Rockford, MI—Wolverine World Wide, Inc. reported Tuesday an increase in its second quarter profit and sales, but also plans to close 140 stores as part of its new Strategic Realignment Plan.
The Plan, which includes store closures and some other initiatives, expects to record charges in the range of $30 million to $37 million, between now and the end of the 2015 fiscal year. About 60 stores will close by the end of the current fiscal year, with the rest closing by the end of 2015. The closures primarily consist of Stride Rite stores.
Wolverine said it aims to manage its retail fleet more efficiently, as well as consolidating store operations and field support teams. It also plans to initiate other organizational and infrastructure changes, it said. The plan should result in pretax benefits of $11 million annually, which will be used in part to boost growth in Wolverine’s wholesale operations.
“The realignment of the consumer-direct business is intended to optimize the fleet of retail locations, right-size the supporting infrastructure, address a fundamental shift in consumer shopping behavior and allow for greater focus on important omni-channel initiatives,” Wolverine stated.
Earnings Beat Estimates
As for its second quarter earnings, Wolverine posted a profit of $27.5 million from $17.9 million in the prior year. Earnings per share advanced to 27 cents from 18 cents. Adjusted earnings per share totaled 31 cents that beat analysts’ average estimate for 27 cents.
Net revenue increased to $613.5 million from $587.8 million in the prior year, topping analysts’ estimate of $608.50 million.
CEO Blake Krueger said, “We are extremely pleased to deliver a record quarter in what continues to be a volatile global retail environment, particularly in the U.S. All of our operating groups achieved a revenue increase in the quarter, which was spread across nearly every region of the world.”
Brands including Saucony, Keds, Caterpillar Footwear, Chaco and Wolverine brands posted very strong year-over-year results, with double-digit revenue gains in EMEA, Latin America and Asia-Pacific.
Gross margin narrowed to 40.1% from 41% primarily due to increased promotional activity to combat sluggish U.S. retail traffic in the company’s consumer-direct business and higher product costs.”
The company estimates pretax charges of $30 million to $37 million related to this plan, and expects to record these charges between now and the end of fiscal 2015.
Wolverine also revised its fully year forecast to consolidated revenue of approximately $2.775 billion, a 3% increase from prior year’s $2.69 billion.
In late April, the company expected revenues in the range of $2.775 to $2.85 billion.
Furthermore, Wolverine also reaffirmed its adjusted earnings per share in the range of $1.57 to $1.63 a share. On a reported basis, earnings per share are expected in the range of $1.32 to $1.38 a share and reflect the impact of the Strategic Realignment Plan.
Analysts have projected earnings at $1.61 a share this year and revenues of $2.79 billion.