Wolverine World Wide Inc., like other footwear companies, is not immune to recent challenges in the global supply chain. Despite the troubles, executives are confident that headwinds will ease in the next quarter and through fiscal year 2022.
Wolverine, which owns the Saucony, Merrell, Sperry and Sweaty Betty brands, among others, reported slightly better-than-expected results for Q1 on Wednesday. Revenue was $614.8 million, up 20.4% over 2021, led by strength from Merrell.
Diluted earnings per share were 12 cents, compared with 45 cents in the same quarter in 2021. Adjusted diluted earnings per share were 41 cents.
As of the end of Q1, in-transit inventory represented about 20% of Wolverine’s total inventory. CFO Michael Stornant said that while this number is higher than normal, it has improved over the last month and will continue to improve through the year.
Lead times for freight in Q1 were almost twice as long as pre-COVID levels, impacted by lockdowns in China, conflict between Russia and Ukraine, and port congestion and trucking capacity limitations in the U.S.
“We expect supply chain to be a lessening, but still meaningful headwinds throughout the year, with evolving COVID issues in China presenting a new potential challenge,” said CEO Brendan Hoffman.
Saucony, which posted revenues of $106 million, up 4% from last year, saw its new product launches delayed by supply chain challenges. However, Wolverine expects to see these obstacles ease and predicts double-digit revenue growth in Q2 for Saucony as the flow of new product improves.
For Merrell, the company expects additional new product to help push the brand toward low teen growth in Q2, with improvements in Q3 and Q4.
Overall, Wolverine is in a much better place than last year in terms of inventory, executives said. The company ended Q1 with inventory of $483.3 million, up 50% from last year and its supply chain challenges.
“Our available inventory on core and carryover styles is currently very healthy,” said Stornant. “Importantly, the flow of new product for our key brands is now improving, and we expect this will support the important product launches planned for Q2 and into Q3.”
The company reaffirmed its fiscal 2022 guidance for revenue and EPS and said it expects revenues to be in the range of $2.78 billion to $2.85 billion, with a growth of 15% to 18%.