Can WWW Sustain Its Broad-Based Margin Expansion Into 2025 & Beyond?

Wolverine World Wide, Inc. WWW sustained its profitability momentum in the second quarter of 2025, once again delivering record margins alongside healthy revenue growth. The adjusted gross margin moved up 410 basis points from the prior year to 47.2%, supported by a favorable sales mix, reduced promotional activity and benefits from supply-chain cost-saving initiatives, with slight incremental impacts from U.S. tariffs.

The company’s two largest brands were central to this margin expansion. Saucony achieved a 560-basis-point increase in the gross margin, benefiting from its strategic reset that focused on premium products, disciplined distribution and higher average selling prices. Merrell posted a gain of nearly 600 basis points in the gross margin, fueled by strong demand for modernized trail offerings such as the Moab Speed 2 and Agility Peak 5.

Sweaty Betty delivered an improvement of more than 500 basis points, reflecting its shift to premium, full-price positioning. The Wolverine brand recorded a gross margin increase of more than 400 basis points, supported by reduced discounting and the success of higher-end product collections.

Operating profitability advanced alongside gross margin gains. The adjusted operating margin climbed 290 basis points year over year to 9.2%, significantly above the company’s 7.2% outlook. The upside reflected revenue outperformance and SG&A leverage, while still allowing for reinvestment in marketing, talent and systems designed to fuel long-term brand health.

For the third quarter, Wolverine expects the gross margin to rise 170 basis points from the prior year’s actual to 47%, and the adjusted operating margin to move up 60 basis points to 8.3%. Management expressed confidence in sustaining long-term gross margins between 45% and 47%, anchored by a healthier sales mix, pricing discipline and ongoing supply-chain optimization.

While higher tariffs will weigh more heavily in the fourth quarter, Wolverine has already acted to mitigate the impacts through sourcing diversification, supplier cost-sharing, selective price increases and SG&A savings. With record profitability, stronger brand performance and operational resilience, the company is well-positioned to sustain margin strength and move steadily toward restoring double-digit operating margins.

WWW’s Price Performance, Valuation & Estimates

In the past three months, the WWW stock has surged 76.6% compared with the Zacks Shoes and Retail Apparel industry’s 18.7% growth.

From a valuation standpoint, the company trades at a forward price-to-sales ratio of 1.27X, below the industry’s average of 2.01X. It has a Value Score of D.

The Zacks Consensus Estimate for WWW’s current financial year’s earnings implies year-over-year growth of 46.2%, while the same for the next financial year indicates a rally of 18.8%. Earnings estimates for 2025 have been upbound by 2 cents per share and the same for 2026 has been upwardly revised by 4 cents in the past 30 days.

Wolverine currently carries a Zacks Rank #1 (Strong Buy).

Key Picks

Some better-ranked stocks are Genesco Inc. GCO, Levi Strauss & Co. LEVI and The TJX Companies, Inc. TJX.

Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GCO’s fiscal 2026 earnings and sales implies growth of 67% and 3%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 28.1%.

Levi Strauss designs and markets jeans, casual wear and related accessories. It has a Zacks Rank of 2 (Buy) at present.

The Zacks Consensus Estimate for Levi Strauss’ current financial-year earnings indicates growth of 4% from the year-ago actual. LEVI delivered a trailing four-quarter average earnings surprise of 25.9%.

The TJX Companies is a leading off-price retailer of apparel and home fashions. It carries a Zacks Rank #2 at present.

The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year earnings and sales indicates growth of 7% and 5.4%, respectively, from the year-ago actuals. TJX delivered a trailing four-quarter average earnings surprise of 5.4%.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research