WOLVERINE WORLD WIDE INC /DE/ Q3 FY2024 earnings call

Chris Hufnagel highlighted that the third quarter delivered better-than-expected revenue and earnings, with Merrell returning to growth, Saucony and Sweaty Betty approximately flat after adjustments. The company drove record gross margin, more than doubled earnings from the prior year, and is raising top and bottom line guidance for the year. Key brand performances: Merrell modernized its product offering, accelerated share gains in the U.S. hiking category, and plans to launch innovative franchises in 2025; Saucony overhauled its strategy, saw positive consumer response, and expects growth in 2025; Sweaty Betty had year-over-year increases in e-commerce and wholesale, launched new collections; Wolverine saw encouraging trends but has more work to do. Strategic initiatives include the global brand building model, establishment of The Den creative studio, key city strategies in Tokyo and London, enhancement of integrated business planning, opening of an innovation hub in Boston, and hiring new critical talent.

Merrell revenue grew 1.4% in the quarter, with growth in both DTC and wholesale. Saucony declined 10% in the quarter, a meaningfully lower rate of decline than expected due to continued demand momentum, particularly in e-commerce and U.S. wholesale. Sweaty Betty grew 3% in the quarter, in line with expectations. The work group declined 11% in the quarter, which fell short of original expectations due to compounding supply chain disruptions.

Wolverine Worldwide is raising its full-year 2024 revenue guidance to $1.73 billion to $1.745 billion, with active group demand and favorable foreign currency driving the increase. Adjusted gross margin expected to be ~44.5%, adjusted operating margin ~7.2%, adjusted diluted earnings per share ~$0.80 to $0.90. Fourth quarter revenue expected to be $475 million to $490 million, with gross margin ~44% and adjusted operating margin ~9%. Net debt expected to be $545 million at year-end, improved from prior year.

Potential risks include supply chain disruptions (as seen in the work group's third quarter performance), macroeconomic environment impacts on consumer spending, potential new tariffs affecting international sales, and the need to continue managing inventory and costs effectively.

Q: Laurent Vasilescu asked about the reception of key retail accounts for Merrell and Saucony.

A: Chris Hufnagel stated they reset distribution, have new leadership, and are focusing on relevant products and partners.

Q: Ashley Owens inquired about work group growth in Q4.

A: Chris Hufnagel said delays in 3Q will be gained back, easier comparison, and pulling ahead from Q1 2025 contribute.

Q: Mitch Kummetz asked about tariffs and Saucony distribution.

A: Chris Hufnagel discussed tariff contemplation and Saucony's distribution expansion efforts.

Q: Jim Duffy asked about Saucony's e-commerce growth.

A: Chris Hufnagel said Saucony had mid-single-digit e-commerce growth, constrained by product availability.

Q: Sam Poser asked about international units and Susie Kuhn.

A: Chris Hufnagel said international units north of 50%, and Susie Kuhn will accelerate growth.

Q: Anna Andreeva asked about collaborations and margin outlook.

A: Chris Hufnagel discussed more collaborations, and Taryn Miller explained margin outlook driven by incremental brand spending.

Q: Mauricio Serna asked about DTC growth and Merrell share gains.

A: Chris Hufnagel said DTC mid-single-digit growth, Merrell accelerated share gains with new products.