The Michigan-based footwear group’s outdoor business was not the sole driver behind its 5.0 percent rise in revenues to $250.3 million for the 2nd quarter ended June 16, but it continues to be the largest one. The segment, which includes the Merrell, Sebago and Patagonia footwear brands, grew by high double digits in the quarter.
Wolverine World Wide’s net earnings were up by 9.0 percent to $15.5 million in the quarter. The European Union’s anti-dumping duties on leather footwear coming from China and Vietnam had a slight impact on the group’s earnings. The EU duties negatively affected by 40 basis points the group’s gross margin, which rose overall by 20 basis points to 38.2 percent.
Strong sales in Europe and elsewhere helped offset slight declines in WWW’s domestic market. During a conference call with analysts to discuss the results, company officials said that a bit more than half of Merrell’s turnover is being generated in the USA, and half of the remaining sales abroad are in Europe.
Merrell grew overall by more than 15 percent in the quarter. WWW claims that Merrell’s apparel offering has been successful so far in the market, and initial shipments should be in the $9-10 million range. Mainly large sporting goods chains are carrying the brand’s clothes, examples in Europe being Field & Trek and Décathlon.
Patagonia’s fairly new footwear collection has seen good sell-throughs, according to WWW’s management. Despite this, WWW admits that many retailers seem cautious on reorders. For the full year, turnover from Patagonia footwear is expected to generate $13-15 million.
Strong sales outside of the USA boosted the Hush Puppies range in the quarter, and offset weak domestic turnover. In total, revenues from the brand increased by 10 percent while earnings grew by double digits. In the “Heritage Brands” group, which includes Harley Davidson and Caterpillar footwear lines, both revenues and earnings rose by single digits. Sales for this group were also stronger outside of the USA.
The Wolverine footwear group continued its expected decline in the quarter, its sales dropping by 8-9 percent as it continues to feel the sting of a more limited contract with the U.S. military. The Bates brand was however recently awarded a small contract to make chemical bio boots for American soldiers.
Going forward, WWW maintains revenue guidance of $1.20-1.23 billion. The company has restated upward its earnings estimate to $1.60-1.64 per share from $1.57-1.63 per share.