US: Wolverine to close stores in strategic realignment
- To close 140 stores by 2015 end
- Cuts full-year EPS outlook
- Q2 earnings up 54%
US clothing and footwear business Wolverine Worldwide has revealed plans to close around 140 stores as part of a strategic realignment plan designed to improve its bottom line.
In a bid to accelerate growth and improve overall profitability, the company will close 60 stores by the end of its fiscal, with the balance to close by the end of 2015. These will primarily be Stride Rite stores.
Wolverine will also be implementing organisational and infrastructure changes in a bid to make further savings, it said.
The plan is expected to result in annual pretax benefits of around US$11m, which will primarily be used to build its omni-channel capabilities and grow its wholesale operations.
As a result of the realignment plan, the company cut its full-year earnings outlook. It now expects earnings of $1.32 to $1.38 per share, down from previous guidance of $1.48 to $1.54. Based on a "continued soft retail environment in the US", it expects revenues of around $2.77bn, at the lower end of its previous guidance range of $2.77bn to $2.85bn.
In addition, Wolverine reported second-quarter earnings of $27.6m, a 54% increase on earnings of $18.1m a year earlier.
Gross margin narrowed to 40.1% from 41% in the prior year due to increased promotional activity.
Sales, however, reached $613.5m from $587.8m last year thanks to revenue growth from its three brands.
"We are extremely pleased to deliver a record quarter in what continues to be a volatile global retail environment, particularly in the US" said CEO Blake Krueger. "All of our operating groups achieved a revenue increase in the quarter, which was spread across nearly every region of the world."
Click here to view further insight on Wolverine's realignment plan.
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