Wolverine Worldwide, the parent company of Merrell, Saucony, Sweaty Betty, and Chaco, raised the mid-point of its guidance for 2024 after reporting better-than-expected revenue and earnings for the quarter ending June 29.

The top- and bottom-line numbers still declined but fell less than forecast.

Wolverine’s net income was $14.2 million for the quarter, down from $24 million for the same quarter last year. Revenue fell 28% to $425.2 million, beating guidance by $14.6 million.

It now expects its full-year revenue to be between $1.71 billion to $1.73 billion. It previously projected revenue of $1.68 billion to $1.73 billion.

“For the second quarter, we exceeded our revenue and earnings expectations with broad-based contributions from across the portfolio, we saw sequential revenue improvement again, drove meaningful gross margin expansion year on year, and further reduced our inventory and debt,” said President and CEO Chris Hufnagel on the company’s Aug. 7 earnings call, noting that he would be celebrating a year in his role later this week.

“Perhaps more importantly, we continue to strengthen our brand’s positioning in the marketplace.”

Hufnagel credited his turnaround plan, with a vision of being “customer-obsessed, global brand builders” which includes:

• Streamlining cost structure and expanding gross margins from 38.7% for the quarter last year to 43.1% this quarter.
• Reducing debt by $271 million this year, bringing total debt to $666 million.
• Reshaping the portfolio through the sale of Keds, Sperry, and Wolverine Leathers.
• Improving consumer and trend insights, beefing up in-house creative and public relations resources, and growing relationships with wholesale and distribution partners.

Revenue growth across Wolverine’s brands is still elusive, however:

• Merrell’s quarterly revenue decreased by 19.2% year-over-year, from $176.7 million in the same quarter last year to $142.7 million this year.
• At Saucony, quarterly revenue decreased 28% year-over-year, from $141.7 million to $102 million.
• Wolverine’s quarterly revenue decreased by 3.1% year-over-year from $41.4 million to $40.1 million.
• And revenue at Sweaty Betty was flat in the quarter from this year to last at $44 million.

“Thanks to our team’s hard work and grit, combined with a clear vision and bold call to action, we find the company in a much better place today,” Hufnagel said. “But be assured, no one is content with where we stand.”

Merrell Modernizes Its Footwear

A key aspect of Wolverine’s turnaround strategy is to focus on marketplace health, Hufnagel said.

“We’ve taken action to shut down rogue selling, optimize distribution and elevate branded shopping experiences,” he said. “Merrell, for example, has cultivated a much cleaner selling environment this past season and successfully reset several of its key accounts in the U.S. with more modern assortments to position the brand more appropriately.”

Products such as the Moab Speed 2 hiking shoe and the Agility Peak 5 trail runners drove retail and hike category growth, Hufnagel said, and the brand’s market share grew through the quarter. Collaborations with brands such as premium golf brand Greyson sold out, and Merrell also opened several stores in Tokyo through the quarter.

Revenue is expected to decline by the low double-digits in fiscal year 2024 compared to 2023 and decline by the mid-single digits from the second quarter to the third this year.

Saucony “Beginning to Hit Its Stride” in Turnaround Journey: CEO

New Saucony products such as the Guide 17, Endorphin 4, and the award-winning Triumph 22 have helped the brand be the “furthest along” in its turnaround journey, Hufnagel said. Sell-through of the Hurricane 24 with Max Cushioning soles is promising so far, and Saucony also previewed its 2025 with a limited release of its Endorphin Elite 2 shoe two weeks ago, which sold out in one hour. Olympian marathon runner Malini Elmore will wear the shoe this weekend in Paris, Hufnagel said.

As for lifestyle products, Saucony successfully tapped into the retro tech trend with styles like the Pro Grid Omni, Pro Grid Triumph, and Ride Millennium.

From a marketing perspective, Saucony focused on the key city of London, England, through the quarter, with brand activations such as sponsoring a 10-kilometer run in the city. Those efforts led to 40% traffic growth to saucony.com from shoppers in the UK in the quarter, which contributed to a 20% increase in the brand’s e-commerce channel globally in the quarter, Hufnagel said.

“Saucony is just beginning to hit its stride in the world,” Hufnagel said.

Revenue is projected to decline by the “low twenties” in 2024 compared to the previous year and decline by the “low twenties” from the second quarter to the third.

Sweaty Betty Doubles Shorts Sales

The “Wear the Damn Shorts” campaign by Sweaty Betty, which encouraged women to prioritize comfort over their insecurities, was a successful example of how a brand can uniquely express itself and reach consumers on an emotional level, Hufnagel said. It also doubled sales of shorts in the quarter compared to last year.

There was double-digit growth in the leggings category, and Sweaty Betty’s expanded Explorer collection also had double-digit growth, Hufnagel said.

Revenue is expected to grow by the low single-digits from the second quarter to the third and remain flat for fiscal year 2024 compared to last year.

Kate Robertson can be reached at [email protected].