Wolverine Worldwide revenues drop 16% on impact of Covid-19
Wolverine World Wide, Inc. (Wolverine Worldwide), the owner of Merrell, Sperry and Hush Puppies, announced a 16.1% decline in its first-quarter revenues on Wednesday. However, the Rockford, Michigan-based company insisted that it is well positioned to “emerge even stronger” from the ongoing Covid-19 crisis.
For the first quarter ended March 28, 2020, Wolverine reported total revenue of $439.3 million, compared to $523.4 million in the prior-year period. On a constant currency basis, the company’s revenue decreased 15.6% year over year.
Although the coronavirus pandemic has had a noticeable effect on Wolverine’s sales, the company was eager to point out that it saw solid revenue growth in its owned e-commerce channels, where sales increased 17.5% in the quarter, reflecting a wider Covid-19 consumer trend, as more shoppers head online to buy items they would usually have purchased in stores.
Wolverine’s Michigan group, which includes the Bates, Cat footwear, Chaco, Harley-Davidson footwear, Hush Puppies, HyTest and Merrell brands, as well as its namesake Wolverine brand, saw its quarterly sales fall 18.1% year over year, from $302.7 million to $247.8 million.
First quarter revenue at the Boston group, whose brands include Keds, Saucony and Sperry, decreased to $182.1 million, down 11.1% from $204.8 million in the same period in the previous year.
Wolverine’s quarterly earnings totaled $13.0 million, or $0.16 per diluted share, down from $40.5 million, or $0.43 per diluted share, in the prior-year period.
“Following record financial results in the fourth quarter of 2019, the Company delivered strong Q1 earnings results, despite challenging conditions caused by the Covid-19 pandemic late in the quarter,” commented Wolverine Worldwide chairman, CEO and president Blake Krueger in a release.
“Many of our brands are resonating with consumers faced with shelter-in-place restrictions, and our e-commerce business has accelerated following the close of the first quarter. We believe the company is strong, well positioned to navigate the current challenges, and will emerge even stronger,” he added.
The company highlighted a range of initiatives it is implementing to deal with the economic disruption being caused by the Covid-19 pandemic, including the reduction of planned inventory receipts by around $300 million and the postponement of $25 million of capital expenditures, as well as the drawing down of the remainder of its revolving credit line.
Wolverine has also reduced planned operating expenses by an estimated $100 million for the remainder of 2020, through furloughs, executive salary cuts and organizational changes.
Thanks to these measures, Wolverine hopes to generate $150 million to $200 million of operating cash flow in 2020.
Organizational changes at the company have included the departure of Michigan group president Todd Spaletto, and the promotion of three brand presidents to Wolverine Worldwide’s executive leadership team, as well as the expansion of their responsibilities.
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