Factors Likely to Influence Wolverine's (WWW) Q2 Earnings

Wolverine World Wide, Inc. WWW is scheduled to report second-quarter 2020 numbers on Aug 5, before the opening bell. The Zacks Consensus Estimate for second quarter is stably pegged at a loss of 12 cents per share for the past 30 days. However, the company had earned  52 cents per share in the year-ago quarter. The consensus mark for quarterly revenues is pinned at $327.1 million, which indicates a decline of over 42% from the year-ago quarter’s tally.

However, the Rockford, MI-based company has a trailing four-quarter average earnings surprise of 16.9%.

Key Factors

Wolverine has been witnessing soft margins for a while now. Moreover, we expect Wolverine’s second-quarter results might have been hurt by retail store closures at some point of time owing to the COVID-19 pandemic. In its Jun 3 release regarding updates on second-quarter business trends, management highlighted that total global revenue declined less than 50% year over year for the first nine weeks of second-quarter 2020, with global store closures during April and May. It stated that COVID-19 has strongly limited its worldwide wholesale business. Furthermore, the Zacks Consensus Estimate for quarterly revenue is pegged at $203 million for the Michigan Group segment and $136 million for the Boston Group. These figures represent year-over-year declines of 36.2% and 41%, respectively.

Wolverine World Wide, Inc. Price and EPS Surprise

Wolverine World Wide, Inc. Price and EPS Surprise

Wolverine World Wide, Inc. price-eps-surprise | Wolverine World Wide, Inc. Quote

However, Wolverine’s owned e-commerce business has provided some cushion.  The company’s June release highlighted that the e-commerce business increased more than 90% year over year, generating more than 40% of the company’s overall revenues through the first nine weeks of the second quarter. This was driven by sturdy growth of performance brands Merrell and Saucony, as well as work brands Wolverine and Cat Footwear. Moreover, online sell-through of its U.S. wholesale customers improved double digits during the nine-week period. Also, at-once order demand where stores opened remained high.

What Our Zacks Model Says

Our proven model predicts an earnings beat for Wolverine this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Wolverine carries a Zacks Rank #3 and an Earnings ESP of +18.61%.

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

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