Wolverine World Wide Inc
. (
WWW
), one of the leading designers, manufacturers and marketers of
branded footwear and apparel, recently posted soft fourth-quarter
2011 results.
Decline in margins took a toll on the company's earnings as
Wolverine reported quarterly earnings of 47 cents a share, down
9.6% from the prior-year quarters' earnings of 52 cents a share.
However, the earnings exceeded the Zacks Consensus Estimate by
couple of cents.
Wolverine, the seller of products under Harley-Davidson
Footwear, Hush Puppies, Merrell and other brands, marked an
increase of 5.6% year over year in its top line to $406.5 million.
The company's multi-brand portfolio, multi-distribution channel
strategy and growth across all branded operating groups led to the
increase.
However, the reported revenue lagged behind the Zacks Consensus
Estimate of $412 million.
Coming to the operating groups, revenues increased 4.5% year
over year to $141.1 million for Outdoor, 4.6% to $158.4 million for
Heritage, and 13.4% to $57.3 million for Lifestyle. Other
business units, which comprise Wolverine retail and leathers,
posted a revenue growth of 23.6% to reach $5 million.
Gross profit increased 5.2% to $150.2 million during the
quarter, reflecting growth in its top line. However, gross margin
contracted 20 basis points to 36.9% compared with the prior-year
quarter, reflecting a rise of 20 basis points in the cost of goods
sold as a percentage of sales.
Operating profit inched down 0.7% to $30.9 million in the
quarter, while operating margin contracted 50 basis points,
reflecting an increase of 30 basis points in operating expenses as
a percentage of sales.
Rockford, Michigan-based Wolverine enjoyed increased momentum in
fiscal 2011, which we expect to continue into fiscal 2012.
Moreover, we believe that the company remains well positioned to
increase its market share on the strength of its brand portfolio.
The Merrell brand has been the key growth driver in the past
decade, and we expect it to catalyze future growth.
Other Financial Aspects
Wolverine ended fourth-quarter 2011 with cash and cash
equivalents of $140 million and shareholders' equity of $575.2
million with no long-term debt. The company repurchased
approximately 1.8 million shares in fiscal 2011 for $65.3 million
with an average price of $35.49 per share. The company has
approximately $89 million shares remaining under its prevailing
share repurchase authorization.
Management Guided
The company now expects total revenue in the range of $ $1,485
million to $1,525 million for fiscal 2012, reflecting a
year-over-year growth of 5.4% to 8.2%.
Moreover, Wolverine expects revenues to remain flat in the first
quarter of fiscal 2012, while the second quarter revenue is
expected to mark a modest growth compared with the prior-year
quarter.
Further, the company forecasted a modest increase in gross
margin for fiscal 2012 on the back of favorable product mix and
planned increases in selling price. On the cost front, the company
expects to deleverage SG&A modestly in fiscal 2012.
The company aims to increase the share of its consumer direct
business to 15% of total revenue through opening new stores. In
fiscal 2012, Wolverine expects to open approximately 12 to 15 new
locations.
Fiscal 2012 earnings are now projected between $2.60 and $2.70
per share, representing a growth of 4.8% to 8.9% from the prior
year. The analysts considered by Zacks expect the company to post
earnings of $2.66 per share for fiscal 2012.
Currently, we are maintaining a long-term Neutral rating on the
stock. Moreover, Wolverine, which competes with
Timberland Co
. (
TBL
),
Deckers Outdoor Corporation
(
DECK
) and
Skechers USA Inc
. (
SKX
), has a Zacks #4 Rank that translates into a short-term Sell
recommendation.
DECKERS OUTDOOR (
DECK
): Free Stock Analysis Report
SKECHERS USA-A (
SKX
): Free Stock Analysis Report
WOLVERINE WORLD (
WWW
): Free Stock Analysis Report
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