Wolverine World Wide(US:WWW)2024-05-08 18:50Financial Data and Key Metrics Changes - First quarter revenue for the ongoing business was $390.8 million, exceeding the outlook of $360 million, with a significant improvement in demand trends and selling execution [43][44] - Adjusted gross margin reached 46.5%, better than the expected 46% and improved by 540 basis points year-over-year, attributed to a healthier sales mix and lower e-commerce promotions [45] - Adjusted operating margin was 5%, exceeding expectations, while adjusted diluted earnings per share were $0.05, also better than anticipated [47] Business Line Data and Key Metrics Changes - Merrell and Saucony led the balanced performance across the portfolio, with Merrell's Moab Speed 2 recognized as a top new product in the hiking category, driving strong sell-through [8][22] - Saucony's new product launches, including the Ride and Guide 17 and Triumph 22, have shown significant retail performance, with the Triumph 22 driving over 80% growth in its first week [19][20] - Wolverine brand's Trade Wedge and Rancher franchises are performing well, consistently beating sell-through forecasts [25] Market Data and Key Metrics Changes - Average weekly replenishment orders from wholesale partners accelerated from Q4 2023 to Q1 2024, indicating improved market conditions [12] - E-commerce demand has improved each month, with growth inflecting in March and accelerating further in April [12] - Saucony's global search interest increased by over 20% year-to-date compared to 2023, indicating growing consumer interest [32] Company Strategy and Development Direction - The company aims to stabilize and transform its operations, focusing on building strong global brands through innovative products and effective storytelling [8][15] - Continued investment in brand marketing is prioritized to capitalize on current momentum and build brand equity for the future [9] - The transition to a licensing model for Merrell and Saucony Kids is expected to simplify operations and leverage the global licensing team [48] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that while progress has been made, challenges remain in the marketplace, and the company is focused on optimizing operations and driving growth [14][80] - The outlook for fiscal 2024 revenue is projected to be between $1.68 billion and $1.73 billion, reflecting a decline from 2023 due to non-recurring revenue items [49] - The company expects significant gross margin expansion to precede an inflection to growth in the latter half of the year, with a focus on improving inventory management and cash flow [61][62] Other Important Information - Taryn Miller has been appointed as the new Chief Financial Officer, succeeding Mike Stornant, who is retiring after nearly three decades with the company [40][41] - The company is proactively addressing new product regulations related to PFAS, ensuring compliance in the future [56] Q&A Session Summary Question: Was there any revenue pull-forward outside of Europe? - Management indicated that there may have been an additional $2 million to $3 million in pull-forward across the business, but nothing significant outside of Europe [70][71] Question: Why was the sales guide unchanged despite the Q1 beat? - Management explained that while there were encouraging trends, a conservative approach was taken due to the need for sequential improvement and inventory management [73][75] Question: What is the outlook for Saucony? - Management expressed optimism about Saucony's prospects, highlighting strong product momentum and a focus on cleaning up the business while rationalizing the product line [84][86] Question: What are the drivers for gross margin expansion? - Management attributed gross margin expansion to improved supply chain performance, cost structure, and a healthier inventory mix, expecting these trends to continue [100][102] Question: What is the expected interest expense for the year? - The expected interest expense is projected to be about $40 million, down from $63 million in the previous year due to debt reduction efforts [97]