Wolverine Worldwide expects to announce earnings at the high end of its previous guidance of $0.85 to $0.90 a share for the financial year ended last Dec. 28, indicating an improvement in net profit to between $85.5 million and $90.5 million, compared with $80.8 million in 2012. Excluding restructuring charges and other charges related to the acquisition of the PLG segment of Collective Brands in October 2012, indicated earnings should have reached a level of $137.8 million to $142.8 million.
However, the company lowered its outlook for group revenues to $2.69 billion from its previous estimate of $2.71 billion to $2.73 billion, indicating growth of only 5.5 percent for the past year on a pro-forma basis or 64.0 percent including the contribution from the newly acquired brands. Double-digit sales growth for Hush Puppies, Cat Footwear and Keds, and mid single-digit sales growth from Merrell and Saucony were partially offset by softness from Sperry Top-Sider and Stride Rite. These two brands, plus Keds and Saucony, were part of the PLG acquisition.
Sperry's performance, in particular, was affected by autumn weather conditions that heavily favored boot offerings versus casual products. Geographically, double-digit revenue growth in the Asia-Pacific and Latin America regions was offset by flat revenue growth in the U.S. and the EMEA region. The European markets where Wolverine controls the distribution performed better than those where it deals through distributors.
The management told the ICR investors' conference a few days ago that it is launching a new e-commerce platform with Sperry as the first brand up and that it will launch a new marketing campaign for Merrell, dubbed “Out.Perform,” to focus the brand more on its core values.
The group has signed 16 agreements with foreign distributors for Sperry since its takeover. The management noted that Keds is getting a lot of interest outside the U.S. because of its position as a girls' brand versus the male bent of Vans and the rock bent of Converse.
Wolverine expects f.o.b. prices from Asia to increase by a single digit in 2014, and to pass on the increases through higher average selling prices, with variations from one brand to the other. Sales should continue to rise by a single digit, but earnings per share should go up by a double digit. It sees revenue growth accelerating over the course of the year.