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WW

WOLVERINE WORLD WIDE INC /DE/ (WWW)·Q2 2025 Earnings Summary

Executive Summary

  • WWW delivered an upside Q2: revenue $474.2M and adjusted diluted EPS $0.35, both above S&P consensus ($451.1M*, $0.24*), driven by Saucony (+41.5% YoY) and Merrell (+10.7% YoY) and another quarterly record gross margin at 47.2%. Management highlighted a $10M shipment timing pull-forward and ~$4M FX tailwind versus guidance.
  • Mix/pricing and supply chain savings expanded gross margin +410 bps YoY to 47.2%, lifting adjusted operating margin to 9.2% (+290 bps YoY). Inventory rose to $316M (+6.4% YoY) to support Saucony momentum; net debt fell to $568M (-14.8% YoY).
  • Q3 outlook: revenue $450–$460M, ~47% gross margin, 7.3% GAAP OM / ~8.3% adjusted OM, and adjusted EPS $0.28–$0.32; company is not providing FY25 guidance due to tariff uncertainty (previous FY25 outlook issued in Feb was withdrawn in May and remains withdrawn).
  • Tariffs: 2025 profit headwind now estimated at ~$20M before mitigation (cut from ~$30M prior) given updated rates effective Aug 7; majority of COGS impact expected in Q4. Mitigation includes sourcing shifts, cost sharing, selective pricing, and SG&A controls.

What Went Well and What Went Wrong

  • What Went Well

    • Strong top-line and margin execution: revenue +11.5% YoY; adjusted operating margin 9.2% (+290 bps YoY); adjusted EPS $0.35 (more than 2x YoY). “Another quarter of record gross margin.”
    • Brand momentum: Saucony +41.5% with record Q2 revenue and broad-based growth across regions/channels; Merrell +10.7% with ~600 bps GM expansion and continued share gains; both cited as executing the brand-building playbook.
    • Balance sheet progress: Net debt down $99M YoY to $568M; leverage improved; dividend maintained at $0.10.

  • What Went Wrong

    • DTC softness and underperformers: Direct-to-Consumer declined ~1.6% YoY; Sweaty Betty revenue -6% YoY (though sequentially better), Work Group +2% aided by timing shift.
    • Elevated SG&A as the company reinvests in brand demand creation and talent; SG&A ratio guided higher YoY into Q3.
    • Tariff overhang and modeling noise: ~$10M shipment pull-forward from Q3 into Q2 and ~$4M FX tailwind vs guidance; tariff headwind ~$20M before mitigation in 2H-weighted COGS pressure, mostly Q4.

Financial Results

Overall P&L vs prior periods

MetricQ2 2024Q1 2025Q2 2025
Revenue ($M)425.2 412.3 474.2
Gross Margin %43.1% 47.3% 47.2%
Operating Margin % (GAAP)6.8% 4.8% 8.6%
Adjusted Operating Margin %6.3% 6.0% 9.2%
Diluted EPS (GAAP)$0.17 $0.13 $0.32
Adjusted Diluted EPS$0.15 $0.18 $0.35

Segment and brand breakdown

Segment/Brand ($M)Q2 2024Q1 2025Q2 2025
Active Group305.9 326.7 355.5
Work Group105.0 74.8 107.5
Other14.3 10.8 11.2
Merrell142.7 150.6 157.9
Saucony102.0 129.8 144.3
Wolverine40.1 37.4 37.1
Sweaty Betty44.0 38.0 41.3
International216.0 207.8 250.0
Direct-to-Consumer (reported)113.4 96.4 111.6

KPIs and balance sheet

KPIQ2 2024Q1 2025Q2 2025
Inventory ($M)297.1 270.7 316.0
Net Debt ($M)—604.0 568.0
Diluted Shares (M)80.0 80.8 81.1

Actuals vs S&P Global consensus (Q2 2025)

MetricConsensus*ActualSurprise
Revenue ($M)451.1*474.2 +$23.1
Adjusted Diluted EPS ($)0.24*0.35 +$0.11
EBITDA ($M)38.9*47.7*+$8.8

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025—$450–$460M New
Gross MarginQ3 2025—~47.0% New
Operating Margin (GAAP)Q3 2025—~7.3% New
Operating Margin (Adj)Q3 2025—~8.3% New
Diluted EPS (GAAP)Q3 2025—$0.24–$0.28 New
Adjusted Diluted EPSQ3 2025—$0.28–$0.32 New
Diluted Shares (M)Q3 2025—~81.3 New
RevenueFY 2025$1.795–$1.825B (Feb 19) Not providing FY25 outlook (withdrawn in May) Withdrawn
Gross MarginFY 2025~45.5% (Feb 19) Not providing FY25 outlook Withdrawn
Diluted EPS (GAAP)FY 2025$0.95–$1.10 (Feb 19) Not providing FY25 outlook Withdrawn
Adjusted Diluted EPSFY 2025$1.05–$1.20 (Feb 19) Not providing FY25 outlook Withdrawn
Quarterly DividendOngoing$0.10 $0.10 (declared Jul 30) Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Prev-2)Q1 2025 (Prev-1)Q2 2025 (Current)Trend
AI/Technology——Sweaty Betty piloted AI for pricing; plans broader rollout across portfolio. Building capability
Supply Chain/CostsGM expansion on lower supply chain costs; margin recovery underway. Record GM 47.3% on mix and cost initiatives. 47.2% GM; continued product cost savings; tariff mitigation actions. Sustained improvement; tariff risk
Tariffs/Macro—Withdrew FY25 outlook due to tariff uncertainty. 2025 profit impact now ~$20M pre-mitigation; majority COGS in Q4. Headwind but mitigated
Product PerformanceMerrell modest growth in Q4; Wolverine +20.5% YoY. Merrell +13%; Saucony +29.6%. Saucony +41.5% (record Q2); Merrell +10.7% with ~600 bps GM expansion. Accelerating
Regional TrendsInternational -5.4% in Q4 reported; -1.3% ongoing. International +16.4%. International $250M (+15.7% YoY); EMEA/APAC outperformed for Merrell. Strengthening
DTCDTC down in Q4; rightsizing. DTC -9.4%; focus on less promotion. DTC -1.6%; GM +~300 bps in DTC; sequential improvement. Improving mix
Marketing/SG&AReinvesting after turnaround. —Higher brand spend to drive top-of-funnel; SG&A ratio rising near term. Investing for growth

Management Commentary

  • CEO: “Our second quarter results exceeded our expectations… another quarter of record gross margin… we’re executing our new brand-building model… building a new company.”
  • CEO on brands: “Saucony delivered record second quarter revenue… Merrell grew 11%… high quality growth enabled us to more than double earnings.”
  • CFO: “Revenue was $474M, exceeding the high end of our outlook… roughly $10M of wholesale orders shipped in Q2 originally planned for Q3; ~$4M favorable FX versus guidance.”
  • CFO on tariffs: “We now estimate the 2025 profit impact from incremental tariffs will be approximately $20M before any mitigation… majority of the incremental expense expected in Q4.”

Q&A Highlights

  • Saucony growth drivers: Broad-based across performance and lifestyle, new doors <50% of growth; intense focus on sell-through and key city strategy (London, Tokyo, Paris).
  • Gross margin durability: Confidence sustaining 45–47% long-term range; Q3 guided ~47%.
  • DTC pathway: Less promotional, improved messaging and tools; DTC GM expanded ~300 bps; sequential improvement with more work ahead.
  • Tariff/pricing cadence: Selective price increases taken in June; still monitoring consumer and competitive response; expecting more tariff impact in Q4.
  • Cash/leverage: Continued debt paydown; bank-defined leverage 2.9x at Q2 vs 3.9x a year ago; targeted inventory build in Saucony to support growth.

Estimates Context

  • Q2 2025 beats vs S&P Global consensus: revenue $474.2M vs $451.1M* (+$23.1M); adjusted diluted EPS $0.35 vs $0.24* (+$0.11); EBITDA $47.7M* vs $38.9M* (+$8.8M). 9 revenue ests; 9 EPS ests.

Forward comparison (Q3 2025)

MetricConsensus*Company Guidance
Revenue ($M)463.1*$450–$460
Adjusted EPS ($)0.330*0.28–0.32

Values retrieved from S&P Global.

Consensus suggests the midpoint of WWW’s Q3 guide is slightly below revenue consensus (timing pull-forward and initial tariff absorption may explain conservatism), while EPS guide brackets consensus.

Key Takeaways for Investors

  • High-quality beat: broad-based revenue growth, record GM, and significant EPS upside; timing/FX aided but underlying brand momentum is clear.
  • Saucony and Merrell are the engine; distribution and key city plays plus product cycles should continue to support above-market growth into 2H.
  • Tariff drag now better quantified (~$20M pre-mitigation) and back-half weighted; mitigation actions reduce downside risk, but Q4 bears close watch.
  • Mix/pricing and supply chain initiatives are structurally lifting margins; management is reinvesting in demand creation, which may temper near-term SG&A leverage but supports brand equity and sell-through.
  • DTC is improving in quality (higher GM, lower promo) though still mixed on growth; continued modernization should aid conversion and profitability.
  • Balance sheet healthier (lower net debt, improved leverage); dividend maintained, offering income support.
  • Near-term trading: Results-driven rerating potential on beats; remain mindful of Q3 timing normalization and Q4 tariff cost load. Medium-term thesis: brand-led growth with durable margin structure as portfolio strategy and operational upgrades compound.