Shares of Wolverine World Wide Inc. (WWW) rose 3.2% after the company posted third-quarter 2014 adjusted earnings of 63 cents per share that topped the Zacks Consensus Estimate of 59 cents per share while rising 8.6% year over year.
Including certain one-time items, earnings increased 5.6% to 57 cents per share.
However, Wolverine’s revenues of $711.1 million marginally decreased 0.8% on a year-over-year basis and were way below the Zacks Consensus Estimate of $720 million. A lukewarm performance of the Lifestyle Group ran down decent runs at the Heritage and Performance Groups.
Lifestyle Group revenues were down 6.7% to $277.9 million, whereas revenues of the Heritage and Performance Groups were up 4.6% to $151.3 million and 2.2% to $257.1 million, respectively. Further, revenues derived from the company’s other brands climbed 9.7% to $24.8 million in the quarter.
Brand-wise, Merrell, Saucony, Chaco, Patagonia Footwear and Wolverine were strong performers, whereas region wise, Canada, Asia-Pacific and EMEA (Europe, Middle East and Africa) did very well. However, a subdued domestic retail environment coupled with lower sales of Sperry brand remain the company’s major concerns.
Although the company’s gross profit fell 0.5% to $284.7 million in the quarter, its gross margin expanded 10 basis points (bps) to 40%. Selected price hikes and favorable product mix led to the increase in gross margin. Wolverine’s adjusted operating margin expanded 70 bps to 13.8%.
Other Financial Aspects
Wolverine ended the quarter with cash and cash equivalents of $231.5 million, long-term debt of $1045 million and shareholders’ equity of $966.2 million. Additionally, inventories during the quarter were up 0.8% to $466.3 million. For the 36 weeks ended Sep 6, 2014, the company generated operating cash flow of $114.7 million.
Guidance
Management now projects fiscal 2014 revenue of $2,745 million.
However, this Zacks Rank #3 (Hold) stock continues to expect earnings per share in the range of $1.57–$1.63, reflecting a year-over-year growth of 10%–14%. The Zacks Consensus Estimate is currently pegged at $1.60 per share, falling within the company’s guidance range. Moreover, reported earnings are expected to be in the range of $1.32—$1.38 per share.
Other Stocks to Consider
Other better-ranked stocks in the same industry include Brown Shoe Co. Inc. (BWS), Nike, Inc. (NKE) and Skechers USA Inc. (SKX), all carrying a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment