Although they were down on last year’s third quarter, Wolverine Worldwide posted better-than-expected sales in the three months to Sept.26, led by double-digit growth from Saucony and Chaco.
The impact of coronavirus-related restrictive measures on retail was partly offset by a growth of 56.4 percent in the group’s own e-commerce operations. The group’s performance brands benefited from the popularity of outdoor activities after lockdowns ended.
The company took steps to strengthen its balance sheet by prioritizing liquidity and net asset management. These actions included the implementation of cash enhancement and expense reduction initiatives. During the last two quarters, which were significantly impacted by the global pandemic, it delivered earnings and exceptional cash from operations of over $210 million. Inventory levels were down by 22 percent as compared to last year at quarter-end.
Despite this good performance, Wolverine expects that headwinds caused by the pandemic will persist in the near term and that fourth-quarter revenues will be down by up to 25 percent year-on-year, including the effects of a partial shift in revenues from its international business into the first quarter of 2021.
Overall, Wolverine’s sales across the group’s entire portfolio of 12 footwear brands dropped in the latest quarter by 14.1 percent to $3,493.1 million, or by 14.6 percent in constant currencies.
Sales went down by 10.2 percent in constant currencies for Wolverine’s Michigan Group, where Merrell and Wolverine saw revenues down by mid-single digits and high-single digits, respectively. However, Chaco grew by nearly 30 percent, driven by the success of the outdoor category and strong online sales.
The group’s so-called Boston Group saw sales declining by 20.3 percent on a currency-neutral basis, as Sperry was down by 45 percent, offset by a good performance by Saucony. The management noted that this represented a substantial improvement over the second quarter.
Overall, the group’s gross margin contracted by 1.4 percentage points to 41.0 percent, while the operating margin dropped by 11.3 percentage points to 8.6 percent. The company’s net income stood at $21.7 million, compared with $48.6 million for the same quarter of last year.