Wolverine Worldwide raised its guidance for the full financial year due to better-than-expected e-commerce growth in the first quarter and optimism over Covid-19 vaccine roll-outs. The group’s revenues in the three months to April 3 rose by 16.3 percent to $510.7 million, just about missing estimates of $511.8 million. The management indicated that they would have been about $40 million higher if some deliveries had not been shifted to the second quarter because of logistics problems.
The parent company of Sperry, Hush Puppies, Saucony, Merrell and many other brands posted net income of $38.5 million for the quarter, up from $13 million a year earlier, thanks largely to a positive swing of $19.0 million in environmental clean-up charges. The reported gross margin improved by 2.1 percentage points to 43.5 percent while the adjusted gross margin rose by 2.9 percentage points to 44.3 percent. A negative factor of 0.8 percentage points from air freight charges was more than offset by lower promotions and higher margins on online sales.
E-commerce went up by 84 percent across the group. Sales outside North America rose by 40 percent with gains of more than 35 percent in every region in spite of ongoing retail lockdowns in certain countries.
Merrell’s sales rose by almost a quarter during the period, led by the EMEA region. The progress was aided by a 30 percent increase on a comparable basis at the company’s physical stores and a 135 percent jump in own e-commerce. Sales of performance and lifestyle shoes were up by 30 percent and 20 percent, respectively. Merrell plans to launch a mobile shopping app later this year.
Saucony´s revenues surged by close to 60 percent, with strong growth in all regions, led by North America and EMEA. Sales of road running shoes nearly doubled and Saucony Originals posted double-digit growth. Investment in the digital business helped drive e-commerce growth of 83.6 percent.
The work boot unit delivered significant growth, with CAT footwear up more than 30 percent and Wolverine almost 30 percent. The company expects accelerated growth for the division in the second quarter.
Sperry declined by about 10 percent overall, despite increases of 40 percent in e-commerce and over 20 percent in the company’s own stores. The brand is expected to return to double-digit growth, however.
The group’s chairman and CEO, Blake Krueger, said that the drivers for the increased guidance were “pretty broad-based” across all of Wolverine’s brands. “We continue to see momentum across international regions. It’s a bit mixed … there (are) still some countries that are locked down a little bit, but the vaccines are working and economies are starting to open up,” he said.
Like other companies, Wolverine experienced supply chain issues due to the pandemic, but its chief financial officer, Mike Stornant, said core inventory levels continued to increase in the second quarter after being down by around 21 percent at April 3. “Our inventory position has improved nicely in the second quarter allowing us to fill nearly all of the orders that slipped from Q1 into Q2,” he said.
The company is now projecting 2021 revenues of $2.24 billion to $2.3 billion, up 25 to 28 percent year on year and $50 million higher than earlier guidance. It has also reiterated a $500 million target for its own e-commerce revenues – more than double 2019 levels.