Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the Wolverine Worldwide Inc.

First Quarter 2023 Earnings Call. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. It is now my pleasure to introduce your host, Alex Wiseman, Vice President of Finance. you. Thank sir. ahead, go Please

Alex Wiseman

morning, and call. quarter conference our welcome to first XXXX Good

This On be our results is President news wolverineworldwide.com. non-GAAP morning's press on Brendan Executive are Keds and press the for we on our of the at today call release press viewed earnings reorganization foreign Hoffman, first Officer. this today's and Mike include and release business. sites quarter website comments our [ph] issued cost and The call certain environmental our costs, gain during the Financial our Officer; net exchange disclosures, Stornant, earnings many President the divestiture Executive available Chief Vice made related as financial on corporate and release adjust announced costs, rate Earlier of can other recoveries, morning, for and a items changes Chief earnings such which and XXXX. and

adjustment an America to second transition of for results body licensing Wolverine of Leathers for our business reconciled CDs, subject the XXXX These Hushpuppy half tables model North in in and which disclosures XXXX, Financial XXXX. of results a the sale February of within and was impact where and for our the which business the comparable a guidance of were sold reflect exclude attached and in ongoing process the XXXX is release.

today's are future to statements to growth securities company's under for describing XXXX, such plans, laws. that fiscal statements company's performance the outlook expected made call remind those affect and and like company's forward-looking as you trends opportunities I'd U.S. the also projections the conference predictions regarding during expectations, year

Hofton. that materially of in are SEC turn must important those like now there With As factors from being risk These press to results caution factors Brendan described identified differ over to you our number company's the filings in that a could and the said, in statements. cause I'd call result, forward-looking actual that releases. a to are we the

Brendan Hoffman

everyone, today's line Thank you our industry delivered we guidance. Good year joining thank results full in despite guidance first headwinds, and our you, morning, are for with Alex. reaffirming We and call. quarter

growth and growth active currency, Saucony reported [ph] group markets. on by XX% the a our increases revenue revenue Merrell in led coming basis international XX% delivered with constant strongest revenue Our from and

our sale of expedite end-of-life pressured expected, As performance. for us left positioned actions the that margin gross better inventory to have future

growth the encouraged execute profitability increases. made progress We our and have are to long-term on for we revenue by strategy

prior resonate adjacent fast-growing core brands building the in laid our our growth brands markets brands our extending categories. from and includes out strategy stronger with and that businesses into consumers, their calls, investment As more distorting powerfully to large,

cost goals remove and we our make while have and speed, against increase progress to operational to our Additionally, complexity efficiency we agility. continued

of of $X.XX First the with quarter from in $XXX business, quarter basis of diluted and expectations reported above X% currency highlights financial include: diluted million, $X.XX. of line ongoing earnings the per X% Adjusted our reported a up revenue share constant XXXX. first adjusted increasing on in from EPS for our expectations

versus Net ongoing track million down on to fourth end our is nearly from quarter $XXX XXXX approximately of declined inventory $XX for sequentially and million XXXX prior business the year.

refinement share collaborate specifically practices structure, to and ability include: strategic and the further goals. of the operating more capabilities our the our new group markets. brand now The enables and highlights we our common to operational categories best and During across easily against execute our quarter, our structure improved teams financial

London-based we new the operational integrated this product to operations will closely In in our management and year. align a be global international of company's great our later We investment to centers are planning also into that tool them excellence. with modernize team including making cycle March, strides chain life set Sweaty more the supply Betty processes,

the growth and to improvement better remains change Betty. to allow for company's logistics, deliver us The be of technology reinvested savings in opportunities will track operational office this savings sweaty $XX on expertise expect profit cost in We leverage million that to can XXXX. harvest

the especially pleased across to sustainable areas all the I'm collaboration see benefits them going to and forward. of these secure business make

the flow-through of to begun have We savings. chain see supply earlier-than-expected some of

profit We office continue of million the to savings from XXXX. improvement expect annual $XXX in

focus of to brands enable licensing are highest optimization The focus the we our Keds that underway. will and will and this sale for allowing portfolio and of businesses return continues, our drive Hush of believe resources The Puppies transitions the well recent pending us on shareholders. these

continue also Wolverine the leather for towards work We business. to an exit

needed the ahead and long-term our success. evaluate brand to for for we we the foundational Sperry opportunities brands, future we and company, focus the work SwittiBetty. to need Saucony for growth investments the while we Therefore, decided Merrell, to on continue months As position over our explore alternatives have strategic coming efforts

a elsewhere experience. and Ireland, the robust consumers, in e-commerce opportunities which U.K. the remains globally, lifestyle and Merrell's Saucony's while great unique technology, convinced this around company. and is joined of future. for bright This very Sweaty us heritage. beyond is with world, in including Berry the in expansion the and to the Stabilizing core focus I'm global market the and right resources when special U.S. most the was a authenticity home more China, with active brand lifestyle U.S. potential I allow investing I user with brand brand original It that our the Betty's business, has has familiar decision behind particularly reach put extending platform everyday investment, banding business, will and looking in and Europe Saucony's in specifically

results, SwediBetty the starting with group consisting Moving on brand Saucony Merrill to Chaco. of active and

the pleased including currency. on XX% quarter, XX% are and growth basis in We reported with first performance a the in group's constant

year. flow of throughout the some shutdown order last first year's the to Vietnam recovery the changed was the this However, half due given of timing from that

As expected, this pressure benefited QX QX and will

core growth in Merrill a in in with franchises. XX% million which based notably, the quarter. and high Most our and expectations strength in Moab I the on market and while reinforced was of of increased on constant products share strength basis innovation. love franchise, gain in reported due our $XXX ability to to launch relevance with product first currency consumer Moab the data and to technological Notably, we through demonstrating the revenue teens line the core refreshed NPD This performance quarter. for our new extensions our Merrell's XX% leadership drive

in the Merrell trail share In the for first the As biggest gains high showed running, result, the of quarter. category brands return quarter. to in gains all a share Merrill

expansion and line for is this Merrell's highest about excited its of our Merrell. are product lifestyle We believe opportunity growth

customers. Our line, reach lifestyle to with partners retail brand's the continues OneTRL, and product expand

opened the first in to and world. quarter, selectively the Tokyo the most plan on elevated open more OnTRL brand's expression In store the TRL stores, around provides we which

Merrill's continue Looking to digits we in fiscal expect to ahead, revenue mid-single XXXX. grow

However, revenues of be the to XXXX that to as by difficult flow I we headwinds as XXXX expect QX flat. product the mentioned decline year-over-year shifts caused is earlier. macroeconomic mid-teens well first half versus expected for both Revenue

strength her and as well our aware Saucony The strong Merrill in innovation In Saucony a underway. look day-to-day of active solidify allow and President team. left and we wanted in Chris to Before Anne working I results, preeminent collaboration previously believe and the Cavassa Chris with for of contributions reach. out well. We President, I in the naming be and the lifestyle broaden Hufnagel, group, involved in wish interim, thank its for occasions change has closely running her Softening to leadership. having more discuss build to of offering brand of a technology to as will make operations her leader successor you core wear brand's a is our with process consumer more the greater will leverage synergies We Saucony's company. Saucony's a

a In XX% on the performance quarter, lifestyle basis with XX% and consumer, quarter, flow in increases our active million. earlier. expectations $XXX grew early and change our Solphany's first in by for along in reach growth core on single-digit the an and I currency driven run initiative the to the category to to constant Revenue broaden revenue high progress surpassed in reported mentioned our receipt

the we also competed XX% runners [ph] sell-through Marathon, Saucony consumer the the XX,XXX at who it Saucony.com first of the market and on the in week a new was shoe at the Marathon. top positive a brand the the very was saw Elite Warren Boston of styles. worn quarter, sub reaction in Endorphin category Boston XX X-hour the highest Overall, In in with to launch. launched the Despite second being most

Evereve, and to we Now on our platform, consumers. the the of lifestyle is accounts, U.S. expand including lifestyle Shopbop fashion reach which on Saucony XX% to Originals brand's classic In our revenue. global channel, business, approaching new opened wholesale touching franchises more leveraging

N Europe, the putting is the on weeks featured campaign Rod trainer, style Hu multiple launch DX Dixon spot in Saccony.EU. we post number for In the one launch to the

Looking digits single XXXX. mid-single HX in decline fiscal revenue mid-single ahead, high to in we digits QX, grow in Saucony and expect grow digits

Moving on to SweatyBetty.

currency for decreased a disappointing, on million. to XX% decline. our quarter a than were revenue First constant mid-teens X% and $XX basis These expectations in while reported better results,

per to other trends Gravity higher led recent The improved less continue of sales in product impacted bra with promotional launch has by retail be and [ph] innovations, transaction FettiBetty April, Zero activity. challenging U.K. along the a results units the running to environment in

home its the in market profitability while the U.K. through rest stronger and portfolio. in Betty improving of integration Sweaty stabilize to continue the within synergies We Ireland, from

teens QX, expect we ahead Looking for a revenue. SweatyBetty in decline low

we low digits on currency digits XXXX, increased decline to basis a basis. fiscal single a expect single low For reported Sweaty and Betty on constant

declined a to International down decline million. pressure consumers quarter price lower of to Work revenue well as was product phasing $XXX as the flow point constant Caterpillar products. normalized Group due from trading XX% primarily and revenue basis to currency spring The in reported on

with great under have the in responded price offerings Our brand teams already category. $XXX

generating brand loyalty. Our resonate well and to awareness collaborations continue highly with customers, further anticipated

continued Master than minute. Edition in Following its Chief boot the first Wolverine launch in universe Wolverine Limited out Halo collaboration journey Boot and X the with our and XXXX, in the of launch Halo less one sold

Wolverine last Year Council. the Pappy the Group were year collaboration boots, they brand of its the of by Fashion week, accessories and the Winkle honored from International Within Van for won as

very Finally, expansion to the Walmart brand about at over test be launch meaningful runway half year. the we second given the of the This Walmart could stores very Bates in excited in are offers. XXX

expect roughly fiscal in single-digit Looking XXXX, work with revenues QX. group flat in declines high ahead, we

X%, to decline caused group, and lower in softer basis declined million, sell-throughs to part and of reported $XX revenue first season. Ferry than which which was saw on spring a a the high single-digit our currency. by revenue styles Sperry weather during due the Hushpuppy certain quarter expected XX% Lifestyle The decline includes of both constant unfavorable

styles introduce growing is brand's more to are initiatives remain prep optimistic trend closely fashion resemble We that market. about the We the stabilizing in the on focused Sperry with DNA. that emerging

a We Sperry single [ph] fiscal with in revenue quarter. expect in second high to low the decline teens digits decline XXXX,

I will constant touch Now business. our briefly first the grew reported XX% on basis on a currency and in XX% quarter. in Revenue international

well both we global to markets. in markets, JV and Our resonate continue and operated opportunities owned significant brands in see

Saucony once China JV XX% and a of Merrell the across drivers quarter growth, strong performance and key with strategy. of strength Saucony's multichannel XXX%, sales exhibiting very were again grew XX% the over had as regions our respectively.

XX of The endorphine during the stores lead and in count total bringing includes brand addition our through XX. sold store and brand. XX activization quarter, China, XX% to the provided QX, growth the for the invaluable in also launched opportunities the new which media In days

our to XXXX. continue revenue Saucony China expect We in double JV to from

in our efficiency conclusion, and our our group, underperforming brands, across growth on as work through business we our In model. focused increasing all addressing year, while position the we active leading leveraging the remain driving move of

brands. newness half are the of planned our year We across excited marketing about for initiatives and the back

to to second year. are high chain XXXX We disruptions the in supply of lap of fully return growth as the single-digit on half last track we

for to the we beyond. expect up to XXXX investment Finally, business continue out of costs and free to and take inventory reduce

first our our the financial XXXX to quarter will Mike turn outlook. to details Mike? I now results more call discuss about and over

Mike Stornant

joining call. Thanks, thank for all Brendan, the you and

second certain recap briefly full me the primarily for business ongoing and from will first quarter our quarter, and Let then for financial highlights our year. I the cover outlook

our business First for currency X% our quarter represented with was $XXX approximately and revenue constant line in ongoing million growth. outlook of

$XXX.X million. Wolverine most XX% our the Reported Our and of revenue Betty accounted Sweaty brands, quarter. for Merrell, was important during over revenue Saucony,

sale X.X% Adjusted gross from of was costs. CDs, line included included transitory with margin expectations. of of operating $XX reorganization gain the XX% the million was reported by impact our and the margin X.X% The of costs. margin in of partially supply Adjusted operating incremental chain offset

$X.XX The $XXX compared quarter per for the and $X.XX a business million earnings diluted of $XX and the diluted the currency a the reflects million, per Adjusted share on ongoing constant share Inventory Keds XXXX. sale $X.XX gain of earnings reported basis. to on QX brand. for improved were was

support The in was office, remain flow all part in nearly We great the objectives. our doing this we made achieved important control cost the target. by good of we deliver improvements strengthening operational year, in confident and to of a and margin work benefits company. our cash crystallize the improvement of of want and savings in in is discipline, profit but quarter have the accelerate improvements the this importance ability driven our first $XXX operating team short-term XXXX mentioned a start all to emphasize million fundamental cost environment, I to in the of the fully to profit We volatile of some being XX% foundation as areas. Brendan and appreciate

to me full the transition XXXX outlook Let year. our for

trends Our in help us. year guidance Keds seen a the have for projections especially exrpected many reflects reach our concerns ahead licensing [ph] cold pressure, Macroeconomic of companies the Like and of this of have market industry, for adjust since in July. risks the since demand. the mitigate other and March. year the ongoing the our Wolverine early and spring in and the expected our season believe transition portfolio diversity business, Despite we impacted Leathers selling for will and full start global which performance to Hushpuse deterioration some added we excludes consumer of

As earnings outlook a result, for and our we are reaffirming revenue, year-end inventory.

expected range in billion, billion to from operating $X.XX be approximately X% currency Adjusted margin gross Adjusted XX%. X%. margin Revenue of X.X%. to growth our the $X.XX approximately be expected is expected to is is business to ongoing of approximately constant

$X.XX in is expected Adjusted is leverage diluted earnings be approximately $X.XX by inventory Operating to debt and to expected to in expected expected least share year-end compared per is times flow $X.XX $XXX range to X Year-end improve the million. $XXX cash is of approximately XXXX. to million be free at

our for second quarter, Wolverine Now of and reflects our let CDs the provide me . outlook which Leathers and the business ongoing excludes performance

$X.XX. and For XXXX for reference, second contribution EPS quarter approximately million, the the revenue these was businesses was $XX

the approximately of a market. $XXX and expect the We This at that challenging persist QX channels XX.X%. conditions approximately trading million, wholesale both in revenue in of decline DXC estimate reflects our

and still managing are of conservatively. retailers are Some most working through elevated inventory levels the goods flow

worth it's and revenue sales a that addition, benefited In in year. QX the of QX XXXX was experienced significant out factory of a delays because from last shift for record closures Vietnam quarter noting that company

including margin of of gross margin QX expect $XX inventory costs. million transitory approximately approximately and X%, XX% We operating of

second me $X.XX for We related beyond the a earnings Briefly quarter, currency back diluted negative $X.XX half includes expect from some let year. the adjusted share of quarter, looking share of per the rates. exchange foreign to approximately the insights which impact second

of total, performance revenue half the XX% pre-pandemic the estimated second for expected the for is consistent normal year, of approach the which now with the to phasing. Given is revenue half more annual first

As efforts we and as the back operating and in improvement in February, increased discussed margin our significantly of inventory half benefits gross improved costs profit the transitory sequentially. of received margin the year

to second in continue to our expect the levels improve also half. inventory We each quarter

tough to In the along are environment successfully way. and improvements conclusion, the business a we navigating making fundamental

allow into we strength. to category clarify announcement us recent brand simplify our to brand including our difficult, Sperry are While the choices and lean portfolio, the making will and

are inventory capacity platforms creating processes accurate. Profit more our are and changes to highest invest our Ongoing and initiatives and track, chain making are us and in in we technology on priorities improvement to nimble supply XXXX.

driving Thank team to their now to to are operator. you at for turn the the commitment I'll call the the entire ongoing Wolverine back changes company. we the

Operator

Please [Operator Piper have go Instructions] Sandler. is ahead. we The first from from Abbie Zvejnieks question

Abbie Zvejnieks

So your question, my taking pursue to business. for about, you much Sperry talk sale of just the a so Thanks Great. decision can first,

sold I a previous brand before in to it. you better the get was position of think philosophy kind the

yet? profitability decline business us been of there Thanks. potential the and the the obviously, top there color line. we is are can So P&L? on the you impact drag a Sperry any give But And the has on on

Brendan Hoffman

We're Thanks, Abby. options. exploring all

be be growth to a to years, that SwediBetty brands it active soften doing X.X a segmenting could starting the strategy we've licensing. I and for over work it it years lifestyle and just over So including the Maryland could sale, to JV I a corporate focusing of our that. be really back work our think mean, could be and X.X work we're and and engines that active been process. But fundamentally, in the this on support businesses goes and

office And as doing became XXXX profit going where while great Sperry we going the to free to require was we to profit apparent that look improvement up just to take from think is. our dollars investment and work the towards that continue investment is was upside away it the hitting margins,

And also so that that's apparent for all became I've a as the best us it's with when me we decision best start think much and here, certainly should a for resonated look brand said, Keds for of because result the this very just it's like but to I process the I brand. most it company that and joined difficult

Mike Stornant

would saying business, and given years. like sort couple in time, require for the the profile certainly is the margin this business, of of operating on it's correct a that On of we been same the last growth the this. kind to revenue market brand of in below challenges the distribution drag those I'm of a impact over what At the business

been operating time that So it's to over dilutive margin performance also

made work such and this to time move say on it, behind transition, to and we've is, it's frame. important a just being really kids quick and allowed able on progress that in I'll great mentioned quick step. to get thing that that us such Brendan Last us -- next

work timing the respect transaction. this So to Keds success in that the of of our on because

Abbie Zvejnieks

makes That sense. it. Got

half? that partner you But caution more. level you mean environment? And one Thanks. in about wholesale confidence Can growth turn, in guidance. then seeing? second of I behavior that you're like gave guess, Just you what I XQ in you gives the the just talk some to what current the are in seeing returning And

Brendan Hoffman

tremendous caution up, mean, I seeing chasing business since know, But time. has we're the Yes. certainly with orders seen our we think soften they're as now business. mean trends. at-once are right although I weather and real early I March everybody

definite in So up factored starting apprehension the some that see our we the guidance, of to into also back half pick orders but year.

back-half more book, good it last bit in order little coverage our us people and bit the historical and weighted. a a are year very But the little it various been very now, our pretty in few support to order weeks cautious right gets seems out that consistent to of And terms penetration in position moment. more guidance. of Our goals a half is also the in market back that's at the events, having industry a

Abbie Zvejnieks

Thank you.

Operator

The we go Paribas. ahead. next Laurent have from is [ph] Please from BNP question

Unidentified Analyst

for it's you're if to know options. Avi's wanted business, you not ex this just at different the $X.XX. I the with EPS contribution I would out, -- there's know this -- up to question but Sperry. probably the follow I could $X.XX, is year? -- theoretically, But sold on looking regards

in the look for? EBITDA $X.XX out contribution use make of if kind And back so you you proceeds the be, that proceeds may whatever business? would around implication year's what you to Just reinvest of pay guidance Would Or $X.XX. is this Does the down embedded would sense? can they for sold those debt? to Sperry you the that we

Brendan Hoffman

easy. last using pay targeting. down We'll any down any are debt monetization of and The question part leverage that the levels the be continue proceeds drive from of that that is to to we our business to

sort contribution performance, more the than it's overall operating an $X.XX. But to to of little margin As rate. a basis, that operating margin far again, as dilutive on

evaluating addressing move going forward we've divestiture. how know So to Sperry. simplify different the we'll as of that we'll to in infrastructure as simpler just allow Kids got with - is but options, Leathers We're that also to portfolio we us with company -- And we well. these X now just the our important Wolverine important forward the still and moving here are brands be

businesses, to end So going which and day, at more left the strong make a structure efficient. of much the with portfolio the work and a active infrastructure simpler we're of really those brands cost will be supporting

Unidentified Analyst

helpful, bit the Very XQ, what lighter. a just between you're stocking. reiterating my question, for still the following then XQ -- Merrell quarters, can Is to retail little you're about Are on second sounds space, is like year. And of And partners? brands a is at mid-single-digit seeing? the starting It athletic both inventories between growth XQ? bit a there maybe you're up the shift or in they XQ for into normalize state you talk little your Mike.

Brendan Hoffman

Yes.

year I cadence in from were with that QX down shut comps the of in think but last a shifted definitely business being as took that, to and shifts soft, we of last remarks, QX I that advantage said lot year. Vietnam saw we my some

That, pressure And talked weaker just the environment in wholesale QX. about with so is we combined

inventories in moderated. are of really I think our good They've shape. retail, out

see don't as a us. I So that for problem

are lot is on much But that retailers brands down to over I brands, based last how own were QX I up we clogging slowed the of our dealing buy. think not private their feel still like think that the of some of inventories. flow open a with for in specifically year

starting to some the also, have I think again. up the as orders value calls some to see starting that's get phone back needs pick think year. in the why half they of in I channel, And we're

healthier we few seen a would have margins than at back. So months

Operator

Kummetz from Research. have ahead. Seaport Please from we question go is Next Mitch

Mitch Kummetz

sort little any that can quarter be a of on basis? improve Is you year-over-year an of kind inventory. mentioned expected you where bit give the that? more you specific goes quarter each end-of-life inventory, the us Mike, you us update had by on way a kind can And on also, inventory million the to there on you through $XXX the give you Yes. of Could year. think of

I against status number I you where I that. a just that. sort think of on And the have And a of was that I'm year? update think that had follow-up. basically hoping is a end the the at Like now? orders maybe

Mike Stornant

Yes. see We should improvement in the every some table that actually that added you QX. a quarter, nice in Mitch, you'll gives those of the inventory of which quarter kind sequential question. for improvement press quarterly numbers, But help release, answer quarter, the biggest biggest

On be -- shipment inventory, did here the that, a of will tranche of ship quarter. shipments kind I quarter But the a or inventory the of There'll vast that's the warehouses of will that in QX. little be of the that would by second majority the in say out of the product second end end-of-life bit some out end-of-life quarter. first and out in of the we and large yet additional

Mitch Kummetz

gross And then XQ profit side forward. or out improvement benefits the like some of I But that's least transfer my looks are missing it looks table profit XQ? accelerating moving on some the Okay. ones has apologize I kind looks like on the And profit on to a the the getting bit It the improvement the on at expenses were there little did the that release. the savings. then for from and that in follow-up, of and shifted, the some press also particularly expense. It then side, timing like gross of pushed profit table of transitory maybe see

shifts? talk you a bit can about some of So those little

Mike Stornant

Sure. Yes.

we and inventory-related the costs, mean, On the that, into you year of I costs costs. those lot transitory a their came know, with as

we when they the So flow P&L shipped. inventory through get

the some shipments, expectations for are of given shifting of some into those terms so softer of in QX. timing QX of And shipments

And cost shifts so expense same transitory time. the just at the

estimates from for just the phasing still haven't The is and really of outlook It's changed. timing that of our overall the the overall, So benefit timing. intact. that

benefits of to initiatives, a necessarily the kind earlier. crystallize secure being then the earlier we than profit but little the ability And not on had those full those just to just able year, more improvement expected, for

that Just that kind calling of some of driving you're earlier out. what's benefit

change slight and obviously, and as -- see on all is stuff dependent a might that and of different number So phasing again drive next the the of benefits. we timing a this expense factors quarter,

Operator

The you. Telsey from ahead. from have next question we Thank Please is Telsey Group. go Dana

Dana Telsey

leadership the quarter about As when and improvement out of back where margin put Brendan, are more profit on expectation? doing? effect, revenue seeing you're any maintaining half think the the guidance, and initiatives color you expectation updates can versus Any what to do year, that? you are the there, second the you Betty Sweaty And you is think the about that that then, parse given changes how that and business you taking on the how state

Mike Stornant

product. which right had is last Dana. think X in Yes. performance, when also through as for they've get control We've new floor. it really Thanks, And presentation I'll the to we're the to or over encouraging stores X weeks to hit away and start with able Betty. speaks e-commerce, their we're credit Swede I new able the that seen a pickup deliveries real

really to the X at X, been good it's last weeks SwediBetty. So see

change, the still And so partnering another or has before in the is month of leadership U.S. terms relocates Julie Head International, of family, She back very she Soriano, there. but with our Shanisabell closely. to are their

it's very them international. having the in -- think been so of to up positive a really alluded to report I And terms movement I

direct into think without that that were on of integrated connection. isolated Wolverine kind bit a being little they own their I

reinvest signs to we into to positive Isabel. of some real can up naming positive allowing but in back a the nothing the our for and report we're us been stages team gain swediBetty it's that synergies So leader brand efficiencies final the and ultimately look in business business, new but to international by utilizing there,

So you excited can about that. comment. Mike,

Brendan Hoffman

Yes.

the like just margin gross slightly with the get gross guided the in on quarter has shipping amount costs, the or really year, to second transitory Dana, of in better think expect sequencing question half that -- lot do we'd we're the the the both of XX% product mix back of approach to of phasing both I timing we end-of-life was in in quarters. the A margins but of the the that the as to.

of factors improvement really about freight which the in the cost and half all is mix the of strong of healthier business, structure, improved obviously improvements timing we've leading of So better year. back and cost talked improvement, year, the not profit from into then mix just the a the least business

outlook those track to So are margin confidence on still us all gave our in things of keep tax. and

Dana Telsey

Got channel? it. And any more color on the DTC

Brendan Hoffman

DTC early tough. the been March. definitely slowed down Yes. It's I has channel mean since

influencing So we our slowed around last QX early guidance. being of business year, said, that's June. May, That end the down know

so that business. we across And the to anniversary have softer we some start comps

product think the So certainly, X get But the along with we'll have weeks some launches launching, be trends or of last X better. will challenging. the been new that I

Dana Telsey

you. Thank

Operator

from question Next Instructions] Williams [Operator is Sam Poser Trading.

Sam Poser

talked or year-over-year the on. don't I've -- active brand you the quarter give Could by you're expecting us lifestyle but and by 'XX. have and thinking sort for segment, by of we we quarter work the year, but One, so you you're quarters second them to about from could tell you brand year, about us for increases by for the the how got two. have don't the we

Alex Wiseman

Yes. is Sam, this Alex.

send that and we by that laid those that stats in by right I out deck. we quarter the at can you the real quickly, it's XXXX have But We disclosed. XXXX IR all for brands hand. so to

there. all it's So

Sam Poser

looking forward the Q. in was I

that. about Sorry

gross And gross that in you're than margin historically, at gross Okay. looking it that QX you just higher because been of mix And has the anticipate margin only will will way significantly be quarter, of fourth gross in in do margin, not the in QX. has the that big been -- higher the higher year-over-year sort then, QX, guiding continue number that anticipate pop Mike, do the the in you will quarter. fourth but and also be that, the

XX%, probably approaching higher be said but it needs You that. to than

Mike Stornant

it know, not these that parts, little the of you benefits of A some fourth the though. of be This incremental because a bit In the stronger. are flowing lot quarter, as a timing normal just of through. moving is will year

our the but balances in what more little mix saying of directionally, in is bit. better you're some a on SweatyBetty has prominently would be margin is fourth a And big the getting we're where quarter, in out to quarter, -- that quarter quarter because business is it's QX. a the Sam. third mix a So heaviest mix. fourth We those expect quarter so impact things gross the right, direct-to-consumer obviously, But strong it in

Sam Poser

one -- you but do -- mean QX, for guidance I be it's thing the mean you gave there. you Just based of said XX%, last got sort approaching expect like do around to on I XX. you

there on is quarter? you handle -- do high it you have So of either that? Or Do XX? a X-floor is foresee sort a

Mike Stornant

in It's Yes. disclosed. the I range that

Sam Poser

Thanks very much.

Operator

question Next from Jim we is ahead Duffy Stifel. have go Please from

Jim Duffy

that have are that observation. more respect releases we with start , two you. Or thank lift that. to are the of for good shocked Mitch them. a is Those going there an carefully. financials? just I'm I'm to be in Sperry should out particular, easy reviewing dissynergies me. portfolio? an with few Well, I so from questions at the aren't and on the character Sam for It's always considering Sirs, this really

Mike Stornant

in easy. now. I of more as expenses Kids, this I it's was mostly gives Obviously, with mean a think really how optimize decision. terms wouldn't fully and can the we it say us Puppies I clarity Hush is the But hard along licensed

very profitable model. in a that's So

how CEDs it licensing. And shape from this goes. earlier, So we said a what we're JV this sale learning don't will or or take, know a as we whether be divestiture, the

we that of what lot a will on depend ultimately - will that So do.

Brendan Hoffman

said But business. are to ability of ability beyond It's now, parry the and we've the and year knowing sort well, structure on invest on focus, you our the direct cost P&L. very our a to right prioritize implications And things to the emphasize the how we've know opportunities. Jim, for this those operated resources really

able And do invest be so our pressure put growth more productive been before. deliver but more mean also to that to active more I work to to we've group to consistent going behind that's and a way on in than able

to that's it's that. decision, Brandon I that's -- worth So mentioned and think it for important but me, before, unlock an repeating this

Jim Duffy

that you be seems you recognize need Sperry. just may It's Boston get you the That Helpful. a I savings of about infrastructure. cost out just headquarters. area a -- opportunity. too goes, And longer mean, if to Sperry I specific Sperry right, If no thinking brand, operating do it I'm Saucony have but glaring difficult the for here, do if

Brendan Hoffman

the at we will of be off to we make. driven it that choice look have of All consider options that and yet the ultimate

we're So the choose, to to it's we more I support global efficient that across for premature streamlined to able and be think examples make that conclusion. system. much infrastructure alternative much cost a company the create that But more on structure like depending I mean, going the there where and are

Jim Duffy

which of go-forward Fair the place aligned half impediment the in more annual year. the guide, about with rate second margin half, Clearly, power. is first half Historically, the half power year mentioned is weighting of to revenue your XX% of second the is the of 'XX enough. the in like think revenue that has some been there's the And annual your typical run earnings more more the a fiscal on way guide seasonality. basis? you to the earnings Mike, of in second right that, But representative earnings in XX%

a we get cost that embedded year, into I to some see be the of discussed and make these full the operating to each But guidance. some from XXXX. improvement to earnings of to I And we're quarterly phasing distorted. going run This about those the back year, much more into much of profit think half think the as the think going year of think office. of year, of opportunities, -- the you're the 'XX And the year, million still cycle the we're we're obviously, to costs margin no, to get is phasing $XXX timing representative I with half sequentially of of I But next we've a back And I that how back more sure. right, half structure, profit talked we will we the million. in all that's the quarter. 'XX the business XXXX think are in see the get be for normalized benefits of savings going But going yes. and here, improvements the will performance extra of No, normalized into improvement going as very $XX incremental rate for go that as

year's meaningful amount incremental will a target. next of that margin operating So savings support

Brendan Hoffman

Yes.

couldn't I think into the what's that improvement enthusiastic invest to energizing progress making said, I And for are as but be we've the dollars the the which us ability the to to all -- done, brands we're me and more going about work get real back that focus and gives targets the can team we discussed office our as into is profit that certainly the investment and as we will half these year Mike is there of transitory deliver 'XX. costs have business. back that the away we go also

Jim Duffy

Good guys. you, luck. Thank

Brendan Hoffman

Jim. Thanks,

Operator

UBS. next The we question is [indiscernible] have auto from from

Unidentified Analyst

I wanted to ask first about quarter. the

normalized you you pockets you sales in maybe done there's for on imply If you could little the the based could to XQ a than the be year, about work terms of bringing inventory year? the across be exit with the the it half level? priorly? cadence both sales terms for we growth And for direct-to-consumer on guidance, where bit more talk growth growth provided line Should channels talk more channel. of expect, you do And does the in inventories, others any to believe rate about to that in what on of more like expect commentary then like the what second

Brendan Hoffman

said, started seen started where Regarding anniversary and we to to from promotions later QX, in to pile inventory start slowdown headwinds DTC, on few we've the weeks. But a of happen. slowdown we these macro last last over get really into really as when themselves up when the into as year the some that's the I quarter show

the we certainly of in our feel in more terms the provides year direct-to-consumer half back potential business. trend So like of upside

year, for year through lot we we product to inventory flow-through, a Last back time, of were half and DXC at didn't the working in business. our new this of drive and planning the have

another positive that's XXXX. a variable important for and So

we're the softest. On heavier little the say inventory a where terms the in I'd of the been inventory, side, has business on where it's areas in

business little more a we're we the right would Sperry, have working inventory through in than schedule. that But inventory with like. So we on overall,

at third the actually inventories year-over-year. over be down will Our of XX% end quarter the

off expect obviously obviously, what so to much elevated different working And our of growth inventory. than be, rates but we

merchandise of today, our and supply not seeing the inflow end we've inventory on get adjusted the that's the by end-of-life year the of through we back the So as the work half the the in the inventory, -- year. chain as we through progress new that only we're own of core we to rightsized sell that core obviously product but inventories

Operator

Hoffman time. would There closing comments. go the no questions Please to like floor turn further to at back are this I now ahead. Brendan over for

Brendan Hoffman

today. Well, QX thank you, with Have We August. forward everyone, us to discussing for results a our look good day. joining you in

Operator

that you you, today's for sir. Ladies gentlemen, joining concludes conference. and Thank us. then Thank

disconnect You lines. now your may

Wolverine World Wide (WWW) 10 May 232023 Q1 Earnings call transcript