Wolverine World Wide profits shoot up on solid margin growth
Rockford, Michigan-based footwear manufacturer Wolverine World Wide, Inc. announced on Tuesday that, despite slipping revenues, the company saw strong earnings growth in the third quarter of 2018.
Wolverine’s reported revenue for the period totaled $558.6 million, down by 3.9% from $581.3 million, while underlying revenue actually increased 0.5%, or 1.1% when adjusted for exchange rates.
Net earnings, however, were $58.9 million, an impressive jump up from the $22.8 million reported in the prior-year period. In a press release, Wolverine Chairman, CEO and President Blake Krueger attributed the progress to the company’s “Way Forward transformation initiatives”, which allowed for improvements in the group’s margins.
Indeed, gross margin was 41.6%, compared to 39.7% in the same period in the previous year, while operating margin was 12.2%, up from 6.4%. According to SVP and Chief Financial Officer Mike Stornant, this margin growth was achieved through a “favorable mix, lower product costs, lower markdowns and benefits from a cleaner inventory pipeline.”
Year to date, revenues totaled $1.66 billion, down from $1.77 billion, while earnings came to $161.0 million, up from $60.1 million.
In light of its results, Wolverine has updated its fourth-quarter and full-year outlook for fiscal 2018. The company now expects underlying revenue growth of between 3% and 5% in Q4, and predicts that it will continue to see strong growth in e-commerce. Its two largest brands, Merrell and Sperry, are expected to see growth in the low-teens and the high-single-digit range, respectively.
For fiscal 2018, revenue is now expected to be around $2.24 billion, representing 2.5% underlying growth, while earnings per share are predicted to be in the range of $2.09 to $2.13.
Wolverine’s revised outlook also takes into account the negative impact of a weak performance in the company’s Latin American region and the bankruptcy of a work boot customer.
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