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WW

WOLVERINE WORLD WIDE INC /DE/ (WWW)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue of $412.3M (+5.5% ongoing YoY; +5.6% cc) and record gross margin of 47.3%; adjusted EPS of $0.18. Results were driven by Saucony (+29.6% YoY) and Merrell (+13.2% YoY), while Work Group declined 17% . Versus S&P Global consensus, WWW delivered a revenue beat ($412.3M vs $395.9M*) and an adjusted EPS beat ($0.18 vs $0.11*) with gross margin above expectations (47.3% vs 46.6%) — significant beats .
  • Management withdrew FY 2025 guidance due to tariff uncertainty and macro conditions, while providing Q2 2025 guidance: revenue $440–$450M, operating margin ~6.7% (adj ~7.2%), diluted EPS $0.17–$0.22 (adj $0.19–$0.24). FY guidance (revenue $1.795–$1.825B, adj EPS $1.05–$1.20) issued on Feb 19 was withdrawn on May 8 .
  • Inventory fell to $271M (−23.6% YoY) and net debt to $604M (−12.1% YoY), demonstrating ongoing balance sheet improvement .
  • Call commentary highlighted: expected unmitigated ~$30M gross profit impact from tariffs in 2025, China sourcing reduced to <10% for U.S. products, surgical price increases to partially offset, and momentum in Saucony and Merrell continuing into Q2. These set near-term stock catalysts around tariffs, margin durability, and brand momentum .

Values with * are from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Merrell and Saucony delivered double-digit growth; Saucony +30% with higher ASPs, share gains in run specialty, and a strong lifestyle expansion; Merrell +13% with share gains in hike/trail and successful launches (SpeedARC Surge Boa) .
  • Record Q1 gross margin (47.3%) on healthier mix, lower promotions, and supply chain cost initiatives; adjusted operating margin expanded to 6.0% (+100bps YoY) .
  • Balance sheet: inventory down 23.6% YoY to $271M; net debt down ~12.1% YoY to $604M; management reiterated deleveraging focus and strong capital structure (2029 notes, largely undrawn revolver) .

What Went Wrong

  • Work Group revenue −17% YoY; Wolverine brand trends inconsistent and pressured by prior-year discounting and product gaps (improvement expected as products replenish) .
  • Direct-to-Consumer declined (reported −9.4%; ongoing −6.9%) as WWW deliberately reduced promotions to bolster full-price mix, impacting top line in near term .
  • FY 2025 outlook withdrawn due to tariff uncertainty; management quantified ~$30M unmitigated gross profit impact and noted a heavier impact in H2 vs Q2, necessitating price increases and SG&A discipline .

Financial Results

P&L and Margins vs prior year and prior quarter

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$394.9 $494.7 $412.3
Gross Margin (%)45.9% 44.0% 47.3%
Operating Margin (%)−0.8% 8.0% 4.8%
Diluted EPS (GAAP, $)−$0.19 $0.29 $0.13
Adjusted Diluted EPS ($)$0.05 $0.42 $0.18

Segment and Brand Breakdown (Q1 2025 vs Q1 2024)

Segment/BrandQ1 2024 ($M)Q1 2025 ($M)YoY Change
Active Group$289.8 $326.7 +12.7%
Work Group$90.1 $74.8 −17.0%
Other$15.0 $10.8 −28.0%
Total Revenue$394.9 $412.3 +4.4%
Ongoing Total Revenue$390.8 $412.3 +5.5%
Merrell$133.0 $150.6 +13.2%
Saucony$100.1 $129.8 +29.6%
Wolverine$41.2 $37.4 −9.2%
Sweaty Betty$45.2 $38.0 −15.9%
International$178.5 $207.8 +16.4%
Direct-to-Consumer (Reported)$106.4 $96.4 −9.4%
Direct-to-Consumer (Ongoing)$103.6 $96.4 −6.9%

KPIs and Balance Sheet

KPIQ1 2024Q1 2025Change
Inventory ($M)$354.3 $270.7 −$83.6M (−23.6%)
Net Debt ($M)~$687 [derived: 604+83] $604 −$83 (−12.1%)
Cash & Equivalents ($M)$169.7 $106.5 −$63.2
Borrowings under revolver ($M)$265.0 $135.0 −$130.0

Q1 2025 vs Wall Street Consensus (S&P Global)

MetricConsensusActual
Revenue ($M)$395.9*$412.3
Primary EPS ($)$0.11*$0.18 (Adjusted)
Gross Margin (%)46.6%*47.3%

Values with * are from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY 2025$1.795–$1.825 Withdrawn Withdrawn
Gross Margin (%)FY 202545.5% Withdrawn Withdrawn
Operating Margin (%)FY 20257.7% (adj 8.3%) Withdrawn Withdrawn
Diluted EPS ($)FY 2025$0.95–$1.10 (adj $1.05–$1.20) Withdrawn Withdrawn
Effective Tax Rate (%)FY 2025~18.0 Withdrawn Withdrawn
Diluted Shares (M)FY 2025~81.5 N/AN/A
Revenue ($M)Q2 2025N/A$440–$450 New
Operating Margin (%)Q2 2025N/A~6.7% (adj ~7.2%) New
Diluted EPS ($)Q2 2025N/A$0.17–$0.22 (adj $0.19–$0.24) New
Diluted Shares (M)Q2 2025N/A~81.1 New
Dividend ($/share)Quarterly$0.10 $0.10 (Aug 1 payment) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Gross margin trajectoryRecord GM; lower supply chain and less end-of-life sell-through GM 44.0%; record improvement YoY Record Q1 GM 47.3%; mix, lower promos, supply chain benefits Improving
Tariffs/macroNot a focus in Q3 release 2025 outlook provided; tariffs not highlighted FY 2025 guidance withdrawn; ~$30M gross profit impact; heavier in H2; mitigation plan Rising risk
Supply chain diversificationNot emphasized –China sourcing reduced to <10% for U.S.; dual sourcing flexibility; aim near-zero by 2026 De-risking
Pricing and promotionsRecord GM tied to reduced promos Lower end-of-life sales supporting GM Surgical price increases (mid-single digits in Saucony/Merrell/work); deliberate DTC promo reduction Less promotional; pricing up
Product and brand momentumMerrell +1%, Saucony −10% (Q3) but beats guidance Merrell +1%, Wolverine +20.5% in Q4 Saucony +29.6%, Merrell +13.2%; lifestyle door expansion; ASPs rising Strengthening
International growthInt’l ongoing −2% (Q3) Int’l ongoing −1.3% (Q4) Int’l +16.4% YoY; momentum outside U.S. Accelerating
Work Group/Wolverine brand−11% Q3 Work Group Work Group +20.6% in Q4 −17% Q1; inconsistent Wolverine; leadership transition in Work Group Mixed to weakening
DTC channelOngoing −1.5% Q3 Ongoing −7.0% Q4 Reported −9.4%; ongoing −6.9%; full-price focus raises DTC GM +550bps Top-line pressured; mix improving
Balance sheet deleveragingNet debt −$373M YoY Q3 Net debt −$246M YoY Q4 Net debt $604M (−12.1% YoY); inventory down 23.6% YoY Continuing

Management Commentary

  • “Merrell and Saucony fueled our growth with double-digit revenue increases, and we more than tripled our earnings year-over-year, again delivering a record gross margin performance” — Chris Hufnagel, CEO .
  • “Revenue grew by over 5% on an ongoing basis... record Q1 gross margin... earnings increased by more than 3x compared to last year” .
  • “Less than 10% of our products are now expected to be sourced from China... we expect these incremental tariffs to translate to an estimated $30 million profit impact to 2025 before any mitigation” — Taryn Miller, CFO .
  • “We communicated a set of strategic and surgical price adjustments... mid-single digits for specific products” .
  • “We are not providing a full-year 2025 outlook... and are withdrawing its 2025 guidance issued on February 19, 2025” .

Q&A Highlights

  • Tariffs impact quantified: ~$30M gross profit in 2025 before mitigation; heavier impact in H2 than Q2; China sourcing reduced to <10% for U.S. products .
  • Pricing: surgical, brand-specific increases (mid-single digits in Saucony/Merrell/Work) to partially offset tariffs; other levers include cost reductions and SG&A discipline .
  • Segment cadence: Q2 Active Group guided to high-single-digit growth; Work Group low-single-digit decline sequentially better than Q1 .
  • Demand planning/inventory: integrated business planning ramped; more surgical inventory posture by brand momentum; cautious in weaker areas .
  • DTC: lower promotions to elevate full-price mix and margins; DTC GM up ~550bps; near-term top-line pressure expected .

Estimates Context

  • Q1 2025 beats: Revenue $412.3M vs $395.9M*; adjusted EPS $0.18 vs $0.11*; gross margin 47.3% vs 46.6%* — indicating stronger demand and mix, particularly in Saucony and Merrell, and effective supply chain cost actions *.
  • Q2 2025 guidance at the time bracketed consensus: revenue $440–$450M vs $451.1M* and adjusted EPS $0.19–$0.24 vs $0.24* — amid tariff uncertainties, with heavier impact expected in H2 *.
  • Implications: Street estimates likely needed upward adjustment for Q1 EPS/margins, but withdrawal of FY guide raises H2 uncertainty; watch for revisions contingent on tariff mitigation and pricing elasticity .

Values with * are from S&P Global.

Key Takeaways for Investors

  • Brand-led momentum: Saucony (+29.6%) and Merrell (+13.2%) underpin top-line and margin resilience, aided by higher ASPs, share gains, and new product franchises — supportive of near-term multiple stabilization .
  • Margin durability: Record 47.3% gross margin driven by mix/promo discipline/supply chain; management is offsetting tariffs with surgical pricing and SG&A controls — monitor elasticity risk .
  • Tariff overhang: ~$30M unmitigated gross profit impact concentrated in H2, FY guide withdrawn — headline risk and potential volatility tied to trade policy developments .
  • Work Group/Wolverine execution: segment −17% and inconsistent brand trends; leadership transition underway — recovery depends on product refreshes and replenishment cadence .
  • DTC strategy: reduced promotions improving mix/margins but pressuring revenue — watch if higher full-price mix sustains without demand erosion .
  • Balance sheet: inventory and net debt down meaningfully YoY; ample liquidity (2029 notes, undrawn revolver) supports flexibility through tariff cycle .
  • Near-term trading: Q2 guidance suggests continued Active Group growth; catalysts include tariff headlines, pricing actions, and Saucony/Merrell sell-through; medium-term thesis hinges on brand momentum, supply chain de-risking, and margin preservation .

Other Relevant Press Releases (Q1 Season)

  • Quarterly dividend maintained at $0.10 per share (payable Aug 1, 2025; record July 1, 2025) — consistent capital return signal .
  • Conference call announcement and schedule details for May 8, 2025 .