Amid a sudden leadership shift at the top, Wolverine Worldwide Inc. has downgraded its 2023 outlook after reporting a sales decline in the second quarter.
The footwear company, which owns the Saucony, Merrell, Sperry and Sweaty Betty brands, among others, reported Q2 revenues of $589.1 million, down 17.4 percent compared to the prior year. Adjusted diluted earnings per share were 19 cents, down from 65 cents in the same quarter last year but in line with the prediction from analysts surveyed by Yahoo Finance.
In tandem with the results, Wolverine Worldwide announced the sudden exit of CEO Brendan Hoffman and named Christopher Hufnagel, formerly president of the company, as president and CEO.
Shares of Wolverine were down more than 20 percent before markets opened on Thursday.
Like other footwear brands this quarter, Wolverine’s wholesale business was challenged due to inventory excesses and conservative orders from wholesale retail partners.
“The trading environment is challenging, especially in global wholesale channels where order demand has slowed as retailers manage their businesses more cautiously,” said Wolverine Worldwide EVP and CFO Mike Stornant in a statement.
Wolverine downgraded its full-year outlook and now expects revenues for the year to be in the range of $2.26 billion to $2.28 billion, which would represent a decline of about 10.7 percent to 10 percent compared with the prior year. Adjusted diluted earnings per share are expected to be between 45 cents and 55 cents, which includes an 11-cent negative impact from foreign currency exchange headwinds.
Hufnagel described the outlook for the second half of the year as “disappointing,” though maintained confidence in the company’s ability to turn business around and improve profits in 2024.
“The current adversity has not only deepened our conviction that our strategic direction is more correct than ever, but that we must execute it with greater boldness and speed,” Hufnagel said.
The results mark yet another challenging quarter for Wolverine. Last year, the company initiated a broad turnaround effort meant to focus its attention on brands with the most potential and improve profitability. More recently, the company has announced a potential sale of its Sperry brand after it divested its Keds business late last year and has consolidated its U.S. offices to streamline the organization.
