Wolverine Beats, Raises Outlook

| About: Wolverine World (WWW)

Wolverine World Wide Inc. (WWW), one of the leading designers, manufacturers and marketers of branded footwear and apparel, recently posted third-quarter 2010 results that topped the Zacks expectation on the heels of strong demand witnessed across its brands, and provided a boost to the company’s outlook for the current fiscal.

The company’s multi-brand portfolio, geographical diversification, and multi-distribution channel strategy remains one of the key growth drivers.

Quarterly Discussion
The quarterly earnings of 70 cents a share outpaced the Zacks Consensus Estimate of 67 cents and soared 12.9% from 62 cents delivered in the prior-year quarter.

Wolverine, who sells its products under the brands Harley-Davidson Footwear, Hush Puppies, Merrell, and others, revealed that total revenue for the quarter climbed 11.7% to $320.4 million from the prior-year quarter, and fell shy of Zacks Consensus Estimate of $321 million.

By operating group, revenues increased – 5.6% to $121.3 million at Outdoor Group, 22.7% to $65.4 million at Wolverine Footwear Group, 14.8% to $63.5 million at Heritage Brands Group, and 0.4% to $36.6 million at Hush Puppies Group. Other business units, which comprise Wolverine retail and leathers, posted a revenue growth of 27.3% to $30.5 million.

Gross margin for the quarter contracted 10 basis points to 40.1% reflecting a rise in product and freight costs, offset by a sustained positive shift in channel and geographic mix, and increase in selling price.

Wolverine, Rockford, Michigan based company, stated that the momentum regained in fiscal 2009, continued in fiscal 2010 and hinted that it is well positioned to increase its market share on the strength of its brand portfolio. The Merrell brand has been the key growth driver for the past decade, and we expect it to catalyze future growth.

Robust Results Reflected in Guidance
Wolverine’s robust results in the first-three quarters and increased order backlog of over 55%, prompted management to raise its fiscal 2010 projection. The company now predicts revenues in the range of $1,200 million to $1,220 million, reflecting a year-over-year growth of 9% to 10.8%; and up from $1,190 million to $1,220 million forecasted earlier.

Fiscal 2010 earnings are now expected between $2.04 and $2.08 per share, representing a year-on-year growth of 15.3% to 17.5%; and up from the previously provided guidance range of $1.98 to $2.04 per share. The current Zacks Consensus Estimate of $2.06 dovetails with the company’s guidance range.

Other Financial Aspects
Wolverine ended the quarter with cash and cash equivalents of $95.3 million and shareholders’ equity of $508.5 million with negligible debt. The company during the quarter repurchased 158,700 shares for a total of $4 million. Year-to-date, the company has bought back approximately 1.8 million shares aggregating to $51.2 million.