Wolverine Worldwide, the owner of Sperry, Cat Footwear, Hush Puppies and more, exceeded expectations for Q2 and raised its guidance on Wednesday.
The company’s revenues increased 2.6% to $598.8 million during the second quarter. Due to a strong second quarter and improving business trends, revenue is now expected in the range of $2.32 billion to $2.37 billion, including a $40 million reduction in revenue from the conversion of Stride Rite business to a license model.
“We had a strong quarter, highlighted by second-quarter revenue and earnings that surpassed expectations and reflected progress toward our holistic, enterprise-wide strategic transformation, the Wolverine Way Forward,” said Blake W. Krueger, Wolverine Worldwide chairman, CEO and president.
Way Forward Update
Wolverine Worldwide closed 180 stores since the beginning of the year, including 76 closures during the second quarter alone. The company expects 33 more store closures before the end of fiscal year 2017, leaving around 80 stores. Due to store closures, Wolverine Worldwide incurred around $5.3 million in operating losses during the quarter.
Starting July 2, the company entered into an agreement to license Stride Rite brand to Vida Shoes International. Also, starting July 31, the company entered into an agreement to sell the intellectual property and certain assets related to Sebago for $14.3 million. The agreement allows the company to sell-off its remaining inventory through the end of the fiscal year.
Outlook
Due to a strong second quarter and improving business trends, the company has updated its outlook. Reported revenue is now expected in the range of $2.32 billion to $2.37 billion, including a $40 million reduction in revenue from the conversion of Stride Rite business to a license model.
Reported operating margin is anticipated in the range of 5.2% to 5.8% and adjusted operating margin around 10.4% to 10.9%, due to operational initiatives focusing on supply chain optimization, omnichannel transformation and operation efficiencies. Last year’s fiscal operating margin was 8.5%.
Reported diluted earnings per share are not anticipated to be around $0.82 to $0.92, compared to $0.89 the same period in 2016. Adjusted diluted earnings per share are now expected to be around $1.55 to $1.65, compared to $1.36 during fiscal year 2016. On a constant currency basis, adjusted earnings per share are expected between $1.62 to $1.72.