Wolverine World Wide Inc
) posted strong second-quarter 2013 results, owing to the robust
performance of its newly acquired brands. Wolverine's quarterly
earnings of 46 cents a share zoomed past the company's previous
guidance range of 31 cents to 35 cents and handily surpassed the
Zacks Consensus Estimate of 34 cents. Moreover, the quarterly
earnings jumped 12.2% year over year.
Including one-time items, the company reported earnings of 36
cents a share compared with 42 cents in the year-ago quarter.
Benefiting largely from the acquisition of Collective Brands'
Performance + Lifestyle Group (PLG) group, Wolverine, which
Deckers Outdoor Corporation
), reported net sales of $587.8 million. Net sales surged 88%
year over year but fell short of the Zacks Consensus Estimate of
$591 million. However, on a pro-forma basis, revenue increased
5.5% during the quarter.
Wolverine acquired 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.
Coming to the operating groups, revenue at its Lifestyle group
came in at $255.2 million, signifying a massive rise from $28.5
million in the year-ago quarter. Performance group's revenue
jumped 33.8% to $199.7 million, while Heritage group's revenue
declined 0.8% to $110.6 million. Revenue derived from the
company's other brands decreased 4.7% to $22.3 million during the
On account of the top-line improvement, the company's gross
profit more than doubled to $241.1 million, while gross margin
expanded 320 basis points to 41%, reflecting increased
contribution of high margin consumer direct operations.
Operating profit came in at $37 million, rising 62.3% year
over year. However, operating margin contracted 100 basis points
Other Financial Aspects
Wolverine ended the quarter with cash and cash equivalents of
$171 million and reduced its net debt by $159 million. Net debt
now stands at $1,014 million, while shareholder equity was $704.6
Guidance Remains Strong
This Zacks Rank #2 (Buy) company raised its earnings guidance.
Earnings per share are now expected to be in the range of $2.60 -
$2.75, up from its earlier guidance range of $2.50 - $2.65, and
reflecting year-over-year growth of 13.5% to 20.1%.
Revenue is expected in the range of $2.7 - $2.775 billion, up
6% to 8.9% year over year on a pro-forma basis.
Wolverine expects gross margin to improve moderately in 2013
due to the product mix shift toward high margin consumer direct
business and lower markdowns. However, operating margin is
projected to remain marginally low when compared with the prior
year. Capital expenditure is projected to be in the range of $40
million - $50 million.
Other Stocks to Consider
Besides Wolverine, other stocks in the consumer discretionary
sector worth considering include
Brown Shoe Co. Inc
Big 5 Sporting Goods Corp
), both carrying a Zacks Rank #1 (Strong Buy).
BIG 5 SPORTING (BGFV): Free Stock Analysis
BROWN SHOE CO (BWS): Free Stock Analysis
DECKERS OUTDOOR (DECK): Free Stock Analysis
WOLVERINE WORLD (WWW): Free Stock Analysis
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