Wolverine Worldwide focused on improving business liquidity and infrastructure in the first quarter as the coronavirus pandemic continues to force tough decisions for retailers and brands.
In a Nutshell: Cash preservation initiatives totaling $500 million were enacted in the first quarter at Wolverine as a part of its focus on crafting a sustainable business plan to survive the pandemic.
This should result in between $150 million and $200 million in operating cash flow in 2020, the company said.
Wolverine also reduced its inventory receipts by around $300 million and postponed another $25 million in capital expenditures until business returns.
On Monday, the company announced that Chris Hufnagel, Joelle Grunberg and Tom Kennedy were promoted to the executive leadership team and will report directly to CEO and president Blake Kreuger. Grunberg was named global president of Sperry, Hufnagel global president of Merrell and Kennedy was named global president of the Wolverine brand.
“During this unprecedented period of economic disruption, we are making important changes to our leadership team and organizational structure to make the company more nimble and better positioned to seize the opportunities that lie ahead,” Krueger said on Monday.
Sales: Revenue reached $439.3 million in the first quarter, down 16.1 percent compared to the previous year and lower than Wall Street’s $455.2 million estimate.
Owned e-commerce sales improved by 17.5 percent, led by double-digit growth at Sperry, Cat and Chaco. Gross margin fell by 0.7 percent, which Wolverine said was in line with expectations.
Some of the changes Kreuger mentioned include a new focus on the company’s online strategy and newness in order to capitalize on the “new normal.” As a result, the company said it expects combined online business in the U.S. to account for more than half of its revenue this year.
Earnings: Diluted earnings per share (EPS) were 16 percent compared to 43 cents in the first quarter of 2019, missing the 17 cents EPS Wall Street was expecting.
CEOs Take: Kreuger has reduced his salary by 50 percent as a cost-reduction measure in support of the many stores idled and employees furloughed as a consequence of the coronavirus pandemic.
The future of the company is strong, Kreuger said, as a result of these adjustments.
“Our supply chain and distribution centers continue to operate, enabling strong e-commerce growth and continued wholesale shipments,” Kreuger said. “We believe our agile business model, which includes our well-established global distribution network and fast-growing digital channels, is well-suited for the future consumer landscape.
“Many of our brands are resonating with consumers faced with shelter-in-place restrictions, and our e-commerce business has accelerated following the close of the first quarter,” he added.