Wolverine World Wide Inc. (WWW), one of the leading designers, manufacturers and marketers of branded footwear and apparel, recently posted first-quarter 2011 results that topped the Zacks expectation on the heels of strong demand witnessed across its brands. The company also raised its outlook for fiscal 2011 on the back of better-than-expected results and a strong order backlog.
The company’s multi-brand portfolio, geographical diversification, and multi-distribution channel strategy remain its key growth drivers.
Quarterly Discussion
The quarterly earnings of 72 cents a share outpaced the Zacks Consensus Estimate of 66 cents and grew 28.6% from 56 cents earned in the prior-year quarter.
Wolverine, the seller of products under Harley-Davidson Footwear, Hush Puppies, Merrell and other brands, said its total revenue for the quarter climbed 16.1% to $330.9 million from the prior-year quarter, and handily beat the Zacks Consensus Estimate of $324 million.
By operating group, year-over-year revenue increased 21.6% to $138.1 million at Outdoor Group, 18.3% to $111.1 million at Heritage Group and 1.1% to $52 million at Lifestyle Group. Other business units, which comprise Wolverine retail and leathers, posted a revenue growth of 14.2% to reach $26.6 million.
Gross profit, excluding restructuring and related costs, jumped 16.2% to $137.8 million during the quarter, whereas gross margin remained more or less flat at 41.6% compared with the prior-year quarter.
Rockford, Michigan-based Wolverine enjoyed increased momentum in fiscal 2010 that continues into fiscal 2011. Moreover, we believe that the company remains well positioned to increase its market share on the strength of its brand portfolio. The Merrell brand has been the key growth driver in the past decade, and we expect it to catalyze future growth.
Other Financial Aspects
Wolverine ended first-quarter 2011 with cash and cash equivalents of $91.6 million and shareholders’ equity of $585.7 million with negligible debt load. The company repurchased 142,000 shares during the quarter at a cost of $5.1 million. The company still has $149 million at its disposal under its share repurchase authorization. The company also recently raised its quarterly dividend by 9.1% to 12 cents a share, which will be paid on May 2, 2011 to shareholders of record as on April 1, 2011.
Robust Results Reflected in Guidance
Wolverine’s healthy first-quarter 2011 results and increased order backlog of approximately 30%, keeps management optimistic on fiscal 2011. The company now projects total revenue in the range of $1,380 million to $1,420 million, reflecting a year-over-year growth of 10.5% to 13.7%.
Fiscal 2011 earnings are expected between $2.40 and $2.50 per share, representing a growth of 10.6% to 15.2% from the prior year. Following encouraging guidance, a positive sentiment may be palpable among the analysts and we could witness a rise in the Zacks Consensus Estimate. The current Zacks Consensus Estimate for fiscal 2011 is $2.43.
Earlier, Wolverine had forecasted fiscal 2011 total revenue in the range of $1,350 million to $1,390 million, reflecting a year-over-year growth of 8.1% to 11.3%, and earnings between $2.35 and $2.45 per share, representing a growth of 8% to 13%.
Wolverine, which competes with Timberland Co. (TBL), Deckers Outdoor Corporation (DECK) and Skechers USA Inc. (SKX), holds a Zacks #2 Rank, which translates into a short-term ‘Buy’ recommendation.
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