ROCKFORD, Mich., March 26, 2020 (GLOBE NEWSWIRE) — Wolverine World Wide, Inc. (NYSE: WWW) today provided a business update, further highlighting the Company’s strong liquidity, supply chain stability, and agile business model, while detailing the proactive and precautionary measures it is taking to navigate the current environment. The Company also commented on the on-line demand for certain products as consumers adjust their lifestyles for social distancing.
Capital preservation, expense controls and positive cash flows
The Company is acting quickly and taking a series of proactive measures to conserve capital during this period of disruption. Most importantly, it is leveraging its nimble supply chain to significantly reduce inventory receipts to adjust for lower demand during periods of store closures and restrictions in certain countries. In addition, the Company has taken steps to reduce capital outflows until business conditions stabilize, by delaying most capital projects and suspending share repurchases. Operating expenses are being significantly reduced to respond to a conservative outlook for the rest of the year. These working capital and operating expense actions are expected to result in up to $500 million of cash savings for the remainder of 2020, with much of the benefit expected in the next two quarters where the business outlook is most challenging. These actions are expected to allow the Company to generate over $150 million of positive operating cash flows in 2020.
The Company maintains a credit facility with total capacity of $1.75 billion that expires in December 2023, which includes an $800 million revolving line of credit. In an abundance of caution and as a precautionary measure the Company has drawn down the remainder of its revolving credit line. This draw down strengthens the Company’s cash position resulting in approximately $450 million of cash on hand. In addition, the Company has uncommitted incremental borrowing capacity of approximately $760 million under the credit facility, subject to certain specified conditions.
Infrastructure is fully operational, enabling ecommerce orders and meeting increased on-line demand
The Company notes that its supply chain, logistics and distribution centers are currently operational allowing it to service all customers, especially through its owned and third-party on-line channels, which represent nearly 40% of total U.S. sales. Through strong product offerings and relevant consumer messaging, the Company has driven mid-teens ecommerce growth in the first quarter and recent trends in this channel are very encouraging. The Company’s portfolio of brands supports key consumer mindsets and activities with particular strength in the run, hike and walk categories. In addition, the Company’s work boot category, which represents 15% of overall revenues has experienced increased on-line demand for core work, military, police, fire and other first responder products.
COVID-19 response efforts
In support of COVID-19 response efforts, the Company has recently donated approximately 25,000 protective masks to a local hospital group in Michigan and plans to supply more masks in both Boston and Michigan. The Company is in the early stages of leveraging its U.S. based ReChaco manufacturing facility for further mask production to make similar donations. In addition, several of the Company’s brands have donated footwear to healthcare and first responders to assist in the current response efforts.
“The unprecedented COVID-19 outbreak brings new information each day. We are fully operational and have proactively positioned our business to navigate through this uncertain time and emerge stronger. Our prompt liquidity measures, significant expense reductions and heightened inventory discipline are expected to allow the Company to deliver positive cash flow in 2020,” said Blake Krueger, Wolverine’s Chairman, Chief Executive Officer and President, “and we will continue to protect the safety of our teams and partners while stepping up to serve our communities.”
The Company plans to provide more information during its first quarter earnings call.