Wolverine Swings into Q4 Loss on Costs, But Sales Soar

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Singer Taylor Swift is the new brand partner for Keds, one of Wolverine's recent acquisitions.

Singer Taylor Swift is the new brand partner for Keds, one of Wolverine’s recent acquisitions.

Rockford, MI—While Wolverine World Wide Inc. reported Tuesday that it swung into a fourth quarter loss due to costs of its purchase of Collective Brands’ Performance + Lifestyle brands, the footwear company also posted strong sales—and forecast bigger ones ahead.

For the quarter ended Dec. 29, Wolverine posted a net loss of $3.72 million, or 8 cents a share, compared to a profit of $23.01 million, or 47 cents a share, a year ago. The results included one-time transaction and integration costs associated with its buy of $24.61 million.

Excluding those expenses, earnings per share were 48 cents a share. That was well head of analysts’ average estimate for earnings of 17 cents a share. Analysts’ estimates typically exclude special items.

Net revenue, on the other hand, jumped 60% to $652.25 million helped by strong sales of its four new brands that added some $241 million to the top line.

‘Most Transformative Year’

Noting that the integration of Saucony, Keds, Stride-Rite and Sperry Top-Sider in Wolverine had “gone smoother than we hoped for,” Blake Krueger, chief executive, said the addition of the new brands nearly doubles the size of the company. Added Krueger: “This has been the most transformative year in the company’s 134-year history.”

Expenses tied to the integrating new brands in the company should be completed by end of fiscal 2013, noted the company which now has 16 brands under its umbrella.

“We went into this transaction thinking this would be a good cultural fit, and frankly the cultural fit has been great,” Krueger told analysts on a conference call.

Wolverine announced a new operating structure which organizes its brands around shared consumers, distribution channels and retail partners.

International growth is being stepped up by adding the new brands into Wolverine’s longtime international distribution network, resulting in eight contracts for the new brands.

The company expects continued sales increases in the United States, Latin America and Asia-Pacific in its fiscal 2013 while the European market will continue to be challenging.

As a result, Wolverine forecast adjusted earnings in the range of $2.50 to $2.65 a share, representing a 9.2% to 15.7% increase from the previous year. Full year sales are expected to be in the range of $2.7 billion to $2.8 billion, up 64.5% to 70.6% from fiscal 2012 revenue of $1.641 billion.

Analysts’ consensus expects 2013 earnings of $2.86 a share on sales of $2.72 billion.