- Prachi Singh |
Wolverine Worldwide’s reported revenue of 598.8 million dollars increased 2.6 percent during the second quarter, but adjusted revenue decreased 3.3 percent after taking effect for the calendar change. Underlying revenue increased 1.4 percent. The company’s reported diluted earnings per share were 0.21 dollar, compared to 0.24 dollar in the prior year. Adjusted diluted earnings per share were 0.43 dollars, while on a constant currency basis, adjusted earnings per share were 0.44 dollar, compared to 0.26 dollar in the prior year.
“We had a strong quarter, highlighted by second-quarter revenue and earnings that surpassed expectations and reflected progress toward our holistic, enterprise-wide strategic transformation, the Wolverine Way Forward," said Blake W. Krueger, Wolverine Worldwide's Chairman, CEO and President in a statement, adding, “We believe that the Wolverine Way Forward will put us in the best position to win in the ‘new normal’ fast-changing global consumer retail environment."
Highlights of the Q2 financial results
Reported gross margin for the quarter was 37.9 percent, compared to 38.8 percent in the prior year, while adjusted gross margin on a constant currency basis was 39.1 percent, up 60 basis points versus the prior year, and includes a negative 210 basis points impact of store closures.
Reported operating margin was 4.9 percent, compared to 7.2 percent in the prior year and adjusted operating margin on a constant currency basis was 11 percent, up 380 basis points versus the prior year and excludes 3 million dollars of incremental inventory markdowns related to the accelerated store closings.
Under the previously-announced store restructuring plan, the company said, it has closed 180 stores since the beginning of 2017 including 76 closures during the second quarter of fiscal 2017. The company expects an additional 33 store closings before the end of fiscal 2017, leaving a remaining retail store fleet of approximately 80 stores.
Wolverine Worldwide updates outlook
The company added that following a strong second quarter, coupled with some improving trends in the business, have resulted in the improvement in the company's full-year outlook. Reported revenue is now expected in the range of 2.320 billion dollars to 2.370 billion dollars, which includes a 40 million dollars reduction in revenue from the conversion of the Stride Rite business to a license model. This is a reported decline of approximately 7 percent to 5 percent, but underlying revenue is now expected to increase and be within the range of flat to growth of 2 percent, reflecting approximately 175 million dollars impact from retail store closures, the Stride Rite change noted above and currency.
Reported operating margin is forecasted in the range of 5.2 percent to 5.8 percent and adjusted operating margin in the range of 10.4 percent to 10.9 percent, resulting from operational excellence initiatives focused on supply chain optimization, omnichannel transformation, and operational efficiencies. Fiscal 2016 adjusted operating margin was 8.5 percent.
Reported diluted earnings per share are expected to be in the range of 0.82 dollar to 0.92 dollar compared to 0.89 dollar in fiscal 2016 and adjusted diluted earnings per share are now expected in the range of 1.55 dollars to 1.65 dollars compared to 1.36 dollars in fiscal 2016 adjusted on the same basis. On a constant currency basis, adjusted earnings per share are expected to be in the range of 1.62 dollars to 1.72 dollars.