Wolverine World Wide (WWW) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue and earnings exceeded expectations and guidance, with record gross margin and earnings more than doubling year-over-year, driven by strong performance from Merrell and portfolio rationalization.

• Strategic turnaround actions included debt reduction, inventory optimization, divestitures of non-core brands, and organizational restructuring, positioning the company for future growth.

• Portfolio now centers on performance brands with global reach and innovation, supported by streamlined operations and enhanced brand-building capabilities.

• Ongoing business excludes Keds, Wolverine Leathers, and Sperry, all divested between 2023 and early 2024.

Financial highlights

• Q3 2024 ongoing revenue was $440.1M–$440.2M, down 7.0% year-over-year after adjusting for divestitures; reported revenue was $440.2M.

• Adjusted gross margin reached a record 45.3%, up 380–450 basis points year-over-year; adjusted operating margin was 7.7%, and operating margin improved to 8.0%.

• Adjusted diluted EPS was $0.29, up 154.5%–163.6% year-over-year; diluted EPS was $0.28.

• Inventory at quarter end was $285.5M–$286M, down 38%–49.4% year-over-year; net debt was $563M, down $370M–$373M year-over-year.

• Operating profit increased 28.9% to $35.2M in Q3 2024, driven by higher gross margin and lower operating expenses.

Outlook and guidance

• FY 2024 ongoing revenue expected at $1.73B–$1.745B, a 12.4%–13.1% decline year-over-year, but above prior guidance.

• Adjusted gross margin for 2024 expected at 44.5%, a record and up 460 basis points from 2023.

• Adjusted operating margin expected at 7.2%; adjusted diluted EPS guided to $0.80–$0.90, up from $0.15 in 2023.

• Year-end net debt projected at $545M, with operating free cash flow of $120M–$130M and inventory expected to decline by $85M.

• Q4 revenue expected at $475M–$490M, with gross margin of ~44% and operating margin of ~9%.