An athletic shoe from Wolverine's Merrell brand.

Wolverine World Wide Inc., impacted by COVID-19 and noncash trade name impairment, lost money in the fourth quarter amid a sales decline, though the footwear giant said the outcome beat its expectations and that e-commerce is continuing to accelerate.

The loss was $171.2 million in the quarter ended Jan. 2, including the impact of a $222.2 million impairment charge. That compared to a $500,000 loss in the year-ago period.

Reported diluted loss per share was $2.10, including the impairment charge of $2.07 per share, compared to a loss per share of 1 cent in the prior year.

Adjusted diluted earnings per share were 21 cents, and, on a constant currency basis, were 22 cents, compared to 59 cents in the prior year.

With performances mixed across Wolverine‘s broad portfolio of brands, revenues fell 16.1 percent to $509.6 million compared to $607.4 million in the year-ago period. On a constant currency basis, revenue was down 16.4 percent versus the prior year.

Owned e-commerce reported revenue grew 31.7 percent last quarter versus the prior year, and 50 percent for all of 2020, and so far in 2021 has seen more than 60 percent growth.

“The company delivered better-than-expected results for the fourth quarter and is poised to drive an accelerated recovery over the next 12 to 18 months,” said Blake W. Krueger, Wolverine Worldwide’s chairman and chief executive officer.

“During a year of unprecedented challenges, we took action focused on the rapidly changing consumer landscape,” said Krueger. “Our owned e-commerce revenue grew 50 percent in 2020, and we have planned further investment in this area to enable growth of 40 percent in 2021, significantly outpacing broader industry expectations. Our balance sheet is healthy, and our brands are well positioned in winning product categories with strong momentum. Merrell, Saucony, Sperry and Wolverine all plan to launch compelling new products behind some of their biggest franchises, and we anticipate meaningful growth for the company in 2021, resulting in revenue approaching 2019 levels for the year.”

In a conference call Thursday, Krueger said last year the company invested in a new leadership, product design and innovation, digital product development tools, consumer insights, and digital marketing capabilities, “all aimed at bringing to market a continuous flow of powerful product marketing stories.…This all sets the stage for our brands, led by Saucony, Merrell, Sperry and Wolverine to launch innovations related to their biggest product franchises in 2021, supported by compelling digital marketing content. We reoriented our brands around a direct-to-consumer first mind-set and go-to-market operating model, while prioritizing our digital platforms globally.”

Last quarter, Saucony saw revenue gains, while Merrell, Sperry and the Wolverine Michigan and Wolverine Boston Groups saw declines.

“Looking to 2021, Saucony plans to launch new products across many of its biggest franchises, including the Guide and Ride franchises, along with expansions of the Endorphin’s series. And that’s just in the first half of the year,” said Krueger.

“We expect Merrill to have a strong year and build on its momentum with several significant introductions behind its biggest franchises, beginning with the Moab app collection, the number-one hiking franchise in the market,” and other Moab introductions for lighter, faster and more athletic styles.

“Merrell also plans to capitalize on the easy on-off trend with compelling new color ways patterns and materials in the Jungle Moc capped off with the launch of the new Jungle Moc Explore in Q3. The fast-growing Hydro Moc and Hut Moc styles are expected to further bolster the brand strength and the slip-on category,” Kruger said.

“We are investing in digital leadership, shifting the majority of our marketing investments to digital, developing enhanced content and optimizing our digital user experiences to increase conversion, including a focus on mobile, through the launch of mobile apps for our brands, beginning with Merrell later this spring,” said Brendan Hoffman, president, during the call. “All of this positions us well to achieve our aggressive target of $500 million of digital revenue in 2021. The growing scale of our own direct-to-consumer business, coupled with the D-to-C channels controlled by our third-party international distributor partners, accounted for roughly one-third of our revenue in 2020 and is anticipated to approach 40 percent in 2021.”

Cash flow from operating activities in the quarter was $173.6 million, compared to $206.6 million in the prior year. Cash on hand at the end of the quarter was $347.4 million, compared to $180.6 million in the prior.

For all of 2020, revenues reached $1.79 billion, down 21.2 percent versus the prior year on a reported and constant currency basis. Owned e-commerce reported revenue grew 49.9 percent versus 2019.

Reported diluted loss per share was $1.70, including the impact of the impairment charge of $2.07 per share, compared to EPS of $1.44 in the prior year. Adjusted diluted EPS were 93 cents, and, on a constant currency basis, were 95 cents, compared to $2.25 in the prior year.

“Our team executed on key profit and liquidity priorities that were identified at the onset of the pandemic, resulting in annual operating cash flow of $309 million and $1.1 billion of total liquidity at yearend,” said Mike Stornant, senior vice president and chief financial officer. In 2019, operating cash flow was $222.6 million.

“We are now able to increase our investment behind several key growth priorities supported by good visibility to robust demand and an e-commerce platform that continues to outperform. The company is in an enviable position to drive profitable and accelerated growth in 2021,” said Stornant.

For 2021, the company expects revenues in the range of between $2.19 billion and $2.25 billion, representing growth of 22 to 26 percent from 2020. If the company meets the high side of its forecast, it would be close to its 2019 volume level.

In its statement, Wolverine said it’s focused on delivering its “aspirational target of $500 million in owned e-commerce revenue, more than double 2019 owned e-commerce revenue.”

Reported diluted EPS is expected to be in the range of $1.75 to $1.90, and adjusted diluted EPS is expected to be in the range of $1.90 to $2.05.

The projections assume “no meaningful deterioration of current market conditions related to the COVID-19 pandemic during the remainder of 2021,” the company said.

Wolverine has a diverse portfolio of  brands including Merrell, Sperry, Hush Puppies, Saucony, Wolverine, Keds, Stride Rite, Chaco, Bates and Hytest. Wolverine Worldwide is also the global footwear licensee of the Cat and Harley-Davidson brands.

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