Why Wolverine World Wide Stock Is Tumbling Today

Wolverine World Wide, Inc. WWW reported second-quarter revenues of $589.10 million, beating the analyst consensus of $579.97 million. Revenues declined 17.4% year over year.

The footwear, apparel, and accessories firm reported Q2 adjusted EPS of $0.19 was in line with the street view.

Sluggishness in international business (revenue down 6.7% to $260.9 million) and lower margins amid a challenging trading environment weighed revenue growth Y/Y.

Gross margin slumped 430 basis points to 38.7%, reflecting the sale of higher-cost inventory due to transitory supply chain costs from 2022, the acceleration of end-of-life inventory liquidation, and increased promotions.

The operating margin fell sharply to 7.8% from 23.5% in the year-ago period.

Inventory at the end of the quarter was $647.9 million. 

Wolverine Worldwide exited Q2 with cash and equivalents of $176.5 million. Net Debt at the end of the quarter was $930 million, and liquidity was approximately $370 million. 

Appoints New CEO: Wolverine Worldwide has appointed its President Christopher E. Hufnagel as President, Chief Executive Officer, and a member of the Board of Directors, effective immediately. 

Hufnagel succeeds Brendan L. Hoffman, who is no longer with the company. The company has terminated the employment of Hoffman as its Chief Executive Officer without cause.

"Our second half outlook, as reflected in our updated annual guidance, is disappointing but we are confident that the work we are undertaking will drive significant profit improvement in 2024 and quickly set a strong growth foundation for the Company," said Hufnagel.

FY23 Outlook Slashed: Wolverine Worldwide cuts FY23 revenue from ongoing business outlook from $2.53 billion-$2.58 billion to $2.26 billion-$2.28 billion, against the consensus of $2.51 billion. 

The new revenue guidance represents a decline of approximately 10.7%-10.0% versus the prior year.

Wolverine Worldwide cuts FY23 Adjusted EPS outlook from $1.40-$1.60 to $0.45-$0.55, against the consensus of $1.42.

"The trading environment is challenging, especially in global wholesale channels where order demand has slowed as retailers manage their businesses more cautiously," said CFO Mike Stornant.

Price Action: WWW shares are trading lower by 20.68% at $9.36 premarket on the last check Thursday.