Rockford, MI—Wolverine World Wide Inc. said today that its first quarter sales and income fell due to negative foreign exchange rates and economic uncertainty in its European markets.
However, the company, which owns Hush Puppies and Merrell footwear, expects to end its current fiscal year with record profits.
For the quarter ended March 24, Wolverine said net income declined about 13% to $31.18 million, or 64 cents a share, from $35.86 million, or 72 cents a share, a year ago.
Total revenue decreased 2.4% to $322.81 million from $330.87 million in the previous year. According to the company, “foreign exchange negatively impacted revenue by $2.2 million.” In addition, sales were “tempered by macroeconomic and financial uncertainty inEurope, which has contributed to a soft retail environment in that important market.”
While Wolverine’s earnings were better than the 55 cents a share analysts’ average expected, it missed on analysts’ sales projection of $332.49 million.
The company’s gross margin decreased to 41% from 41.6% a year ago, hurt by product cost increases, higher closeout sales and an unfavorable sales mix shift.
Plans Joint Venture to Expand into India
Although the company said it expects the continued economic challenges inEurope, it still raised its full year forecast by 10 cents to $2.70 and $2.80 a share. However, the company lowered its sales guidance to $1.46 billion to $1.5 billion, representing full year growth of 3.6% to 6.5%.
Analysts’ average estimate expects Wolverine to earn $2.65 a share on revenues of $1.51 billion for the year.
“While we expect 2012 to be another record year for the company, most of our growth is planned for the second half, as retailers remain cautious and are focused on keeping inventories lean,” said Blake W. Krueger, chairman/ceo. “The global strength of our brand portfolio remains one of our most significant competitive advantages. Our expectations for growth in many international markets will help balance the current uneven pace in the United States and the recessionary environment in Europe.”
In other news, Wolverine announced the formation of a joint venture with Tata International to market footwear and apparel inIndia. The new joint venture will initially be responsible for the wholesale distribution of Wolverine’s Merrell and Caterpillar footwear brands. Wolverine Worldwide and Tata International will each hold a 50% stake in this new joint venture.