Key Takeaways Wolverine reported broad-based Q2 growth, led by Saucony's 41.5% y/y revenue jump and record sales.Merrell marked its fourth straight quarter of growth with lighter, faster trail footwear driving demand.Sweaty Betty and Wolverine delivered margin expansion through campaigns, innovation and premium launches.Wolverine World Wide, Inc. (WWW) delivered strong brand results in the second quarter of 2025, with Saucony leading the portfolio. The brand posted a 41.5% year-over-year revenue increase, a ...

Core Insights - Wolverine World Wide, Inc. (WWW) maintained profitability momentum in Q2 2025, achieving record margins and healthy revenue growth [1] - The adjusted gross margin increased by 410 basis points year-over-year to 47.2%, driven by a favorable sales mix, reduced promotional activity, and supply-chain cost-saving initiatives [1][9] - The company expects long-term gross margins to remain between 45% and 47% due to pricing discipline and ongoing supply-chain optimization [5][9] Brand Performance - Saucony's gross margin rose by 560 basis points, benefiting from a strategic focus on premium products and higher average selling prices [2] - Merrell experienced a nearly 600 basis point increase in gross margin, driven by strong demand for modernized trail offerings [2] - Sweaty Betty improved by over 500 basis points due to its shift to premium, full-price positioning, while the Wolverine brand saw a gross margin increase of over 400 basis points [3] Operating Profitability - Adjusted operating margin increased by 290 basis points year-over-year to 9.2%, exceeding the company's 7.2% outlook [4] - The increase in operating profitability was attributed to revenue outperformance and SG&A leverage, allowing for reinvestment in marketing and talent [4] Future Expectations - For Q3, Wolverine anticipates a gross margin rise of 170 basis points to 47% and an adjusted operating margin increase of 60 basis points to 8.3% [5] - The company has taken measures to mitigate the impact of higher tariffs through sourcing diversification and selective price increases [6] Stock Performance and Valuation - WWW stock surged 76.6% over the past three months, outperforming the Zacks Shoes and Retail Apparel industry, which grew by 18.7% [7] - The company trades at a forward price-to-sales ratio of 1.27X, below the industry average of 2.01X [10] Earnings Estimates - The Zacks Consensus Estimate for WWW's current financial year's earnings implies a year-over-year growth of 46.2%, with an 18.8% growth forecast for the next financial year [11] - Earnings estimates for 2025 have been revised upward by 2 cents per share, while 2026 estimates increased by 4 cents in the past 30 days [11]

Core Insights - Wolverine World Wide, Inc. (WWW) reported a strong second quarter in 2025, with revenues increasing by 11.5% year over year to $474.2 million, driven by brand momentum, particularly from Saucony and Merrell [1][10] Brand Performance - Saucony achieved record second-quarter revenues, rising 41.5% year over year, with a gross margin expansion of 560 basis points, supported by successful product launches and expanded lifestyle distribution [2][10] - Merrell experienced a revenue growth of 10.7% and nearly 600 basis points of margin expansion, bolstered by modernized trail offerings and increased lifestyle footwear appeal [3][10] - Sweaty Betty narrowed its revenue decline to 6.1% while improving margins by over 500 basis points, focusing on restoring its premium positioning through targeted campaigns [4] - The Wolverine brand also showed progress with new premium product introductions, contributing to overall growth alongside Saucony and Merrell [5] Competitive Landscape - Key competitors in the footwear industry include Deckers Outdoor Corporation, Tapestry, Inc., and Urban Outfitters Inc., with Deckers showing strong performance through its flagship brands HOKA and UGG [6][7][8][9] Financial Metrics - WWW's shares have gained 29.3% year to date, contrasting with a 1.5% decline in the industry [11] - The company trades at a forward price-to-earnings ratio of 19.78X, significantly below the industry average of 30.45X [12] - The Zacks Consensus Estimate for WWW's financial 2025 earnings indicates a year-over-year growth of 44%, with a 17.2% increase projected for 2026 [13]

Core Insights - Wolverine World Wide, Inc. (WWW) reported strong performance in Q1 2025, driven by flagship brands Saucony and Merrell, both achieving double-digit revenue growth and margin expansion [1][7] Group 1: Saucony Performance - Saucony's revenues increased by 29.6% year-over-year to $129.8 million, with significant growth in North America and more than doubling sales in the Asia-Pacific region [2][9] - The brand's gross margin improved by nearly 400 basis points due to a healthier mix of full-price sales and reduced promotional activity [2][9] - Key product lines such as Ride, Guide, Triumph, and Hurricane saw strong gains, while the Endorphin franchise grew over 30% year-over-year, driven by the launch of Endorphin Elite 2 [3] - Saucony expanded into 900 new lifestyle retail doors this spring and plans to add 400 more in the second half of 2025 [3] Group 2: Merrell Performance - Merrell recorded a 13.2% year-over-year revenue growth to $150.6 million, showing strong performance in Asia Pacific and EMEA, and gaining market share in the U.S. hiking category [5][9] - The brand's gross margin rose by more than 200 basis points, supported by premium pricing and efficient inventory management [5][9] - High-performing product lines included Moab Speed 2 and Agility Peak 5, with the new SpeedARC Surge Boa selling rapidly, indicating strong consumer demand for premium footwear [6] Group 3: Strategic Outlook - The combined performance of Saucony and Merrell reflects Wolverine's successful brand revitalization and strategic execution, positioning both brands for sustained growth throughout 2025 [7] - For Q2, the company expects revenues between $440 million and $450 million, indicating growth of 3.7-6% from the previous year [7]

Financial Data and Key Metrics Changes - Fiscal 2024 revenue for ongoing business was $1.75 billion, a decline of 12.1% compared to the prior year, primarily due to discrete items in 2023 [38] - Full-year adjusted gross margin was 44.6%, an increase of 470 basis points versus last year, reflecting cost-saving actions and improved sales mix [39] - Fourth-quarter revenue was $495 million, exceeding expectations, with ongoing business revenue growing 3% year-over-year [42] - Fourth-quarter adjusted gross margin was 44%, a year-over-year increase of 620 basis points [45] - Full-year diluted earnings per share was $0.91, compared to $0.15 in 2023, indicating significant profitability improvement [41] Business Line Data and Key Metrics Changes - Saucony grew 7% in the fourth quarter, with low teens growth in the US and over 20% in EMEA, driven by strong demand and improved product offerings [17][43] - Merrell posted a 1% revenue increase in the fourth quarter, continuing to gain market share in the US hiking category [25][43] - Sweaty Betty's revenue was down 6% in the fourth quarter, although profitability improved with nearly 900 basis points of gross margin improvement [30][43] - Wolverine brand's revenue performance was encouraging, but trends remained inconsistent [32] Market Data and Key Metrics Changes - Saucony's running business gained market share in the US run specialty channel for the second consecutive quarter [17] - Merrell gained significant market share in the US hiking category, marking the eighth time in the last nine quarters [25] - The work group revenue increased by 21% in the fourth quarter, driven by strong demand for core franchises [44] Company Strategy and Development Direction - The company is focused on stabilizing its foundation and driving growth through brand-building investments and product innovation [10][66] - Plans include expanding Saucony's lifestyle offerings and enhancing marketing efforts, particularly in key city activations [66] - The company aims to modernize its product line management tools and enhance e-commerce capabilities to improve consumer experiences [68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's direction and brand-building strategies, highlighting the potential for significant growth [65] - The outlook for 2025 includes expected revenue growth of 2.5% to 4.3%, with a focus on new product launches and lifestyle expansion [51] - Management acknowledged the need for continued investment in brands and technology to drive long-term sustainable growth [63] Other Important Information - The company successfully reduced net debt to $496 million, a 33% reduction compared to 2023 [48] - Inventory at the end of the fourth quarter was $241 million, down approximately 36% from last year, indicating improved planning and execution [47] Q&A Session Summary Question: Saucony's growth and new doors - Management confirmed plans for 900 new doors for Saucony, with many being online, and emphasized the importance of driving sell-through [73][76] Question: Merrell's new doors and reception - Management noted that Merrell is also opening new doors, particularly in the female consumer segment, and is encouraged by early returns [74][78] Question: Gross margin sustainability - Management expressed satisfaction with gross margin improvements and indicated ongoing opportunities for further expansion [81][84] Question: Long-term operating margin aspirations - Management stated that while it's too early to provide a specific timeline for mid-teen operating margins, they are encouraged by recent progress [90][93] Question: Inventory management - Management characterized current inventory levels as healthy and close to target, with plans for modest investment in inventory for 2025 [145]