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WW

WOLVERINE WORLD WIDE INC /DE/ (WWW)·Q4 2024 Earnings Summary

Executive Summary

  • Ongoing revenue inflected to growth in Q4 2024 (+3% YoY), with adjusted EPS at $0.42 and gross margin at 44.0% (+620 bps YoY) on lower supply chain costs and healthier mix .
  • Management guided FY 2025 revenue to $1.795–$1.825B, gross margin to 45.5% (corrected), operating margin to 7.7% (adj. 8.3%), and adjusted EPS to $1.05–$1.20, citing FX headwinds (~$0.08 EPS) and a 53rd week .
  • Balance sheet improved materially: inventory fell to $240.6M and net debt to $496M (down 33% YoY), supporting reinvestment (marketing rate rising from ~8%) and innovation initiatives (Boston Innovation Hub) .
  • Key catalysts: Saucony’s performance/lifestyle expansion (core four franchises, Endorphin Elite 2), Merrell share gains in hiking/trail, Work Group new product launches and timing normalization, and higher full‑price DTC mix; watch FX and China tariff developments (management expects manageable impact) .

What Went Well and What Went Wrong

  • What Went Well

    • Company delivered an “inflection to growth” in Q4 with revenue/EPS above internal expectations; CEO: “we accomplished all of these objectives…exceeded our expectations for revenue and earnings and inflected to growth” .
    • Margin expansion driven by cost actions and cleaner mix; CFO: Q4 adjusted operating margin 10.2% above outlook; adjusted EPS $0.42 “above the high end of our guidance” .
    • Brand momentum: Saucony grew 7% adjusted for business model changes, gained U.S. run specialty share; Merrell grew 1% with ~400 bps GM expansion; new disruptive launches (Endorphin Elite 2; Merrell SpeedARC Surge BOA) .

  • What Went Wrong

    • Reported revenue declined YoY (divestiture effects), and Saucony down 5% reported due to Kids/China model changes; DTC revenue declined as promotions were reduced (mix improved, but top line softer) .
    • Work Group trends “inconsistent” (order patterns, supply chain timing, brand footing); ~$7M revenue timing shift into Q4 from Q1 highlighted volatility .
    • FX headwinds and tariffs present external pressures; management flagged ~300 bps operating margin FX impact and monitoring February China tariff changes (viewed as manageable) .

Financial Results

Sequential quarterly comparison (oldest → newest):

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$425.2 $440.2 $494.7
Gross Margin %43.1% 45.3% 44.0%
Operating Margin %6.8% 8.0% 8.0%
Diluted EPS ($)$0.17 $0.28 $0.29
Adjusted Operating Margin %6.3% 7.7% 10.2%
Adjusted Diluted EPS ($)$0.15 $0.29 $0.42

Q4 year-over-year comparison:

MetricQ4 2023Q4 2024
Reported Revenue ($USD Millions)$526.7 $494.7
Ongoing Total Revenue ($USD Millions)$480.5 $494.7
Gross Margin %36.6% 44.0%
Adjusted Gross Margin %37.8% 44.0%
Operating Margin %(35.5)% 8.0%
Adjusted Operating Margin %(2.9)% 10.2%
Diluted EPS ($)($1.15) $0.29
Adjusted Diluted EPS ($)($0.26) $0.42
Constant Currency Diluted EPS ($)N/A$0.48

Segment and brand breakdown (oldest → newest):

Segment/Brand Revenue ($USD Millions)Q2 2024Q3 2024Q4 2024
Active Group$305.9 $318.7 $331.7
Work Group$105.0 $109.1 $151.1
Other$14.3 $12.4 $11.9
Merrell$142.7 $159.2 $163.4
Saucony$102.0 $104.8 $99.6
Wolverine$40.1 $49.4 $62.4
Sweaty Betty$44.0 $46.3 $63.4

Selected KPIs (oldest → newest):

KPIQ2 2024Q3 2024Q4 2024
Inventory ($USD Millions)$297.1 $285.5 $240.6
Net Debt ($USD Millions)$666 $563 $496
International Revenue - Reported ($USD Millions)$216.0 $213.8 $252.7
Direct-to-Consumer Revenue - Reported ($USD Millions)$113.4 $112.4 $151.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025N/A (initial)$1.795–$1.825 New
Gross Margin %FY 2025N/A (initial)45.5% (corrected) New
Operating Margin %FY 2025N/A (initial)7.7% (Adjusted: 8.3%) New
Adjusted Diluted EPS ($)FY 2025N/A (initial)$1.05–$1.20 New
Diluted EPS ($)FY 2025N/A (initial)$0.95–$1.10 New
Effective Tax Rate %FY 2025N/A (initial)~18.0% New
Interest & Other Expense ($M)FY 2025N/A (initial)$25–$30 New
Revenue ($USD Millions)Q1 2025N/A (initial)~$395 (+1.2% YoY; ~5.1% cc ex-model change) New
Gross Margin %Q1 2025N/A (initial)~46.6% New
Adjusted Operating Margin %Q1 2025N/A (initial)~4.6% New
Adjusted Diluted EPS ($)Q1 2025N/A (initial)~$0.10 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Technology/InnovationModernizing tools and brand-building model (stated progress) Continuing transformation and operations enhancement Boston Innovation Hub opened to accelerate design; added merchandising talent/tools Improving
Supply Chain & CostsLower supply chain costs lifted GM Lower supply chain costs, reduced end-of-life inventory GM +620 bps YoY; benefits from cost savings and healthier mix Improving
Tariffs/Macro——Monitoring Feb 4 China tariff changes; impact viewed as manageable; FX a notable headwind Caution
Product Performance (Saucony)Decline reported, pipeline strengthening Saucony still down reported, but brand momentum building +7% adj growth; core 4 strong; Endorphin Elite 2 launch; share gains in U.S. run specialty Improving
Product Performance (Merrell)Category headwinds; working to modernize +1.4% revenue; mix improving +1% revenue; ~400 bps GM expansion; share gains in hiking/trail Improving
DTC & PricingDTC ~flat ongoing; mix improving DTC ongoing -1.5%; margin improving DTC revenue down on lower promotions; full-price penetration +500 bps YoY Margin up; revenue softer
Marketing Investment——Marketing ~8% in 2024; rising in 2025; focus on Saucony (events, key city, concept stores) Increasing
Work GroupDeclines in Q2 amid timing -11.3% YoY; building core franchises +21% reported on demand recovery and timing; Q1 decline low double-digit cc with ~$7M timing shift Volatile, normalizing

Management Commentary

  • CEO: “We outlined…stabilization, transformation, and inflection…we accomplished all of these objectives…exceeded our expectations for revenue and earnings and inflected to growth…brands are poised to continue to build on our momentum” .
  • CFO: “Fourth quarter adjusted operating margin of 10.2% exceeded our outlook…adjusted diluted EPS was $0.42, above the high end of our guidance…inventory…down approximately 36%…net debt…down 33%…2025 outlook builds on momentum…with FX headwinds and a 53rd week” .
  • CEO on Saucony/Merrell: Saucony grew 7% (adj), doubled down on core four franchises and launches (Endorphin Elite 2); Merrell modernizing trail with Moab Speed 2/Agility Peak 5 and SpeedARC Surge BOA (~$300 price point) .

Q&A Highlights

  • Distribution expansion: Saucony targeting ~900 incremental doors in 2025 (many online), disciplined scaling; Merrell opening new lifestyle distribution and resetting U.S. wholesale, with focus on female consumer .
  • Margin aspirations: Discussion of reaching 45–47% gross margin over time; continued sourcing/product cost opportunities and SG&A savings planned for 2025 .
  • Work Group timing: Q1 Work Group expected low double-digit cc decline; half ($7M) due to timing shift from Q1 to Q4; improvement expected from Q2 as new products replenish inventory .
  • Sweaty Betty footprint: ~100 stores; 10 new (U.K.) in 2025; U.S. tests (Georgetown, Chicago) show positive reception; focus on profitability and category innovation .
  • Channel and inventory: DTC softness tied to lower promos and inventory constraints (Saucony); inventory now near target, modest 2025 investment to support growth; U.S. run specialty channel healthy; Saucony gaining share .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to data-access limitations during this analysis window; direct beat/miss vs consensus could not be verified. Values retrieved from S&P Global were unavailable at time of request.

Where estimates may need to adjust:

  • FY 2025 margin trajectory is stronger than 2024 (GM +100 bps; adj OM +80 bps) despite FX/tariff headwinds, and brand-level growth (Saucony mid-teens cc, Merrell mid-single, Work low single) supports upward revenue revisions if execution holds .
  • Q1 2025 seasonality and operating leverage path (EPS ~$0.10, OM ~4.6%) set expectations for sequential margin ramp through the year as revenue accelerates .

Key Takeaways for Investors

  • Q4 validated the turnaround playbook: ongoing revenue inflected to growth, margins expanded sharply, and balance sheet is cleaner (inventory, net debt) .
  • FY 2025 guide implies sustained profitable growth with higher investment in demand creation and platforms; FX and tariffs are watch items but currently manageable per management .
  • Saucony is the near-term growth engine across performance and lifestyle; monitor sell-through of core four and Endorphin Elite 2, door expansion pace, and U.K./Tokyo key city activations .
  • Merrell’s modernization is gaining traction (share gains, higher GM); track SpeedARC adoption and lifestyle distribution expansion .
  • Work Group volatility should abate as supply timing normalizes and new products land; expect better run-rate from Q2 onward .
  • DTC strategy is pivoting to full-price health at the expense of near-term top line; margin mix benefits should persist as e-commerce platform upgrades roll out .
  • Balance sheet flexibility (interest/other down to $25–$30M; net debt reduced) supports reinvestment and potential for estimate upward bias if brand momentum continues .

Sources and Additional Q4 Materials

  • Q4 2024 8-K (press release and reconciliations) .
  • Q4 2024 earnings call transcript (prepared remarks and Q&A) .
  • Correction press release (FY 2025 gross margin corrected to 45.5%) .
  • Other relevant Q4 press releases: Boston Innovation Hub opening (design/innovation capacity) .
  • Prior quarters for trend: Q3 2024 press release ; Q2 2024 8-K .