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Wolverine Q3 Revenue Surpasses Expectations, Updates Outlook

Wolverine Worldwide surpassed its own expectations for the third quarter of fiscal year 2017.

Reported revenue of $581.3 million, decreased 3.7% during the quarter, but adjusted revenue dropped 8 percent after taking into effect the quarterly calendar change.  Underlying revenue increased 1.1%.

Reported gross margin came in at 39.7% compared to 39.3% during the same time last year. Adjusted gross margin on a constant currency basis was 40.4%, compared to 39.1% during the same period last year. This shows the improvement of 130 basis points despite a 90 basis point negative mix impact from store closures.

Reported operating margin was 6.1% compared to 11.4% during the same period last year.

Reported diluted earnings per share (EPS) were $0.24 compared to $0.49 last year during the same period. Adjusted EPS were $0.43. And, on a constant currency basis, adjusted EPS were $0.45, remaining the same compared to last year.

“We are very pleased to continue our positive momentum and report third quarter revenue and earnings that surpassed expectations. This marks the third consecutive quarter of strong results for the Company,” said Blake W. Krueger, Wolverine Worldwide chairman, CEO and president. “We continue to make excellent progress on our enterprise wide strategic transformation, the Wolverine Way Forward, including the recently announced sale of our Department of Defense business.”

Krueger said that the company’s third quarter results are reflective of the progress the company continues to make, focusing on elevating its more powerful brands with consumers, delivering continuous product innovation.

Wolverine Way Forward Transformation Update

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The company sold off its Department of Defense contract business and certain associated assets. Wolverine World Wide also licensed the Stride Rite brand to Vida Shoes International, and sold off Sebago earlier in the quarter. It continues its store restructuring plan and closed 188 stores since the beginning of the year. The company anticipates another 27 store closings before the end of FY2017, leaving a lean store fleet of around 80 stores.

Updated Outlook

Wolverine Worldwide updates its Outlook by narrowing its revenue outlook to the upper end of its previous expected range. Now Wolverine World Wide expects revenue to be $2.34 billion to $2.370 billion. This would be a drop of around 6.2% to 5 percent. However, underlying revenue is expected to be within the range of flat growth of 1.5%, showing around $160 million revenue impact from retail store closures and the Stride Rite transition.

Reported operating margin in the range of 5 percent to 5.4% and adjusted operating margin in the range of 10.6% to 10.9% resulting from operational excellence initiatives focused on supply chain optimization, omichannel transformation and operation efficiencies.

Reported diluted EPS is expected in the range of $0.76 to $0.81, compared to $0.89 in FY2016. Meanwhile, adjusted diluted EPS are now anticipated to be around $1.60 to $1.65 compared to $1.36 in FY2016 adjusted on the same basis. On a constant currency basis, adjusted EPS in the range of $1.67 to $1.72.