WWW Q1 Earnings Beat Estimates, Revenues Rise Y/Y, Stock Gains 10%

Wolverine World Wide, Inc. WWW reported impressive first-quarter 2025 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Also, revenues and earnings grew year over year. As a result, its shares have gained 10.3% as of yesterday's closing.

The company reported strong first-quarter results, driven by double-digit revenue growth from key brands Merrell and Saucony, as well as a significant year-over-year increase in earnings, which more than tripled.

The company also achieved a record gross margin performance, reflecting enhanced operational efficiency and a favorable product mix. Despite ongoing market uncertainty, its strategy of focusing on innovative products and operational improvements has positioned it well for continued success in a competitive global market.

Insight Into WWW’s Q1 Performance

The company posted adjusted earnings of 18 cents a share, which beat the Zacks Consensus Estimate of 11 cents. The figure improved significantly from adjusted earnings of 5 cents in the prior-year quarter. At constant currency, the company’s earnings per share were 20 cents, up from earnings of 5 cents in the prior-year quarter. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)

Total revenues were $412.3 million, up 4.4% year over year on a reported basis and 5.6% on a constant-currency basis. Ongoing revenues of $412.3 million increased 5.5% on a reported basis and 6.7% on a constant-currency basis. The top line surpassed the Zacks Consensus Estimate of $395 million. Direct-to-consumer revenues on an ongoing basis were $96.4 million, down 9.4% year over year. WWW’s international business’ revenues increased 16.4% to $207.8 million.

Regarding segments, Active Group’s revenues increased 12.7% year over year to $326.7 million. However, the segment’s revenues beat the Zacks Consensus Estimate of $298.2 million. Revenues at Work Group decreased 17% year over year to $74.8 million and lagged the consensus estimate of $84.1 million. Revenues of the Other segment plunged 28% year over year to $10.8 million. Also, the metric lagged the consensus estimate of $13.1 million.

Brand-wise, Merrell’s revenues rose 13.2% year over year to $150.6 million. Saucony's revenues improved 29.6% to $129.8 million. Wolverine's revenues declined 9.2% to $37.4 million. Sweaty Betty generated revenues of $38 million, down 15.9% year over year. The Zacks Consensus Estimate for the brands’ revenues was pegged at $133 million for Merrell, $101 million for Saucony, $41.2 million for Wolverine and $43.4 million for Sweaty Betty.

Wolverine’s Margins & Costs

Adjusted gross profit was $194.8 million, up 7.3% year over year. The adjusted gross margin increased 80 basis points (bps) year over year to 47.3%. This resulted from a more favorable sales mix, reduced promotional activity and benefits from supply-chain cost-saving initiatives.

Adjusted operating costs increased 4.9% to $170.2 million. Also, the metric, as a percentage of revenues, increased 100 bps to 6%.

WWW’s Other Financials

The company ended the quarter with cash and cash equivalents of $106.5 million, long-term debt of $565.8 million and stockholders' equity of $320.8 million.

Net debt was $604 million at the end of the quarter, down 12.1% from the previous year. Inventory at the end of the quarter was $271 million, down 23.6% from the year-earlier quarter.

What Lies Ahead for Wolverine?

Building on a strong first-quarter performance, the outlook for the second quarter reflects continued positive momentum across the business. For the second quarter, the company expects revenues between $440 million and $450 million, indicating growth of 3.7-6% from the year ago period. On a constant-currency basis, expected growth is pegged at 3.4-5.7%. 

The operating margin is projected to be 6.7%, indicating a decline of 10 basis points from the second quarter of 2024. The adjusted operating margin is expected to be 7.2%, suggesting an increase of 90 basis points from the year ago period. 

Earnings per share are anticipated between 17 cents and 22 cents, whereas adjusted earnings per share are expected between 19 cents and 24 cents.

Given ongoing uncertainties related to tariffs and broader macroeconomic conditions, the company is not issuing full-year guidance at this time and has withdrawn its fiscal 2025 outlook provided on Feb. 19, 2025.

In the past three months, shares of this Zacks Rank #5 (Strong Sell) company have lost 21.5% compared with the industry’s 16.6% decline.

WWW Stock Past Three-Month Performance

Stocks to Consider

Some better-ranked stocks are Stitch Fix SFIX, Canada Goose GOOS and G-III Apparel Group, Ltd. GIII.

Stitch Fix delivers customized shipments of apparel, shoes and accessories for women, men and kids. It has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Stitch Fix’s fiscal 2025 earnings indicates growth of 64.7% from the fiscal 2024 reported level. SFIX delivered a trailing four-quarter average earnings surprise of 48.9%.

Canada Goose is a global outerwear brand. GOOS is a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children. It carries a Zacks Rank #2 at present.

The Zacks Consensus Estimate for Canada Goose’s current fiscal year’s earnings and revenues implies declines of 1.4% and 4.9%, respectively, from the year-ago actuals. GOOS delivered a trailing four-quarter average earnings surprise of 71.3%.

G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under three types of brands, licensed, owned and private label. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for GIII’s fiscal 2025 earnings and revenues implies declines of 4.5% and 1.2%, respectively, from the year-ago actuals. G-III Apparel delivered a trailing four-quarter average earnings surprise of 117.8%.

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

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