Wolverine World Wide (NYSE:
) is scheduled to announce earnings on Tuesday, July 10, before
market open. Analysts are expecting the company to announce
second quarter adjusted earnings per share (
) of $0.44 on revenues of $314.5 million. The
median target price
from analysts surveyed is $45.50.
Wolverine has met or exceeded analyst estimates the last four
Founded in 1883, Wolverine World Wide manufactures, designs,
licenses, and distributes a wide variety of footwear and apparel
brands. The company's brands and licensing efforts include Hush
Puppies, Patagonia Footwear, CAT (NYSE:
) Footwear, Harley-Davidson (NYSE:
) footwear, and Merrell. Wolverine birthed Hush Puppies in 1958,
launched the brand in 1959, and went public in 1965 after
rebranding from "Wolverine Shoe and Tanning".
Wolverine picked up CAT Footwear in 1994, and purchased the
Merrell brand in 1997. The company acquired Harley-Davidson
footwear licensing in 1998. The 2000's encompassed a whirlwind of
licensing and acquisition activity including its purchase of
Sebago in 2003, its Patagonia Footwear license in 2006, and its
acquisitions of Chaco and UK-based Cushe in 2009. Company sales
hit $1 billion for the first time in 2005, according to
More recently, Wolverine made headlines in May after it
announced a definitive agreement with Blum Capital and Golden
Collective Brands (NYSE:
) for $21.75 per share on a purchase valued at $2 billion
including debt. Collective Brands reported a $35 million loss the
previous year and announced its intention to close 475 stores.
The deal is expected to close in Q4 2012.
Collective Brands' holdings include Keds, Sperry, Stride Rite,
Saucony, and Payless ShoeSource (Payless turned into Collective
Brands following its acquisition of Collective Licensing and
Stride Rite in 2007). A few days after the announcement, investor
against Collective Brands citing a deprivation of "ability to
participate in the company's long term prospects," according to
Bloomberg. The takeover represents the largest footwear
consolidation since VF Corp (NYSE:
) bought Timberland for $1.97 billion last year.
In the takeover, Wolverine is
slated to acquire
the Sperry, Saucony, Stride Rite, and Keds brands, with Blum
Capital and Golden Gate picking up the Payless brand as well as
Collective Brands' international licensing arm.
Shares of Wolverine have a price to earnings (P/E) ratio of
16.05 and a forward P/E of 12.92, compared to Steven Madden's
) P/E of 14.47 and forward P/E of 10.98; Deckers Outdoor's
) P/E of 9.40 and forward P/E of 8.28; and Crocs' (NASDAQ:
) P/E of 12.12 and forward P/E of 9.20. Of the four competitors
year-to-date, SHOO is down 2.41 percent, DECK is down over 41
percent, CROX is up 3.42 percent, and WWW is up almost 7
Wolverine shares have a short ratio of 3.4 and PEG of 1.41.
The company offers a $0.48 per share (1.30 %) dividend.
Sterne Agee lowered its fiscal year 2012 estimates on July 2
from $2.69 EPS on $1.46 billion to $2.59 EPS on $1.7 billion,
versus Wolverine's previous guidance of $2.70 to $2.80 EPS on
$1.46 to $1.50 billion, leading into the company's earnings.
Sterne Agee maintained its $36 price target and Underperform
rating, citing concerns on slower trends in key initiatives,
long-term viability of the company's PLG acquisition, and
increased competition in the sector. For second quarter adjusted
EPS, the ratings firm lowered its Q2 2012 guidance from $0.45 to
In the report, Sterne Agee stated, "We contend that WWW has
overcommitted to the category and has not paid enough attention
to the core business, which can present pressures going forward.
While some of the other brands such Hush Puppies and Chaco are
preforming well, they are simply not large enough to make up for
the slowing of Merrell."
Conversely, Jefferies stated in a July 5 report that it
expects Wolverine to be "relatively in line with expectations,"
modeling its second quarter EPS at $0.45 - a penny above the
Street's consensus. Jefferies stated in the report that the
company's previous guidance appropriately reflected Merrell's
Barefoot product line debut anniversary as well as macro and
European risk factors. Jefferies has a Buy rating and $49 price
target on the company.
In the report, Jefferies stated, "We view WWW as a relatively
defensive name that it appears poised to outperform in an
uncertain macro environment. The combination of a diverse
footwear portfolio and strong management provide earnings
stability at a time like this. The upside case comes from the
pending PLG (PSS, $21.45, NC) acquisition but also an easy winter
comparison along with a moderating product cost environment in
the second half."
D.A. Davidson maintained its Buy rating and lowered its price
target by a dollar from $50 to $49 on July 5, citing a bullish
outlook on Wolverine's growth and a favorable position on the
company's PLG acquisition.
In the report, D.A. Davidson stated, "With economic
uncertainty abound, we believe the growth and earnings accretion
provided by the PLG acquisition will look increasingly attractive
to investors. Furthermore, we believe initial PLG 2013 accretion
guidance of $0.25-$0.40 will prove conservative, providing a
valuable lever for either offsetting economic-related shortfalls
in the core business or upward earnings revisions."
) earnings miss shook up the footwear industry,
reporting Q4 2011
net income of $549 million or $1.17 per share versus $594 million
or $1.24 per share on June 28. Shares gapped significantly lower
the next trading day - bottoming around $85 - and then
rallying into the open
, sitting at $89.54 in intraday trading. Shares of Nike closed
Thursday at $92.20, down over 4 percent year-to-date.
Luxury retailers have also felt the pain of
slower-than-expected sales in the sector, with shares of Coach
) down almost 6 percent year to date and Vera Bradley (NASDAQ:
) down over 33 percent year to date. Atlantic Securities raised
its Coach rating to Overweight on Monday, however, and
Canaccord Genuity upgraded
fellow competitor Tiffany (NYSE:
) to Buy last week. With the weakness seen across the board in
various retail and cyclical companies, some traders may see these
pullbacks as a buying opportunity.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.