Shares of shoe maker Wolverine World Wide (WWW) trade up almost seven percent after reporting second quarter earnings. The upside in shares was caused mainly from updated guidance and the impact of a recent acquisition of brands. Back in May, I discussed the positive impacts of Wolverine's acquisition of Collective Brands (PSS) shoes. The deal gave Wolverine four new brands in: Saucony, Stride-Rite, Keds, and Sperry Top-Sider.
Second quarter revenue was recognized as $312.7 million, which marked a record for the company. Revenue increased 0.8% from last year's second quarter. Earnings per share were reported as $0.42. This is a decline from last year's reported $0.48. Analysts were calling for $0.44 per share in earnings this quarter.
Wolverine saw nice increases from its outdoor group, online sales, and retail store segment. Brick and mortar stores, including the company's Track 'N Trail mall brand, saw double digit sales increases. Foreign currency did cause a negative $3.8 million revenue impact. The company's presence in Europe was also bad for revenue growth. The company is expanding internationally through joint ventures and increasing its presence in emerging markets, which should help offset weakness in Europe.
Higher expenses from the pending acquisition did make operating expenses higher and impacted earnings. The acquisition is expected to close in the summer or fall. The deal is closing faster than expected, which should lead to upside in third and fourth quarter reports.
Wolverine is backing its full year guidance of revenue in a range of $1.46 to $1.50 billion. Earnings per share are guided at $2.70 to $2.80. After acquisition costs, the earnings would fall in a range of $2.64 to $2.74. Analysts on Yahoo Finance are projecting revenue of $1.48 billion and earnings per share of $2.72.
I still believe in the growth path of Wolverine World Wide. I predicted earnings per share of $3.88 in 2014 based on growth targets. My last article saw a price target of $58.20 based on the 2014 earnings. This is one of my favorite long term retail stocks and investors should pounce on shares if they fall.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in WWW over the next 72 hours.