Wolverine World Wide (WWW) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue and earnings exceeded expectations and guidance, with record gross margin and more than double the prior year's earnings, driven by strong performance from Merrell and Saucony.

• Strategic turnaround and portfolio rationalization, including divestitures of Keds, Wolverine Leathers, and Sperry, stabilized the business, reduced debt, and positioned the company for future growth.

• Ongoing business now focuses on performance brands with global reach, supported by streamlined operations and innovation.

• Inventory and net debt were significantly reduced year-over-year, strengthening the balance sheet.

• Raised full-year revenue and earnings guidance based on strong Q3 results and order book development.

Financial highlights

• Q3 2024 ongoing revenue was $440.1M, 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% (up 210 bps); operating margin improved to 8.0% from 5.2% year-over-year.

• Adjusted diluted EPS was $0.29 in Q3, up 154.5%–163.6% year-over-year; net earnings attributable to the company rose to $23.6M.

• Inventory at quarter end was $285.5M–$286M, down 40%–49.4% year-over-year; net debt reduced to $563M, down $370M–$373M from last year.

Outlook and guidance

• FY 2024 ongoing revenue expected at $1.73–$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 projected at 7.2%; adjusted diluted EPS expected at $0.80–$0.90, up from $0.15 in 2023.

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

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