Shares of Wolverine World Wide Inc. (WWW) fell 7% in the after-market trading yesterday after the company gave a conservative guidance for fiscal 2015. Alongside, the company furnished its preliminary results for fiscal 2014.
For the fourth quarter of fiscal 2014, Wolverine expects revenues to increase 9.1% year over year to $808 million while full year revenues are expected to grow 2.6% to $2.76 billion. The Zacks Consensus Estimate for fourth quarter and full year stands at $789 million and $2.74 billion, respectively.
Adjusted earnings per share for the fiscal are now expected to be at the higher end of the earlier projection of $1.57 to $1.63 per share, while earnings, on a reported basis, will be well within the guided range of $1.32 to $1.38. The Zacks Consensus Estimate is currently pegged at $1.61 per share. Moreover, the company expects to bring down its net debt below the $700 million mark as cash flows are anticipated to be at a record high level in the year.
Management expects this momentum to continue in 2015 as it will take up omni-channel capacities and international footprint expansion in a big way to ensure high visibility of its brand. These measures are expected to cost the company $100 million over the next three years of which $30 million is likely to be recorded in fiscal 2015.
However, management highlighted that these incremental investments combined with currency headwinds and higher pension expenses are likely to impact full year bottom-line by 18 to 22 cents a share, thus leaving earnings per share flat compared with fiscal 2014. Also, its exit of Patagonia Footwear license and store closures announced earlier will play spoilsport. Nevertheless, sales are expected to be up in mid-single digits as against projected low-single digit rise in fiscal 2014.
Wolverine currently carries a Zacks Rank #3 (Hold). Other retailers worth considering include Brown Shoe Co. Inc. (BWS), Skechers USA Inc. (SKX) and Sequential Brands Group, Inc. (SQBG). While Brown Shoe sports a Zacks Rank #1 (Strong Buy), Skechers and Sequential Brands carry a Zacks Rank #2 (Buy).
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