Wolverine Posts Robust Q3 Earnings - Analyst Blog

By Zacks Equity Research,

Shutterstock photo

Wolverine World Wide Inc. ( WWW ) posted strong third-quarter 2013 results, driven by the continuous impressive performance of its newly acquired brands. Wolverine's quarterly earnings per share of $1.16 handily surpassed the Zacks Consensus Estimate of $1.05 and rose 61.1% year over year.

Including one-time items, the company reported earnings per share of $1.08 compared with 66 cents in the year-ago quarter.

Benefiting largely from the acquisition of Collective Brands' Performance + Lifestyle Group (PLG) group, Wolverine reported net sales of $716.7 million that more than doubled  on a year-over-year basis and came ahead of  the Zacks Consensus Estimate of $711 million. Moreover, on a pro-forma basis, revenues increased 9.0% in the quarter.

Wolverine acquired the PLG unit for $1.25 billion. The PLG unit sells footwear and related products, both wholesale and retail, for children and adults under popular brands including Stride Rite, Sperry Top-Sider, Saucony and Keds.

As regards the company's operating groups, revenues at its Lifestyle group came in at $295.8 million, a whopping rise from $38.0 million in the year-ago quarter. The Performance group's revenues rose 67.0% to $254.1 million, while Heritage group's revenues nudged up 0.8% to $144.6 million. Revenues derived from the company's other brands rose14.4% to $22.2 million in the quarter.

On account of top-line improvement, the company's gross profit rose more than twofold to $286.0 million, while gross margin expanded 70 basis points (bps) to 39.9%. The improvement in both these cases reflected an encouraging channel mix, partly offset by foreign exchange contract losses.

Operating profit came in at $86.3 million, rising 86.4% year over year. However, operating margin contracted 110 bps to 12.0%.  

Other Financial Aspects

Wolverine, which competes with Deckers Outdoor Corporation ( DECK ), ended the quarter with cash and cash equivalents of $147.8 million, net debt of $994.3 million and shareholders' equity of $768.0 million. Operating free cash flow came in at $22.8 million for the quarter.


This Zacks Rank #3 (Hold) company raised its earnings guidance based on robust year-to-date performance. Adjusted earnings per share are now expected to be in the range of $2.73-$2.83, up from its earlier projection of $2.60-$2.75, and reflecting year-over-year growth of 19.2% to 23.6%.

Revenues are expected to be in the range of $2.71-$2.73 billion, up 6.4% to 7.1% year over year on a pro-forma basis. For fiscal fourth-quarter 2013, the company anticipates revenues in the band of $750-$780 million, reflecting growth of 3.2% to 6%.

Other Stocks to Consider

Apart from Wolverine, other stocks in the consumer discretionary sector worth considering include Brown Shoe Co. Inc. ( BWS ) and Skechers USA Inc. ( SKX ). Both of these carry a Zacks Rank #1 (Strong Buy).

BROWN SHOE CO (BWS): Free Stock Analysis Report

DECKERS OUTDOOR (DECK): Free Stock Analysis Report

SKECHERS USA-A (SKX): Free Stock Analysis Report

WOLVERINE WORLD (WWW): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: BWS , DECK , PLG , SKX , WWW

More from Zacks.com




Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com