During the quarter ending 30 December 2023, Wolverine Worldwide’s international revenue also fell 5.1% to $267.2m, while direct-to-consumer sales were down 17.6% to $186.9m.
By brand, Merrell’s sales declined by 16.6% to $161.8m, Saucony’s sales decreased by 13.4% to $105.1m, Wolverine brand sales fell by 27.9% to $51.8m, and Sweaty Betty sales decreased by 7.6% to $67.3m.
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Wolverine Worldwide executives say they are now refocusing and amplifying the company’s star brands – Saucony and Merrell.
The company’s CEO Chris Hufnagel is especially buoyant about Saucony. Speaking on Wolverine’s earnings call for Q4, Hufnagel told investors that Saucony “is near and dear” to his heart and believes the running brand has “some of the greatest potential” in the company’s portfolio.
“I’m encouraged by Saucony because I think the product pipeline is very good,” said Hufnagel. He added that he sees it as “a tremendous opportunity”.
Hufnagel’s enthusiasm for Saucony coincides with the announcement from Wolverine Worldwide that its total net revenues for the fiscal year 2023 decreased by 16.5% to $2.24bn, compared to $2.68bn in 2022.
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By GlobalDataThe company’s gross margin rose to 40.8%, up from 40.2% in 2022, primarily due to improved profitability and distribution channel changes. This was despite higher inventory and closeout sales.
Hufnagel said in a statement: “We finished the year with revenue and earnings in-line with guidance, and inventory and debt levels better than expected. Most importantly, Wolverine Worldwide is a much different company than it was just six months ago, with a healthier balance sheet, enhanced efficiency to deliver higher profit and investment, and a redesigned organisational structure to strengthen our brand-building capabilities.”
Highlights from Wolverine Worldwide Q4 results:
- Revenue of $526.7m in Q4 2023, down 20.8% versus Q4 2022.
- An operating loss of $186.9m was reported in the quarter, down from $454.7m in Q4 2022.
- Total inventory of $373.6 million, down $371.6 million or approximately 50% compared to Q4 2022.
Speaking on the call with investors, Hafnagel said the company was continuing to make great progress in driving its turnaround and transformation plans with a “clear vision” and a “common sense of purpose”. He attributed the success of the plan to the company’s urgency and effectiveness, which has allowed Wolverine Worldwide to “outpace” expectations.
Executive vice president and chief financial officer Mike Stornant confirmed that the company’s turnaround is ahead of schedule in many key areas, including portfolio optimisation, gross margin expansion, operating cost improvements, healthier inventory and much lower net debt.
Speaking on a call with investors, Stornant said: “Today, we’re in a much better position to accelerate the continued transformation of the company.
The second chapter of our turnaround story is focused on transforming wolverineWorldWide into a builder of great global brands.”
Wolverine predicts revenue decline in FY24
Looking ahead, Wolverine anticipates revenue from its ongoing business to be around $1.7bn to $1.75bn in 2024, representing a decline of 12.2% to 14.7% compared to 2023.
Gross margin is forecasted at 44.5%, up 460 basis points compared to 2023. The operating margin is expected to be 5.7%, and the adjusted operating margin will be 7% up 310 basis points.
Wolverine also expects its inventory to decline by at least $70 million by year-end in FY 2024.
In a statement, Stornant said: “While we expect the macro environment to remain challenging, especially in the first half of the year, we believe firmly that the business is on much stronger footing and poised to drive improved profit, cash flow and growth into the future.”
Last year, the US company sold off parts of the business to turn around declining sales and increase profitability. In February the company successfully offloaded its Keds brands for a sum exceeding $90m.
This was followed by another significant sale in August, involving the sale of the Hush Puppies intellectual property rights in China, Hong Kong, and Macau for around $58.8m. Most recently, in January of this year, Wolverine concluded the sale of its Sperry brand to Authentic Brands.
