Wolverine World Wide’s Earnings Call: Growth Amid Caution

Wolverine World Wide ((WWW)) has held its Q1 earnings call. Read on for the main highlights of the call.

Wolverine World Wide’s recent earnings call painted a picture of robust growth tempered by caution. The company reported strong revenue and earnings growth, driven by key brands Saucony and Merrell, alongside record gross margins. However, challenges such as declining revenues in the Work Group and Sweaty Betty, coupled with uncertainties surrounding tariffs, have led to a cautious outlook. The withdrawal of full-year guidance further underscores the need for prudence despite a strong start to the year.

Revenue and Earnings Growth

Wolverine Worldwide reported impressive revenue growth, with over 5% on an ongoing basis and nearly 7% on a constant currency basis in the first quarter. Earnings saw a significant increase, more than tripling compared to the previous year, showcasing the company’s strong financial performance.

Record Q1 Gross Margin

The company achieved a record Q1 gross margin, marking the fourth time in the last five quarters that Wolverine Worldwide has posted record gross margins. This achievement highlights the company’s effective cost management and pricing strategies.

Saucony Brand Performance

Saucony delivered remarkable performance with a 30% year-over-year revenue growth in Q1. The brand saw strong double-digit growth in North America and more than doubled its business in the Asia-Pacific region. Additionally, Saucony’s gross margin improved by nearly 400 basis points.

Merrell Brand Performance

Merrell also showed strong growth, with a 13% increase in revenue compared to Q1 last year. The largest contributions came from the Asia Pacific and EMEA regions, with gross margins improving by more than 200 basis points.

International Business Growth

Wolverine Worldwide’s international markets reported mid-teens year-over-year growth, with a positive outlook for the remainder of the year. This growth underscores the company’s successful expansion strategies outside of its domestic market.

Work Group Revenue Decline

The Work Group experienced a 17% decline in revenue for the quarter. This was attributed to a timing shift and the non-repeat of significant discounting on certain styles from the previous year.

Sweaty Betty Revenue Decline

Sweaty Betty’s revenue declined by 16% in Q1, although the brand saw a significant improvement in gross margins by nearly 1,000 basis points, indicating potential for future profitability improvements.

Tariff Uncertainty and Impact

The company faces significant uncertainty due to tariffs, estimating a $30 million profit impact before mitigation. This uncertainty has prompted Wolverine Worldwide to withdraw its full-year guidance, emphasizing the dynamic market conditions.

Withdrawal of Full-Year Guidance

Due to evolving market conditions, particularly the tariff situation, Wolverine Worldwide withdrew its full-year guidance for 2025. This decision reflects the company’s cautious approach in navigating the current economic landscape.

Forward-Looking Guidance

For the second quarter of 2025, Wolverine Worldwide expects revenue between $440 million to $450 million, representing a year-over-year increase of approximately 5% at the midpoint. The Active Group is anticipated to grow by a high single-digit percentage, while the Work Group is expected to decline slightly. The company projects adjusted operating margins of approximately 7.2% and adjusted diluted earnings per share between $0.19 to $0.24. To mitigate tariff impacts, Wolverine Worldwide plans strategic price adjustments and aims to reduce U.S. sourcing from China to less than 10% by year-end, targeting near zero by 2026.

In summary, Wolverine World Wide’s earnings call reflects a strong financial performance driven by key brands, yet tempered by challenges such as declining revenues in specific segments and tariff uncertainties. The company’s cautious outlook, highlighted by the withdrawal of full-year guidance, underscores the need for strategic adjustments in a dynamic market environment.