Rockford, Michigan based footwear company Wolverine Worldwide (WWW) reported second-quarter financial results that beat Wall Street expectations on both the top- and bottom-lines.
For the three months ended June 20, consolidated revenue at the maker of Hush Puppies, Merrell and Sperry increased by 2.7% to a record $630 million. On a constant currency basis, the increase was 4.9%. Adjusting for the impact of foreign exchange, retail store closures and termination of the Patagonia license agreement, adjusted revenue grew 6.9% versus the prior year.
Planned retail store closures and termination of the Patagonia license agreement reduced revenue $11.6 million versus the prior year.
Gross margin was 39.1%, a decrease of 100 basis points versus the prior year’s gross margin, in line with Company expectations.
Although adjusted net income tumbled to $25.2 million from $65.3 million in the prior year period, it was well ahead of expectations for the quarter. Diluted earnings per share dropped from $.27 to $.24, but beat analyst expectations of $.21 per share.
“The strong performance in the quarter was highlighted by mid-single digit revenue growth in our U.S. wholesale business, double-digit growth in EMEA and growth exceeding 50% in the Asia Pacific region, each on a constant currency basis,” commented Mike Stornant, Senior Vice President and Chief Financial Officer. “Revenue for the quarter also benefited from higher than anticipated international shipments that were initially expected to deliver in Q3 2015. The Company’s global diversity and reliable fiscal discipline helped deliver another very good financial performance in Q2 2015.”
Over the past year, Wolverine has initiated several key strategic initiatives to accelerate growth and improve profitability. This includes plan to close a total of about 120 stores by the end of fiscal 2015, followed by an additional 55 under-performing doors over the next five years as their leases expire. Also, as part of the continuing evaluation of the performance of brands within its portfolio, the company has decided to wind-down operations for its smallest brand, Cushe, and redeploy talent and resources to other higher-value opportunities.
“The global demand for our family of brands remains strong and I am pleased to report that our top-line growth accelerated in the quarter and exceeded our internal expectations,” commented Blake W. Krueger, Wolverine Worldwide’s Chairman, Chief Executive Officer and President. “As we move into the second half of the year, we remain intensely focused on our consumers and further investing in our key strategic initiatives – specifically our global brand-building efforts, omnichannel transformation and the continued expansion of our portfolio’s international footprint.”