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Wolverine CEO Says Spike in Hiking and Running Helped Tough Quarter

Wolverine Worldwide’s investment in digital and e-commerce has paid off during the economic downturn from the coronavirus pandemic, and executives believe there will be no turning back.

Nor do they think the public appetite for outdoor activities and and growing interest in athletic participation will revert when COVID-19 subsides. In a quarter that saw revenue decline 38.6 percent to $349.1 million and year-to-year earnings plunge from $40.2 million in 2019 to a net loss of $1.9 million for the three months through June 27, owned e-commerce revenue grew 96 versus the prior year.

Online investment

“We strategically invested in digital and e-commerce capabilities for several years, and quickly prioritized these channels as the best path to reach our consumers and drive profitable growth during the shutdown,” Blake Krueger, chairman, CEO and president of Wolverine Worldwide, said on a conference call this week with analysts. “These investments enabled our online business to sustain accelerated growth throughout the quarter, with a number of brands like Merrell, Saucony, Wolverine and Cat Footwear delivering well over 100 percent online growth. The relevance of our brands, product offerings and stories, combined with effective consumer acquisition efforts, drove an increase in organic traffic, while new consumers grew over 100 percent.”

“During the pandemic, we have increased digital marketing spend by more than 100 percent, fueling growth and new customer acquisition,” Krueger added. “And we expect to increase this investment by more than 60 percent for the full year.”

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Krueger said the total online channel, including its own e-commerce business and that of its wholesale partners, accounted for about two-thirds of revenue in the U.S. during the second quarter. He said this growth “delivered strong profit leverage,” including nearly 600 basis points of operating margin expansion.

Brands benefit

“During the pandemic, there has been a significant uptick in new runners, and Saucony is capturing many of these new consumers and building momentum with award-winning product innovation,” he said. “More people are getting outside and participating in outdoor activities, especially younger consumers. And Merrell is the market leader in the hiking category and provides a broad range of products to help consumers enjoy the outdoors.”

In addition, Krueger noted, people are tackling more do-it-yourself home projects, in addition to continuing to work in essential jobs, spurring demand in work product, a category that benefits its Wolverine and Cat Footwear brands.

“One of the things that has been surprising to us has been the quick spike in consumer trends, whether it’s to the outdoor or running,” he said. “Even in the running category, there’s been a tremendous influx, for example, of new consumers to the sport and subsequent surveys have shown that the vast majority of those new consumers are going to remain with the sport. So, we see some of those trends continuing on well past probably the lifeline of this particular pandemic.”

The CEO said e-commerce was the primary revenue and earnings driver across the portfolio in the quarter. grew approximately 140 percent, while nearly tripling new customer acquisition year-over-year.

“The brand effectively engaged consumers digitally, with significant increases in video views and social engagements driven by highly relevant stories and product celebrating the power and benefits of the outdoors,” Krueger said. “The combination of compelling new product in the hiking, trail running, outdoor and at-home casual categories and strong customer engagement helped generate robust online demand.”

Wolverine and Cat Footwear grew their e-commerce businesses even faster, he said, with’s top seller, the Shiftplus work boot, offering new Duraspring technology, delivering an athletic feel and a work-ready construction with long-lasting cushioning. The brand built on this new technology with the July launch of the innovative Hellcat work boot, powered by Ultraspring. was led by the Excavator Superlight collection in work and the trend-right Intruder collection in the lifestyle category. nearly tripled revenue in the quarter, mainly through new product innovation and significant new customer acquisition, according to Keuger. Product innovation also helped increase the brand’s average selling prices overall and expand gross margin by 500 basis points.

“Saucony has captured the running world’s attention and garnered numerous awards with the speed roll designed geometry and power run midsole cushioning technology, which delivers enhanced flexibility, fit, durability and energy return, while weighing one-third less than comparable styles,” he said. grew more than 30 percent in the quarter, driven primarily by new customer acquisition. Its new Plushwave product collection continued to gain traction and the brand executed its top-performing digital campaign in the period. In addition, Krueger noted that the ongoing partnership with singer John Legend continued to resonate with consumers, and the brand is planning a strong push behind the campaign this fall.

Sperry also plans to expand its iconic Saltwater boot offering into men’s and diversify the women’s assortment this fall.

Inventory status

Looking at the company’s inventory position, Mike Stornant, senior vice president and chief financial officer, said the company expects by the end of the year to be in down more than $40 million year-over-year.

“But we have the ability to surge–if our spring demand were to pick up over the next 60 days and we needed to bring in some more spring merchandise for December and January deliveries, we still have some time to do that,” Stornant said. “Many of our brands have seasonless inventory. It’s very good core product that sells year round and I think for some of our brands, like…Sperry’s boot business…did get pushed into Q4 a little bit, but other than that, our inventories are strong…and I think we’re in a very good position, certainly for Q3. So far in the quarter, we’ve been able to fulfill the unexpected demand at a very high level.”