Wolverine Worldwide, the maker of Hush Puppies, Sperry, Saucony, Keds and more, reported “softer-than-expected” revenue for third quarter 2015 on Tuesday, however, the company said its earnings were in line with guidance.
Total revenue was $678.9 million, down 4.5% from same period the year prior. Adjusted diluted earnings per share were $0.48, in line with guidance, compared to an adjusted $0.63 per share in the prior year. Reported diluted earnings per share were $0.44, compared to $0.57 per share in the prior year.
Adjusted revenue grew 0.7% after adjusting for the impact of foreign exchange, retail store closures and termination of the Patagonia license agreement.
Gross margin was 40 percent better than projected and flat with the prior year’s gross margin despite challenging foreign exchange headwinds. Adjusted operating margin of 11.9% was better than expected but 190 basis points lower than the third quarter 2015, due primarily to planned incremental brand investment and higher pension expense. Reported operating margin was 11.2%.
Wolverine’s marketing spend was 26 percent higher compared to the prior year, due to its incremental demand-creation investment strategy. Inventories were $495.5 million, 6.3% more than third quarter 2014.
In a statement, Wolverine Worldwide Senior Vice President and Chief Financial Officer Mike Stornant said, “We are pleased to deliver a strong earnings performance in light of softer-than-expected revenue for the quarter.” He continued, “The company also delivered better-than-expected gross margin in the quarter, despite very challenging foreign currency headwinds in many key international markets. Our operating margin was also well ahead of our expectation, benefiting from continued discipline over discretionary spending without compromising our demand creation investments, and we continued to generate positive cash flow.”
The company updated its fiscal 2015 guidance to take into account current trends and conditions. After adjusting for the estimated impact of foreign exchange, retail store closures and the termination of the Patagonia license agreement, revenue growth is expected in the range of approximately 2.1% to 2.8% versus the prior year. Reported revenue is expected in the range of $2.69 billion to $2.71 billion, representing a decline in the range of approximately 2.6% to 1.8% versus the prior year.
Blake W. Krueger, Wolverine Worldwide chairman, chief executive officer and president, said, “Looking ahead, the Company remains focused on accelerating the growth of our brands around the world through product innovation and deepening our consumer connections through our demand creation investment strategy.”