In line revenue growth and record gross margin lead to 10% adjusted EPS growth, ahead of expectations for Q3
ROCKFORD, Mich., Nov. 07, 2019 (GLOBE NEWSWIRE) — Wolverine World Wide, Inc. (NYSE: WWW) today reported financial results for the third quarter ended September 28, 2019. The Company also provided an update on its full-year 2019 outlook.
“We delivered our highest quarterly revenue increase of the year driven by constant currency growth of over 11% from Merrell, Sperry and Saucony. Our adjusted earnings per share of $0.68 was a record performance for the Company and meaningfully better than our expectations heading into the quarter,” said Blake Krueger, Wolverine World Wide’s Chairman, Chief Executive Officer and President. “The double-digit growth from our biggest brands is a direct result of our continued focus on building trend-right product that resonates with consumers and ongoing execution of our digital-direct offense.”
THIRD QUARTER 2019 REVIEW
- Reported revenue of $574.3 million increased 2.8% as compared to the prior year and adjusting for currency, increased 3.6%.
- Reported gross margin of 42.4%, was in line with expectations, and increased 80 basis points compared to 41.6% in the prior year.
- Reported operating margin was 11.9%. Adjusted operating margin of 14.1% exceeded expectations expanding 150 basis points compared to the prior year.
- Reported diluted earnings per share were $0.57, compared to $0.60 in the prior year. Adjusted diluted earnings per share increased 9.7% to $0.68 compared to $0.62 in the prior year.
- The reported tax rate was 20.3%, as compared to 7.8% in the prior year. The prior year effective rate was favorably impacted by a $40 million voluntary pension contribution, resulting in a $0.06 benefit in the prior year.
- Inventories increased 28.8% compared to the prior year, slightly better than expectations, and include $8.4 million related to new stores and the Saucony Europe acquisition.
- The Company repurchased $107 million of shares in the quarter at an average price of $25.13, and has approximately $513 million available under its authorized share repurchase programs.
“The strong results from Merrell, Sperry and Saucony demonstrate the benefits of our demand creation investments and steady execution against our global growth model. This revenue performance combined with continued operational discipline led to excellent earnings leverage in the quarter, with adjusted earnings per share growth of nearly 10% and gross margin of 42.4%, the highest of any third quarter for the Company,” stated Mike Stornant, Senior Vice President and Chief Financial Officer. “Our well-positioned capital structure allowed us to continue to opportunistically repurchase stock. Our strong liquidity position provides considerable flexibility to drive future long-term shareholder return.”
FULL-YEAR 2019 OUTLOOK
The Company is maintaining its full-year revenue guidance and updating its full-year earnings outlook to reflect estimated new tariff costs in the fourth quarter.
- Revenue is expected to be approximately $2.28 billion including approximately 7.0% constant currency growth in the fourth quarter.
- Gross margin is still expected to be approximately 41.0% matching the prior year’s record level.
- Reported operating margin is now expected to be approximately 10.5% and adjusted operating margin is expected to be approximately 12.0%.
- The effective tax rate is expected to be approximately 19.0%.
- Diluted weighted average shares are now expected to be approximately 86.4 million.
- Reported diluted earnings per share are now expected to be approximately $1.96 and adjusted diluted earnings per share are now expected to be approximately $2.25 including $0.03 related to new tariffs on products expected to be sold in the fourth quarter.
- Cash flow from operations is expected to be approximately $190 million.