Wolverine World Wide’s Earnings Call Highlights Growth Amid Challenges

Wolverine World Wide ((WWW)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Wolverine World Wide painted a picture of robust performance in key segments such as Merrell and Saucony, which significantly contributed to the company’s revenue and profit growth. Despite these successes, challenges persist in the Work Group and Sweaty Betty segments, compounded by tariff-related cost pressures. The company is strategically investing to ensure long-term growth while addressing these immediate challenges.

Strong Revenue Growth

The third quarter saw Wolverine World Wide’s revenue grow by approximately 7%, aligning with the company’s long-term targets. This growth was primarily driven by the strong performance of the Merrell and Saucony brands, which have been pivotal in bolstering the company’s financial health.

Record Gross Margin

Wolverine World Wide achieved another quarter of record gross margin, which played a crucial role in the adjusted EPS growing more than three times the rate of top-line growth. This indicates effective cost management and operational efficiency.

Saucony’s Exceptional Performance

Saucony delivered an impressive 27% growth in the third quarter, fueled by broad-based growth across various channels and markets. This exceptional performance underscores the brand’s strong market position and consumer appeal.

Merrell’s Consistent Growth

Merrell continued its consistent growth trajectory with a 5% increase in revenue during the third quarter. This growth was driven by low double-digit growth in the wholesale segment, highlighting the brand’s steady market demand.

Successful Cost Management

The company reported a 240 basis point improvement in gross margin compared to the previous year, with a 50 basis point improvement above expectations. This reflects Wolverine’s effective cost management strategies.

Positive DTC Growth for Saucony

Saucony’s direct-to-consumer (DTC) business was a standout performer, with mid-teens growth in their e-commerce segment. This highlights the brand’s successful digital strategy and consumer engagement.

Work Group Performance Lag

The Wolverine brand and Work Group did not meet expectations, with revenue projected to finish the year down by high single digits compared to 2024. This segment remains a challenge for the company.

Sweaty Betty Revenue Decline

Sweaty Betty experienced a 4% decline in revenue for the quarter, although this was better than anticipated. The brand faces challenges in reversing this trend.

Tariff Impact on Cost Structure

The company anticipates an unmitigated tariff impact of approximately $10 million in 2025, with a larger annualized impact expected in 2026. This presents a significant challenge to the company’s cost structure.

Lower DTC Performance

Overall, the direct-to-consumer performance declined by 5% compared to the prior year, primarily due to reduced promotional activity in the U.S. This indicates a need for strategic adjustments in the DTC approach.

Forward-Looking Guidance

Wolverine World Wide’s guidance for the full fiscal year projects revenue between $1.855 billion and $1.87 billion, reflecting a 6.4% growth at the midpoint. The company expects a gross margin of 47.1%, up 280 basis points from the previous year, driven by product cost savings and a healthier mix of full-price sales. Adjusted operating margin is projected to improve by 160 basis points to 8.9%, with adjusted earnings per share anticipated between $1.29 and $1.34, marking a 50% increase compared to 2024. The guidance underscores continued strategic investments in brand-building and talent, while managing tariff-related pressures.

In summary, Wolverine World Wide’s earnings call highlighted strong performances from key brands Merrell and Saucony, contributing to overall growth. However, challenges in the Work Group and Sweaty Betty segments, along with tariff impacts, remain hurdles. The company’s forward-looking guidance reflects optimism and strategic focus on overcoming these challenges while continuing to invest in growth.