Company Significantly Strengthens its
Balance Sheet and Improves Cost Structure, Enabling an Acceleration
of its Transformation to Become Great Global Brand Builders
Wolverine World Wide, Inc. (NYSE: WWW) today reported financial
results for the fourth-quarter and full-year 2023 ended December
30, 2023.
“We are effectively executing our transformation plan with great
pace – having largely completed the stabilization phase of our
turnaround,” said Chris Hufnagel, President and Chief Executive
Officer of Wolverine Worldwide. “We finished the year with revenue
and earnings in-line with guidance, and inventory and debt levels
better than expected. Most importantly, Wolverine Worldwide is a
much different company than it was just six months ago, with a
healthier balance sheet, enhanced efficiency to deliver higher
profit and investment, and a redesigned organizational structure to
strengthen our brand-building capabilities. Our focused portfolio
of authentic brands – supported by powerful central platforms – is
focused on helping consumers live better lives through
performance-led product innovation and design. Going forward, we
are accelerating our transformation of the business to ultimately
drive an inflection to growth. Our team is energized by our new
vision to become global brand builders, and we are confident in our
ability to drive meaningful and sustained shareholder value.”
FINANCIAL HIGHLIGHTS
Financial results for 2023, and comparable results from 2022, in
each case, for our ongoing business exclude the impact of Keds,
which was sold in February 2023, the U.S. Wolverine Leathers
business, which was sold in August 2023, the non-U.S. Wolverine
Leathers business, which was sold in December 2023, and reflect an
adjustment for the transition of our Hush Puppies North America
business to a licensing model in the second half of 2023. Tables
have been provided in the back of this release showing the impact
of these adjustments on financial results for 2023 and 2022. For
visibility regarding this impact on our 2023 operating results, the
Company has reported actual results reflecting its ongoing
businesses and separately reported results for Keds, which will be
limited to the period through February 3, 2023, and Wolverine
Leathers to the extent it owned and operated the business.
Prior to the fourth quarter of 2023, Sperry®, Keds®, and Hush
Puppies® financial results were reported in the Lifestyle Group.
The Lifestyle Group is no longer a reportable segment and the
financial results for Sperry®, Keds®, and Hush Puppies® are
included in Other. Prior period disclosures have been adjusted.
FOURTH-QUARTER 2023 FINANCIAL HIGHLIGHTS
(in millions)
December 30, 2023
December 31, 2022
Y/Y Change
Constant Currency
Change
Reported Segment Revenue
Results:
Active Group
$341.3
$397.6
(14.2)%
(15.2)%
Work Group
$125.3
$154.5
(18.9)%
(19.7)%
Other
$60.1
$112.9
(46.8)%
(44.8)%
Total Revenue
$526.7
$665.0
(20.8)%
(21.3)%
Ongoing Total Revenue
$521.2
$634.6
(17.9)%
(18.4)%
Supplemental Brand Revenue
Information
Merrell
$161.8
$193.9
(16.6)%
(17.0)%
Saucony
$105.1
$121.3
(13.4)%
(13.7)%
Wolverine
$51.8
$71.8
(27.9)%
(27.9)%
Sweaty Betty
$67.3
$72.8
(7.6)%
(11.8)%
Reported:
Gross Margin
36.6%
33.7%
290 bps
Operating Margin
(35.5)%
(68.4)%
3,290 bps
Diluted Earnings Per Share
($1.15)
($4.59)
74.9%
Non-GAAP and Ongoing business:
Adjusted Gross Margin
36.9%
34.2%
270 bps
Adjusted Operating Margin
(3.5)%
(1.8)%
(170) bps
Adjusted Diluted Earnings Per Share
$(0.30)
$(0.13)
130.8%
Constant Currency Earnings Per Share
$(0.29)
$(0.13)
123.1%
Revenue of $526.7 million declined 20.8% versus the prior
year and declined 21.3% on a constant currency basis. Revenue from
the ongoing business was $521.2 million and declined 18.4% on a
constant currency basis.
The Company's international revenue of $267.2 million was down
5.1% compared to the prior year and down 6.2% on a constant
currency basis. International revenue from the ongoing business of
$261.7 million was down 3.4% compared to the prior year and down
4.6% on a constant currency basis. Direct-to-Consumer revenue of
$186.9 million was down 17.6% compared to the prior year and down
15.5% for the ongoing business compared to the prior year.
Gross margin was 36.6% compared to 33.7% in the prior
year and improved due to less promotional eCommerce sales and
inventory markdown provisions as a result of much healthier
inventory levels. Benefits from profit improvement initiatives were
offset by the sale of the last tranche of higher-cost inventory
containing transitory supply chain costs from 2022.
Selling, General & Administrative expenses were
$379.9 million, or 72.1% of revenue. Adjusted SG&A expenses of
$210.5 million or 40.4% of adjusted revenue, were 450 basis points
higher than the prior year. Refer to table in the back of the
release for reconciliation of reported SG&A expenses to
adjusted SG&A expenses.
Inventory at the end of the quarter was $373.6 million
and was down $371.6 million or approximately 50% compared to the
prior year. The Sperry business and China joint venture entities
are considered held for sale and not included in the Company's 2023
total inventory balance.
Net Debt at the end of the quarter was $740 million, down
$285 million from the prior year. The Company's bank-defined
leverage ratio was 2.9x.
FULL-YEAR 2023 FINANCIAL HIGHLIGHTS
(in millions)
December 30, 2023
December 31, 2022
Y/Y Change
Constant Currency
Change
Segment Revenue Results:
Active Group
$1,439.1
$1,570.2
(8.3)%
(8.1)%
Work Group
$480.6
$590.5
(18.6)%
(19.0)%
Other
$323.2
$524.1
(38.3)%
(37.9)%
Total Revenue
$2,242.9
$2,684.8
(16.5)%
(16.3)%
Ongoing Total Revenue
$2,199.3
$2,532.1
(13.1)%
(13.0)%
Supplemental Brand
Information
Merrell
$675.8
$764.2
(11.6)%
(11.3)%
Saucony
$495.8
$505.3
(1.9)%
(1.2)%
Wolverine
$201.2
$247.5
(18.7)%
(18.7)%
Sweaty Betty
$203.8
$211.5
(3.6)%
(4.5)%
Reported:
Gross Margin
38.9%
39.9%
(100) bps
Operating Margin
(3.0)%
(7.8)%
480 bps
Diluted Earnings Per Share
$(0.51)
$(2.37)
78.5%
Non-GAAP:
Adjusted Gross Margin
39.3%
40.7%
(140) bps
Adjusted Operating Margin
3.1%
6.8%
(370) bps
Adjusted Diluted Earnings Per Share
$0.05
$1.37
(96.4)%
Constant Currency Earnings Per Share
$0.15
$1.37
(89.1)%
Revenue of $2,242.9 million represents a decline of 16.5%
versus the prior year and a decline of 16.3% on a constant currency
basis.
Gross margin was 38.9% versus 39.9% in the prior year and
reflects sales of higher-cost inventory due to transitory costs
from 2022 and acceleration of end-of-life inventory
liquidations.
Selling, General & Administrative expenses were
$940.7 million, or 41.9% of revenue. Adjusted SG&A expenses of
$797.7 million or 36.3% of adjusted revenue, were 250 basis points
higher than the prior year.
FULL-YEAR 2024 OUTLOOK
The outlook for 2024, and comparable results from 2023, in each
case, for our ongoing business now also exclude the impact of
Sperry, which was sold in January 2024.
“Our expectation of improved Fiscal 2024 profitability reflects
the comprehensive stabilization work completed over the last six
months,” said Mike Stornant, Executive Vice President and Chief
Financial Officer. “We expect to deliver incremental cost benefits
of $140 million from recent profit improvement initiatives,
allowing reinvestment into demand creation, enhanced technology,
among other new capabilities needed to drive sustained growth.
Solid inventory reductions already executed will benefit gross
margin and allow for an increased flow of new and innovative
product offerings. Successful efforts to lower debt are expected to
reduce interest expense by approximately $20 million. While we
expect the macro environment to remain challenging, especially in
the first half of the year, we believe firmly that the business is
on much stronger footing and poised to drive improved profit, cash
flow and growth into the future."
Full year 2024 outlook is as follows:
- Revenue from our ongoing business is expected to be
approximately $1.70 billion to $1.75 billion, representing a
decline compared to 2023 of approximately 14.7% to 12.2% and
constant currency decline of approximately 14.3% and 11.8%.
- Gross margin is expected to be approximately 44.5% up
460 basis points compared to 2023.
- Operating margin is expected to be approximately 5.7%,
and adjusted operating margin is expected to be approximately 7.0%,
up 310 basis points compared to 2023.
- The effective tax rate is expected to be approximately
18%.
- Diluted earnings per share are expected to be between
$0.43 and $0.63, and adjusted diluted earnings per share are
expected to be between $0.65 and $0.85. These full-year EPS
projections include an approximate $0.10 negative impact from
foreign currency exchange rate fluctuations.
- Diluted weighted average shares are expected to be
approximately 80 million.
- Inventory is expected to decline by at least $70 million
by year-end.
- Net Debt at year-end is expected to be approximately
$575 million.
NON-GAAP FINANCIAL MEASURES
Measures referred to in this release as “adjusted” financial
results and the financial results of the "ongoing business" are
non-GAAP measures. Adjusted financial results exclude environmental
and other related costs net of recoveries, non-cash impairment of
long-lived assets, reorganization costs, debt modification costs,
gain on the sale of businesses, trademarks and long-lived assets,
costs associated with divestitures, SERP curtailment gain,
receivables securitization transaction costs, and costs associated
with Sweaty Betty® integration. The financial results of the
ongoing business exclude financial results from the Keds business,
Wolverine Leathers business and reflect an adjustment for the
transition of our Hush Puppies North America business to a
licensing model in the second half of 2023. The outlook for 2024,
and comparable results from 2023, in each case, for our ongoing
business now also exclude the impact of Sperry, which was sold in
January 2024. The Company also presents constant currency
information, which is a non-GAAP measure that excludes the impact
of fluctuations in foreign currency exchange rates. The Company
calculates constant currency basis by converting the current-period
local currency financial results using the prior period exchange
rates and comparing these adjusted amounts to the Company's current
period reported results. The Company believes providing each of
these non- GAAP measures provides valuable supplemental information
regarding its results of operations, consistent with how the
Company evaluates performance.
The Company has provided a reconciliation of each of the above
non-GAAP financial measures to the most directly comparable GAAP
financial measure. The Company believes these non-GAAP measures
provide useful information to both management and investors because
they increase the comparability of current period results to prior
period results by adjusting for certain items that may not be
indicative of core operating results and enable better
identification of trends in our business. The adjusted financial
results are used by management to, and allow investors to, evaluate
the operating performance of the Company on a comparable basis.
Management does not, nor should investors, consider such non-GAAP
financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP.
EARNINGS CALL INFORMATION
The Company will host a conference call today at 8:30 a.m. EST
to discuss these results and current business trends. The
conference call will be broadcast live and accessible under the
“Investor Relations” tab at www.wolverineworldwide.com. A replay of
the conference call will be available on the Company’s website for
a period of approximately 30 days.
ABOUT WOLVERINE WORLDWIDE
Founded in 1883, Wolverine World Wide, Inc. (NYSE:WWW) is one of
the world’s leading marketers and licensors of branded casual,
active lifestyle, work, outdoor sport, athletic, children's and
uniform footwear and apparel. The Company's diverse portfolio of
highly recognized brands includes Merrell®, Saucony®, Sweaty
Betty®, Hush Puppies®, Wolverine®, Chaco®, Bates®, HYTEST®, and
Stride Rite®. Wolverine Worldwide is also the global footwear
licensee of the popular brands Cat® and Harley-Davidson®. Based in
Rockford, Michigan, for more than 140 years, the Company's products
are carried by leading retailers in the U.S. and globally in
approximately 170 countries and territories. For additional
information, please visit our website,
www.wolverineworldwide.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements,
including statements regarding the Company’s outlook for 2024
including, among others: reported, adjusted and constant currency
revenue; reported and adjusted gross margin; reported and adjusted
operating margin; effective tax rate; reported and adjusted diluted
earnings per share; diluted weighted average shares; and net debt;
as well as statements regarding the Company's brand performance,
strategic investment and improved profitability in 2024, the
Company’s expectations regarding the macro environment in 2024, and
the Company's ability to drive sustainable, long-term growth and
shareholder returns.. In addition, words such as “estimates,”
“anticipates,” “believes,” “forecasts,” “step,” “plans,”
“predicts,” “focused,” “projects,” “outlook,” “is likely,”
“expects,” “intends,” “should,” “will,” “confident,” variations of
such words, and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties, and
assumptions (“Risk Factors”) that are difficult to predict with
regard to timing, extent, likelihood, and degree of occurrence.
Risk Factors include, among others: changes in general economic
conditions, employment rates, business conditions, interest rates,
tax policies, inflationary pressures and other factors affecting
consumer spending in the markets and regions in which the Company’s
products are sold; the inability for any reason to effectively
compete in global footwear, apparel and consumer-direct markets;
the inability to maintain positive brand images and anticipate,
understand and respond to changing footwear and apparel trends and
consumer preferences; the inability to effectively manage inventory
levels; changes in duties, tariffs, quotas or applicable
assessments in countries of import and export; foreign currency
exchange rate fluctuations; currency restrictions; supply chain or
other capacity constraints, production disruptions, quality issues,
price increases or other risks associated with foreign sourcing;
the cost, including the effect of inflationary pressures, and
availability of raw materials, inventories, services and labor for
contract manufacturers; labor disruptions; changes in relationships
with, including the loss of, significant wholesale customers; risks
related to the significant investment in, and performance of, the
Company’s consumer-direct operations; risks related to expansion
into new markets and complementary product categories; the impact
of seasonality and unpredictable weather conditions; the impact of
changes in general economic conditions and/or the credit markets on
the Company’s manufacturers, distributors, suppliers, joint venture
partners and wholesale customers; changes in the Company’s
effective tax rates; failure of licensees or distributors to meet
planned annual sales goals or to make timely payments to the
Company; the risks of doing business in developing countries, and
politically or economically volatile areas; the ability to secure
and protect owned intellectual property or use licensed
intellectual property; the impact of regulation, regulatory and
legal proceedings and legal compliance risks, including compliance
with federal, state and local laws and regulations relating to the
protection of the environment, environmental remediation and other
related costs, and litigation or other legal proceedings relating
to the protection of the environment or environmental effects on
human health; risks of breach of the Company’s databases or other
systems, or those of its vendors, which contain certain personal
information, payment card data or proprietary information, due to
cyberattack or other similar events; problems affecting the
Company’s supply chain and distribution system, including service
disruptions at shipping and receiving ports; strategic actions,
including new initiatives and ventures, acquisitions and
dispositions, and the Company’s success in integrating acquired
businesses, and implementing new initiatives and ventures; risks
relating to stockholder activism; the potential effects of
outbreaks of COVID-19 or future health crises on the Company’s
business, operations, financial results and liquidity; the risk of
impairment to goodwill and other intangibles; changes in future
pension funding requirements and pension expenses; and additional
factors discussed in the Company’s reports filed with the
Securities and Exchange Commission and exhibits thereto. The
foregoing Risk Factors, as well as other existing Risk Factors and
new Risk Factors that emerge from time to time, may cause actual
results to differ materially from those contained in any
forward-looking statements. Given these or other risks and
uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.
Furthermore, the Company undertakes no obligation to update, amend,
or clarify forward-looking statements.
WOLVERINE WORLD WIDE,
INC.
CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except earnings
per share)
Quarter Ended
Fiscal Year Ended
December 30, 2023
December 31, 2022
December 30, 2023
December 31, 2022
Revenue
$
526.7
$
665.0
$
2,242.9
$
2,684.8
Cost of goods sold
333.7
440.8
1,370.4
1,614.4
Gross profit
193.0
224.2
872.5
1,070.4
Gross margin
36.6
%
33.7
%
38.9
%
39.9
%
Selling, general and administrative
expenses
245.4
249.1
856.2
906.4
Gain on sale of business, trademarks and
long-lived assets
(12.6
)
—
(90.4
)
(90.0
)
Impairment of long-lived assets
129.5
428.7
185.3
428.7
Environmental and other related costs
(income), net of recoveries
17.6
1.1
(10.4
)
33.7
Operating expenses
379.9
678.9
940.7
1,278.8
Operating expenses as a % of revenue
72.1
%
102.1
%
41.9
%
47.6
%
Operating loss
(186.9
)
(454.7
)
(68.2
)
(208.4
)
Operating margin
(35.5
)%
(68.4
)%
(3.0
)%
(7.8
)%
Interest expense, net
16.1
16.0
63.5
47.3
Other expense (income), net
(0.7
)
(5.0
)
2.5
(2.8
)
Total other expenses
15.4
11.0
66.0
44.5
Loss before income taxes
(202.3
)
(465.7
)
(134.2
)
(252.9
)
Income tax benefit
(111.7
)
(104.9
)
(95.0
)
(63.8
)
Effective tax rate
55.2
%
22.5
%
70.7
%
25.2
%
Net loss
(90.6
)
(360.8
)
(39.2
)
(189.1
)
Less: net earnings (loss) attributable to
noncontrolling interests
0.6
0.8
0.4
(0.8
)
Net loss attributable to Wolverine World
Wide, Inc.
$
(91.2
)
$
(361.6
)
$
(39.6
)
$
(188.3
)
Diluted loss per share
$
(1.15
)
$
(4.59
)
$
(0.51
)
$
(2.37
)
Supplemental information:
Net loss used to calculate diluted loss
per share
$
(91.4
)
$
(361.8
)
$
(40.3
)
$
(188.9
)
Shares used to calculate diluted loss per
share
79.5
78.8
79.4
79.7
WOLVERINE WORLD WIDE,
INC.
CONSOLIDATED CONDENSED BALANCE
SHEETS
(Unaudited)
(In millions)
December 30, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
179.0
$
131.5
Accounts receivables, net
230.8
241.7
Inventories, net
373.6
745.2
Current assets held for sale
160.6
67.9
Other current assets
81.1
79.0
Total current assets
1,025.1
1,265.3
Property, plant and equipment, net
96.3
136.2
Lease right-of-use assets
118.2
174.7
Goodwill and other indefinite-lived
intangibles
601.2
759.0
Other noncurrent assets
222.0
157.5
Total assets
$
2,062.8
$
2,492.7
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable and other accrued
liabilities
$
519.7
$
636.2
Lease liabilities
34.7
39.1
Current maturities of long-term debt
10.0
10.0
Borrowings under revolving credit
agreements
305.0
425.0
Total current liabilities
869.4
1,110.3
Long-term debt
605.8
723.0
Lease liabilities, noncurrent
132.4
153.6
Other noncurrent liabilities
155.2
166.8
Stockholders' equity
300.0
339.0
Total liabilities and stockholders'
equity
$
2,062.8
$
2,492.7
WOLVERINE WORLD WIDE,
INC.
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Fiscal Year Ended
December 30, 2023
December 31, 2022
OPERATING ACTIVITIES:
Net loss
$
(39.2
)
$
(189.1
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
35.1
34.6
Deferred income taxes
(95.8
)
(105.7
)
Stock-based compensation expense
15.2
33.4
Pension and SERP expense
0.7
9.3
Impairment of long-lived assets
185.3
428.7
Environmental and other related costs
(55.1
)
(23.0
)
Gain on sale of business, trademarks and
long-lived assets
(90.4
)
(90.0
)
Other
(2.0
)
(2.7
)
Changes in operating assets and
liabilities
168.0
(274.4
)
Net cash provided by (used in) operating
activities
121.8
(178.9
)
INVESTING ACTIVITIES:
Additions to property, plant and
equipment
(14.6
)
(36.5
)
Proceeds from sale of business, trademarks
and long-lived assets
188.9
90.0
Investment in joint ventures
—
(2.8
)
Other
(2.7
)
3.9
Net cash provided by investing
activities
171.6
54.6
FINANCING ACTIVITIES:
Payments under revolving credit
agreements
(743.0
)
(740.0
)
Borrowings under revolving credit
agreements
623.0
940.0
Proceeds from company-owned insurance
policies
—
30.5
Payments on long-term debt
(118.3
)
(10.0
)
Payments of debt issuance costs
(0.9
)
—
Cash dividends paid
(32.6
)
(32.8
)
Purchase of common stock for treasury
—
(81.3
)
Employee taxes paid under stock-based
compensation plans
(5.8
)
(7.7
)
Proceeds from the exercise of stock
options
0.1
1.4
Contributions from noncontrolling
interests
31.2
7.0
Net cash provided by (used in) financing
activities
(246.3
)
107.1
Effect of foreign exchange rate
changes
2.0
(9.0
)
Increase (decrease) in cash and cash
equivalents
49.1
(26.2
)
Cash and cash equivalents at beginning of
the year
135.5
161.7
Cash and cash equivalents at end of the
year
$
184.6
$
135.5
The following tables contain information regarding the non-GAAP
financial measures used by the Company in the presentation of its
financial results:
WOLVERINE WORLD WIDE,
INC.
Q4 2023 RECONCILIATION
TABLES
RECONCILIATION OF REPORTED
REVENUE TO ADJUSTED
REVENUE ON A CONSTANT CURRENCY
BASIS*
(Unaudited)
(In millions)
GAAP Basis 2023-Q4
Foreign Exchange
Impact
Constant Currency Basis
2023-Q4
GAAP Basis 2022-Q4
Reported Change
Constant Currency
Change
REVENUE
Active Group
$
341.3
$
(4.3
)
$
337.0
$
397.6
(14.2
)%
(15.2
)%
Work Group
125.3
(1.2
)
124.1
154.5
(18.9
)%
(19.7
)%
Other
60.1
2.2
62.3
112.9
(46.8
)%
(44.8
)%
Total
$
526.7
$
(3.3
)
$
523.4
$
665.0
(20.8
)%
(21.3
)%
RECONCILIATION OF REPORTED
REVENUE
TO ADJUSTED REVENUE*
(Unaudited)
(In millions)
GAAP Basis
Divestiture (1)
As Adjusted
Revenue - Fiscal 2023 Q4
$
526.7
$
5.5
$
521.2
Revenue - Fiscal 2022 Q4
$
665.0
$
30.4
$
634.6
(1)
Q4 2023 adjustments reflect the Wolverine Leathers business results
included in the consolidated condensed statement of operations. Q4
2022 adjustments reflect results for the Keds business, Wolverine
Leathers business and Hush Puppies prior to the license model
change included in the consolidated condensed statement of
operations.
RECONCILIATION OF REPORTED
GROSS MARGIN
TO ADJUSTED GROSS MARGIN
*
(Unaudited)
(In millions)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Gross Profit - Fiscal 2023 Q4
$
193.0
$
—
$
(0.6
)
$
192.4
Gross margin
36.6
%
36.9
%
Gross Profit - Fiscal 2022 Q4
$
224.2
$
1.0
$
(8.3
)
$
216.9
Gross margin
33.7
%
34.2
%
(1)
Q4 2022 adjustment reflects $1.0 million of costs associated with
Sweaty Betty® integration.
(2)
Q4 2023 adjustments reflect the Wolverine Leathers business results
included in the consolidated condensed statement of operations. Q4
2022 adjustments reflect results for the Keds business, Wolverine
Leathers business and Hush Puppies prior to the license model
change included in the consolidated condensed statement of
operations.
RECONCILIATION OF REPORTED
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
TO ADJUSTED SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES*
(Unaudited)
(In millions)
GAAP Basis
Adjustment (1)
Divestiture (2)
As Adjusted
Selling, general and administrative
expenses - Fiscal 2023 Q4
$
379.9
$
(168.8
)
$
(0.6
)
$
210.5
Selling, general and administrative
expenses - Fiscal 2022 Q4
$
678.9
$
(440.6
)
$
(10.2
)
$
228.1
(1)
Q4 2023 adjustments reflect $129.4 million for non-cash impairments
of long-lived assets, $31.3 million of reorganization costs, $17.6
million of environmental and other related costs net of recoveries,
$3.1 million of costs associated with divestitures, partially
offset by $12.6 million gain on the sale of businesses, trademarks
and long-lived assets. Q4 2022 adjustments reflect $428.7 million
for a non-cash impairment of the Sperry® trade name and the Sweaty
Betty® trade name and goodwill, $9.1 million for reorganization
costs, $1.1 million of environmental and other related costs net of
recoveries, $0.9 million of costs associated with Sweaty Betty®
integration and $0.8 of receivables securitization transaction
costs.
(2)
Q4 2023 adjustments reflect the Wolverine Leathers business results
included in the consolidated condensed statement of operations. Q4
2022 adjustments reflect results for the Keds business, Wolverine
Leathers business and Hush Puppies prior to the license model
change included in the consolidated condensed statement of
operations.
RECONCILIATION OF REPORTED
OPERATING MARGIN
TO ADJUSTED OPERATING
MARGIN
(Unaudited)
(In millions)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Operating Profit - Fiscal 2023 Q4
$
(186.9
)
$
168.8
$
—
$
(18.1
)
Operating margin
(35.5
)%
(3.5
)%
Operating Profit - Fiscal 2022 Q4
$
(454.7
)
$
441.6
$
1.9
$
(11.2
)
Operating margin
(68.4
)%
(1.8
)%
(1)
Q4 2023 adjustments reflect $129.4 million for non-cash impairments
of long-lived assets, $31.3 million of reorganization costs, $17.6
million of environmental and other related costs net of recoveries,
$3.1 million of costs associated with divestitures, partially
offset by $12.6 million gain on the sale of businesses, trademarks
and long-lived assets. Q4 2022 adjustments reflect $428.7 million
for a non-cash impairment of the Sperry® trade name and the Sweaty
Betty® trade name and goodwill, $9.1 million for reorganization
costs, $1.1 million of environmental and other related costs net of
recoveries, $1.9 million of costs associated with Sweaty Betty®
integration and $0.8 of receivables securitization transaction
costs.
(2)
Q4 2023 adjustments reflect the Wolverine Leathers business results
included in the consolidated condensed statement of operations. Q4
2022 adjustments reflect results for the Keds business, Wolverine
Leathers business and Hush Puppies prior to the license model
change included in the consolidated condensed statement of
operations.
RECONCILIATION OF REPORTED
DILUTED EPS TO ADJUSTED
DILUTED EPS ON A CONSTANT
CURRENCY BASIS*
(Unaudited)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Foreign Exchange
Impact
As Adjusted
EPS On a Constant Currency
Basis
EPS - Fiscal 2023 Q4
$
(1.15
)
$
0.85
$
—
$
(0.30
)
$
0.01
$
(0.29
)
EPS - Fiscal 2022 Q4
$
(4.59
)
$
4.44
$
0.02
$
(0.13
)
(1)
Q4 2023 adjustments reflect non-cash impairments of long-lived
assets, reorganization costs, environmental and other related costs
net of recoveries, costs associated with divestitures, partially
offset by gain on the sale of businesses, trademarks and long-lived
assets and SERP curtailment gain. Q4 2022 adjustment reflects
non-cash impairment of the Sperry® trade name and the Sweaty Betty®
trade name and goodwill, reorganization costs, environmental and
other related costs net of recoveries, costs associated with Sweaty
Betty® integration and receivables securitization transaction costs
(2)
Q4 2023 adjustments reflect the Wolverine Leathers business results
included in the consolidated condensed statement of operations. Q4
2022 adjustments reflect results for the Keds business, Wolverine
Leathers business and Hush Puppies prior to the license model
change included in the consolidated condensed statement of
operations.
RECONCILIATION OF REPORTED
INVENTORY
TO ADJUSTED INVENTORY*
(Unaudited)
(In millions)
GAAP Basis
Divestiture (1)
As Adjusted
Inventory - 2023 Q4
$
373.6
$
—
$
373.6
Inventory - 2023 Q3
$
563.8
$
100.6
$
463.2
Inventory - 2023 Q2
$
647.9
$
113.3
$
534.6
Inventory - 2023 Q1
$
725.9
$
120.5
$
605.4
Inventory - 2022 Q4
$
745.2
$
132.0
$
613.2
(1)
Adjustments reflect the Sperry business and consolidated China
joint ventures inventory included in the consolidated condensed
balance sheet.
2023 FULL-YEAR RECONCILIATION
TABLES
RECONCILIATION OF REPORTED
REVENUE TO ADJUSTED
REVENUE ON A CONSTANT CURRENCY
BASIS*
(Unaudited)
(In millions)
GAAP Basis 2023
Foreign Exchange
Impact
Constant Currency Basis
2023
GAAP Basis 2022
Reported Change
Constant Currency
Change
REVENUE
Active Group
$
1,439.1
3.5
$
1,442.6
$
1,570.2
(8.3
)%
(8.1
)%
Work Group
480.6
(2.4
)
478.2
590.5
(18.6
)%
(19.0
)%
Other
323.2
2.3
325.5
524.1
(38.3
)%
(37.9
)%
Total
$
2,242.9
$
3.4
$
2,246.3
$
2,684.8
(16.5
)%
(16.3
)%
RECONCILIATION OF REPORTED
REVENUE
TO ADJUSTED REVENUE*
(Unaudited)
(In millions)
GAAP Basis
Divestiture (1)
As Adjusted
Revenue - Fiscal 2023
$
2,242.9
$
43.6
$
2,199.3
Revenue - Fiscal 2022
$
2,684.8
$
152.7
$
2,532.1
(1)
2023 adjustments reflect the Keds business and Wolverine Leathers
business results included in the consolidated condensed statement
of operations. 2022 adjustments reflect results for the Keds
business, Wolverine Leathers business and Hush Puppies prior to the
license model change included in the consolidated condensed
statement of operations.
RECONCILIATION OF REPORTED
GROSS MARGIN
TO ADJUSTED GROSS
MARGIN*
(Unaudited)
(In millions)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Gross Profit - Fiscal 2023
$
872.5
$
0.4
$
(7.7
)
$
865.2
Gross margin
38.9
%
39.3
%
Gross Profit - Fiscal 2022
$
1,070.4
$
1.7
$
(42.1
)
$
1,030.0
Gross margin
39.9
%
40.7
%
(1)
2023 adjustment reflects $0.4 million of costs associated with
divestitures. 2022 adjustment reflects $1.7 million of costs
associated with Sweaty Betty® integration.
(2)
2023 adjustments reflect the Keds business and Wolverine Leathers
business results included in the consolidated condensed statement
of operations. 2022 adjustments reflect results for the Keds
business, Wolverine Leathers business and Hush Puppies prior to the
license model change included in the consolidated condensed
statement of operations.
RECONCILIATION OF REPORTED
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
TO ADJUSTED SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES*
(Unaudited)
(In millions)
GAAP Basis
Adjustment (1)
Divestiture (2)
As Adjusted
Selling, general and administrative
expenses - Fiscal 2023
$
940.7
$
(136.7
)
$
(6.3
)
$
797.7
Selling, general and administrative
expenses - Fiscal 2022
$
1,278.8
$
(384.3
)
$
(37.9
)
$
856.6
(1)
2023 adjustments reflect $185.3 million for non-cash impairments of
long-lived assets, $47.1 million of reorganization costs, $5.1
million of costs associated with divestitures, partially offset by
$90.4 million gain on the sale of businesses, trademarks and
long-lived assets and $10.4 million of environmental and other
related costs net of recoveries. 2022 adjustments reflect $428.7
million for a non-cash impairment of the Sperry® trade name and the
Sweaty Betty® trade name and goodwill, $9.1 million for
reorganization costs, $33.7 million of environmental and other
related costs net of recoveries, $2.0 million of costs associated
with Sweaty Betty® integration and $0.8 million of receivables
securitization transaction costs, partially offset by $90.0 gain on
the sale of the Champion trademarks.
(2)
2023 adjustments reflect the Keds business and Wolverine Leathers
business results included in the consolidated condensed statement
of operations. 2022 adjustments reflect results for the Keds
business, Wolverine Leathers business and Hush Puppies prior to the
license model change included in the consolidated condensed
statement of operations.
RECONCILIATION OF REPORTED
OPERATING MARGIN
TO ADJUSTED OPERATING
MARGIN*
(Unaudited)
(In millions)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Operating Profit (Loss) - Fiscal 2023
$
(68.2
)
$
137.1
$
(1.4
)
$
67.5
Operating margin
(3.0
)%
3.1
%
Operating Profit (Loss) - Fiscal 2022
$
(208.4
)
$
386.0
$
(4.2
)
$
173.4
Operating margin
(7.8
)%
6.8
%
(1)
2023 adjustments reflect $185.3 million for non-cash impairments of
long-lived assets, $47.1 million of reorganization costs, $5.5
million of costs associated with divestitures, partially offset by
$90.4 million gain on the sale of businesses, trademarks and
long-lived assets and $10.4 million of environmental and other
related costs net of recoveries. 2022 adjustments reflect $428.7
million for a non-cash impairment of the Sperry® trade name and the
Sweaty Betty® trade name and goodwill, $9.1 million for
reorganization costs, $33.7 million of environmental and other
related costs net of recoveries, $3.7 million of costs associated
with Sweaty Betty® integration and $0.8 million of receivables
securitization transaction costs, partially offset by $90.0 gain on
the sale of the Champion trademarks.
(2)
2023 adjustments reflect the Keds business and Wolverine Leathers
business results included in the consolidated condensed statement
of operations. 2022 adjustments reflect results for the Keds
business, Wolverine Leathers business and Hush Puppies prior to the
license model change included in the consolidated condensed
statement of operations.
RECONCILIATION OF REPORTED
DILUTED EPS TO ADJUSTED
DILUTED EPS ON A CONSTANT
CURRENCY BASIS*
(Unaudited)
GAAP Basis
Adjustments (1)
Divestiture (2)
As Adjusted
Foreign Exchange
Impact
As Adjusted
EPS On a Constant Currency
Basis
EPS - Fiscal 2023
$
(0.51
)
$
0.57
$
(0.01
)
$
0.05
$
0.10
$
0.15
EPS - Fiscal 2022
$
(2.37
)
$
3.78
$
(0.04
)
$
1.37
(1)
2023 adjustments reflect non-cash impairments of long-lived assets,
reorganization costs, costs associated with divestitures, debt
modification costs, partially offset by gain on the sale of
businesses, trademarks and long-lived assets, environmental and
other related costs net of recoveries, and SERP curtailment gain.
2022 adjustment reflects non-cash impairment of the Sperry® trade
name and the Sweaty Betty® trade name and goodwill, reorganization
costs, environmental and other related costs net of recoveries,
costs associated with Sweaty Betty® integration and receivables
securitization transaction costs, partially offset by gain on the
sale of the Champion trademark.
(2)
2023 adjustments reflect the Keds business and Wolverine Leathers
business results included in the consolidated condensed statement
of operations. 2022 adjustments reflect results for the Keds
business, Wolverine Leathers business and Hush Puppies prior to the
license model change included in the consolidated condensed
statement of operations.
DIVESTITURE FINANCIAL SUMMARY
(Unaudited) (In millions, except per share
amounts)
In order to provide visibility regarding the financial impact of
completed divestitures, and the impact of the transition of Hush
Puppies® from a wholesale model to a license model on July 1, 2023,
the Company has provided additional information within the
supplemental table below. The items included in the tables
represent amounts that are reflected in the reported fiscal 2023
and 2022 results that are related to businesses the Company has
sold or announced that the Company does not intend to include the
business in the Company's long-term plans. The Company believes
providing the following information is helpful to better understand
the impact of the divestitures and transition to a license model on
the Company's ongoing business.
Q1
Q2
Q3
Q4
2023
Full-Year
Revenue - Impact
Keds business (1)
$
6.5
$
—
$
—
$
—
$
6.5
Wolverine Leathers business (2)
12.5
10.9
8.2
5.5
37.1
Total Revenue - Impact
$
19.0
$
10.9
$
8.2
$
5.5
$
43.6
Operating profit - Impact
Keds business (1)
$
(1.9
)
$
—
$
—
$
—
$
(1.9
)
Wolverine Leathers business (2)
1.4
0.8
1.1
—
3.3
Total Operating profit - Impact
$
(0.5
)
$
0.8
$
1.1
$
—
$
1.4
Net earnings per share - Impact
$
(0.01
)
$
0.01
$
0.01
$
—
$
0.01
Q1
Q2
Q3
Q4
2022
Full-Year
Revenue - Impact
Keds business (1)
$
20.4
$
24.0
$
21.3
$
17.1
$
82.8
Wolverine Leathers business (2)
18.5
17.7
14.0
8.4
58.6
Hush Puppies (3)
—
—
6.4
4.9
11.3
Total Revenue - Impact
$
38.9
$
41.7
$
41.7
$
30.4
$
152.7
Operating profit - Impact
Keds business (1)
$
1.5
$
0.5
$
0.4
$
(0.9
)
$
1.5
Wolverine Leathers business (2)
1.4
1.7
0.9
0.4
4.4
Hush Puppies (3)
—
—
(0.3
)
(1.4
)
(1.7
)
Total Operating profit - Impact
$
2.9
$
2.2
$
1.0
$
(1.9
)
$
4.2
Net earnings per share - Impact
$
0.03
$
0.02
$
0.01
$
(0.02
)
$
0.04
(1)
The Keds® business line item reflects the revenue and operating
profit from sale of Keds® products that will not reoccur after the
Company's first period in fiscal 2023 as a result of the sale of
the global Keds® business effective February 4, 2023.
(2)
The Wolverine Leathers business line item reflects revenue and
operating profit from the Wolverine Leathers business that will not
reoccur after the Wolverine Leathers business is sold. The Company
divested the U.S. Wolverine Leathers business in August 2023 and
divested the non-U.S. Wolverine Leathers business in December 2023.
(3)
The Hush Puppies® line item represents financial results associated
with the Hush Puppies® United States and Canada operations prior to
the transition from a wholesale model to a license model on July 1,
2023, net of estimated license revenue.
2024 GUIDANCE SPERRY DIVESTITURE
AND 2024 GUIDANCE COMPARISON RECONCILIATIONS
(Unaudited) (In millions, except per share
amounts)
In order to provide visibility regarding the financial impact of
the Sperry® business divestiture, the Company has provided
additional information within the supplemental table below. The
items included in the table represent amounts related to the
Sperry® business that are reflected in the Company’s reported
fiscal year 2023 results. The Sperry® business financial results
are excluded for purposes of comparison of the 2024 guidance to the
adjusted 2023 results. Reconciliation tables are provided below for
2023 GAAP results to the 2023 as adjusted results included in any
2024 guidance comparisons to 2023.
Q1
Q2
Q3
Q4
2023
YTD
Sperry business (1)
Revenue
$
62.9
$
57.4
$
46.2
$
40.7
$
207.2
Operating profit
$
(2.3
)
$
0.2
$
(4.0
)
$
(4.2
)
$
(10.3
)
Net Earnings per share
$
(0.02
)
$
—
$
(0.04
)
$
(0.04
)
$
(0.10
)
Operating profit adjusted (2)
$
2.5
$
4.6
$
(0.5
)
$
(1.1
)
$
5.5
(1)
The Sperry® business reflects the revenue and operating profit from
sale of Sperry® products that will not reoccur after the Company's
first period in fiscal 2024 as a result of the sale of the global
Sperry® business effective January 10, 2024.
(2)
Operating profit adjusted represents operating profit of the
Sperry® business before cost allocations for Company resources
shared by all Company brands, resources which were not sold as part
of the Sperry® divestiture and the costs for which the Company will
continue to bear.
The Company believes operating profit before internal cost
allocations for shared resources provides useful information to
both management and investors because it provides insights into the
Sperry brand contribution to the Company’s consolidated results of
operations, which contributions will not reoccur following the
divestiture of the Sperry brand. Management does not, nor should
investors, consider this financial measure in isolation from, or as
a substitute for financial information prepared in accordance with
GAAP.
RECONCILIATION OF 2023
REPORTED REVENUE
TO ADJUSTED REVENUE FOR
COMPARISON
TO 2024 GUIDANCE*
(Unaudited)
(In millions)
GAAP Basis
Keds and Leathers Divestiture
(1)
Sperry Divestiture (2)
As Adjusted
Revenue - Fiscal 2023
$
2,242.9
$
43.6
$
207.2
$
1,992.1
(1)
Adjustments reflect the Keds business and Wolverine Leathers
business results included in the consolidated condensed statement
of operations.
(2)
Adjustments reflect the Sperry business results included in the
consolidated condensed statement of operations.
RECONCILIATION OF REPORTED
2023 OPERATING MARGIN
TO ADJUSTED OPERATING MARGIN
FOR COMPARISON
TO 2024 GUIDANCE*
(Unaudited)
(In millions)
GAAP Basis
Adjustments (1)
Keds and Leathers Divestiture
(2)
Sperry Divestiture (3)
As Adjusted
Operating Profit (Loss) - Fiscal 2023
$
(68.2
)
$
137.1
$
(1.4
)
$
10.3
$
77.8
Operating margin
(3.0
)%
3.9
%
(1)
Adjustments reflect $185.3 million for a non-cash impairment of
long-lived assets, $47.1 million of reorganization costs, $5.5
million of costs associated with divestitures, partially offset by
$90.4 million gain on the sale of businesses, trademarks and
long-lived assets and $10.4 million of environmental and other
related costs net of recoveries.
(2)
Adjustments reflect the Keds business and Wolverine Leathers
business results included in the consolidated condensed statement
of operations.
(3)
Adjustments reflect the Sperry business results included in the
consolidated condensed statement of operations.
RECONCILIATION OF REPORTED
2023 DILUTED EPS TO ADJUSTED
DILUTED EPS FOR
COMPARISON
TO 2024 GUIDANCE*
(Unaudited)
GAAP Basis
Adjustments (1)
Keds and Leathers Divestiture
(2)
Sperry Divestiture (3)
As Adjusted
EPS - Fiscal 2023
$
(0.51
)
$
0.57
$
(0.01
)
$
0.10
$
0.15
(1)
Adjustments reflect non-cash impairment of long-lived assets,
reorganization costs, costs associated with divestitures, debt
modification costs, partially offset by gain on the sale of
businesses, trademarks and long-lived assets, environmental and
other related costs net of recoveries, and SERP curtailment gain.
(2)
Adjustments reflect the Keds business and Wolverine Leathers
business results included in the consolidated condensed statement
of operations.
(3)
Adjustments reflect the Sperry business results included in the
consolidated condensed statement of operations.
2024 GUIDANCE RECONCILIATION
TABLES
RECONCILIATION OF REPORTED
GUIDANCE TO ADJUSTED GUIDANCE,
REPORTED DILUTED EPS GUIDANCE
TO ADJUSTED DILUTED EPS
GUIDANCE AND SUPPLEMENTAL
INFORMATION*
(Unaudited)
(In millions, except earnings
per share)
GAAP Basis
Divestiture
Adjustments (1)
Other
Adjustments (2)
As Adjusted
Revenue - Fiscal 2024 Full Year
$1,704 - $1,754
$(4)
$1,700 - $1,750
Gross Margin - Fiscal 2024 Full Year
44.5 %
– %
44.5 %
Operating Margin - Fiscal 2024 Full
Year
5.7 %
0.3 %
1.0 %
7.0 %
Dilutive EPS - Fiscal 2024 Full Year
$0.43 -$0.63
$0.05
$0.17
$0.65 - $0.85
Fiscal 2024 Full Year Supplemental
information:
Net Earnings
$35 -$51
$4
$14
$53 - $69
Net Earnings used to calculate diluted
earnings per share
$34 - $50
$4
$14
$52 - $68
Shares used to calculate diluted earnings
per share
79.9
79.9
(1)
2024 adjustments reflect financial results for the Sperry® business
and Sperry® stores not divested which the Company is closing in
2024.
(2)
2024 adjustments reflect estimated environmental and other related
costs net of recoveries and reorganization costs. * To supplement
the consolidated condensed financial statements presented in
accordance with Generally Accepted Accounting Principles ("GAAP"),
the Company describes what certain financial measures would have
been if environmental and other related costs net of recoveries,
non-cash impairment of long-lived assets, reorganization costs,
debt modification costs, gain on the sale of businesses, trademarks
and long-lived assets, costs associated with divestitures, SERP
curtailment gain and costs associated with Sweaty Betty®
integration were excluded. The financial results of the ongoing
business exclude financial results from the Keds business,
Wolverine Leathers business and reflect an adjustment for the
transition of our Hush Puppies North America business to a
licensing model in the second half of 2023. The outlook for 2024,
and comparable results from 2023, in each case, for our ongoing
business now also exclude the impact of Sperry, which was sold in
January 2024. The Company believes these non-GAAP measures provide
useful information to both management and investors by increasing
comparability to the prior period by adjusting for certain items
that may not be indicative of the Company's core ongoing operating
business results and to better identify trends in the Company's
ongoing business. The adjusted financial results are used by
management to, and allow investors to, evaluate the operating
performance of the Company on a comparable basis. The
constant currency presentation, which is a non-GAAP measure,
excludes the impact of fluctuations in foreign currency exchange
rates. The Company believes providing constant currency information
provides valuable supplemental information regarding results of
operations, consistent with how the Company evaluates performance.
The Company calculates constant currency by converting the
current-period local currency financial results using the prior
period exchange rates and comparing these adjusted amounts to the
Company's current period reported results. Management does
not, nor should investors, consider such non-GAAP financial
measures in isolation from, or as a substitution for, financial
information prepared in accordance with GAAP. A reconciliation of
all non-GAAP measures included in this press release, to the most
directly comparable GAAP measures are found in the financial tables
above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240221637634/en/
Alex Wiseman (616) 863-3974
Wolverine World Wide (NYSE:WWW)
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