to $39.0 million from zero. However, diluted earnings per share adjusted for special effects fell by 14.3 percent from $0.56 to $0.48, falling short of analysts’ expectations.
Due to the adverse market situation, the management cut its forecast for the year. Revenue target lowered to $2.670-2.695 billion from $2.74-2.79 billion. The guidance range for diluted earnings per share is now $1.90 to $2.00, down from a previously expected range of $2.62 to $2.72.
The group brands will be bundled into three divisions in the future
A new group structure should now help to achieve better results again in the future. As part of the reform, the brands of the group of companies will be bundled into the three segments Active Group, Work Group and Lifestyle Group in order to ensure closer cooperation between labels with a similar focus.
In the future, the three groups will be led by proven executives who have been promoted to the new posts. Chris Hufnagel is now responsible for the Active Group division with the Merrell, Saucony, Sweaty Betty and Chaco brands, Tom Kennedy for the Work Group with the Wolverine, Cat, Bates, Harley-Davidson and HyTest labels. Katherine Cousins has been appointed to lead the Lifestyle Group, which owns the Sperry, Keds and Hush Puppies brands.