Wolverine to divest Keds, leathers business; reveals layoffs
Wolverine Worldwide announced on Thursday plans to divest or license its Keds brand and leathers business, citing the pair as "low-profit contributors," as the firm looks to streamline and "prioritize growth brands."
In relation to the divesting, the Rockford, Michigan-based company said it had started a workforce reduction earlier this week, which it expects to result in approximately $30 million in savings in 2023. I failed to specify how many workers would be laid off.
Including the impact from the workforce reduction noted above, Wolverine said it expects to realize total savings of approximately $45 million in 2023, "from organizational synergies and other indirect cost areas."
In addition, the global footwear and apparel company plans to build on the supply chain cost initiatives started earlier this year and expects to realize approximately $20 million of savings in 2023.
“We believe the recent changes to our group reporting structure and the announcement of strategic alternatives for Keds and Wolverine leathers, as part of our regular assessment of the portfolio, will put the business on an accelerated path to improved profitability and restore Wolverine as a best-in-class brand house,” said Brendan Hoffman, Wolverine Worldwide’s president and chief executive officer.
“In this rapidly evolving retail environment, agility is more important than ever. As such, I firmly believe that portfolio simplification and prioritization are essential to achieving our goals."
In its most recent trading update last month, Wolverine said sales for the third quarter rose close to 9%, on the back of surging growth in U.S. group's international market.
Coinciding with the earnings update, Wolverine said it is reorganizing its brand group structure into 'Active' (Merrell, Saucony, Sweaty Betty, and Chaco footwear); 'Work' (Wolverine, Cat, Bates, Harley-Davidson, HyTest); and 'Lifestyle' groups (Sperry, Keds, and Hush Puppies).
The company said at the time it hopes to better leverage common product and consumer categories and align with the company's view of its global portfolio.
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