Wolverine World Wide(WWW) - 2024 Q4 - Earnings Call Transcript

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]