Wolverine World Wide(WWW) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for the second quarter was $474 million, exceeding the high end of the outlook of $450 million, driven by stronger performance in both active and workgroups [31] - Ongoing revenue increased by 11.6% compared to the prior year, with a constant currency growth of 10.4% [32] - Adjusted diluted earnings per share rose to $0.35 from $0.15 in the prior year, reflecting strong revenue growth and gross margin expansion [38] Business Line Data and Key Metrics Changes - Saucony achieved a revenue increase of 42% in the quarter, with broad-based growth across regions and channels [34] - Merrell grew by 11%, marking its fourth consecutive quarter of growth, supported by strong wholesale performance [36] - Sweaty Betty's revenue declined by 6%, but this was an improvement compared to the first quarter, indicating progress in reestablishing the brand's premium positioning [36] Market Data and Key Metrics Changes - Global wholesale revenue was the primary driver of performance, with international growth slightly outpacing the U.S. [32] - The active group revenue increased by 16% compared to the prior year, led by Saucony and Merrell [33] - The workgroup revenue grew by 2% compared to the prior year, indicating a sequential improvement [36] Company Strategy and Development Direction - The company is focused on becoming a consumer-obsessed brand builder, emphasizing innovative and trend-right products [47] - A new brand building playbook has been effective, leading to improved revenue trends for five consecutive quarters [7] - The company is navigating a volatile macro environment and has taken actions to mitigate the impact of tariffs [7][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning to navigate ongoing changes in the global marketplace [7] - The outlook for the second half of the year anticipates moderated year-over-year growth compared to the first half due to timing shifts normalizing [43] - The company expects to continue seeing benefits from pricing discipline and cost initiatives, with gross margin anticipated to remain strong [58] Other Important Information - The company has made significant progress in reducing net debt, which was $568 million at the end of the second quarter, down 15% compared to the previous year [39] - The company is implementing strategic price increases on select products to offset tariff-related headwinds while maintaining investment in brand building [41] Q&A Session Summary Question: Follow-up on Saucony's growth in the second half - Management highlighted broad-based growth in both performance and lifestyle segments, driven by a reinvigorated product pipeline and effective storytelling [52][54] Question: Sustainability of current gross margin levels - Management expressed confidence in sustaining gross margins at current levels due to improved pricing discipline and cost initiatives [58][59] Question: Go-to-market strategy for DTC growth - Management acknowledged the need for improvement in the DTC channel and emphasized a focus on consistent messaging and innovative product flow [63][66] Question: Saucony's performance in newly expanded doors - Management indicated a strong focus on sell-through rates and responsible growth as they lap new door expansions [67][70] Question: Merrill's growth momentum and future outlook - Management noted that Merrill has gained market share and is well-positioned for future growth due to new product introductions and thoughtful distribution strategies [81] Question: Operating cash flow and leverage expectations - Management confirmed a focus on sustainable long-term profitable growth, with a bank-defined leverage of 2.9 times at the end of the second quarter, down from 3.9 times a year ago [88]