Wolverine World Wide(WWW) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenue increased by 20% to $615 million, exceeding guidance, with organic growth of 10% excluding Sweaty Betty [11][41] - Adjusted gross margin was 42.5%, down 180 basis points from the previous year, impacted by higher supply chain costs and channel mix [41][42] - Adjusted diluted earnings per share for the quarter were$ 0.41, a growth of 2.5% compared to $0.40 in the prior year [45] Business Line Data and Key Metrics Changes - Merrell revenue was$ 148 million, down 2%, but expected to deliver low teens growth in Q2 and high teens for the full year [11][12] - Saucony revenue was approximately $106 million, with a growth of 4%, and expected to achieve double-digit growth in Q2 [14] - Sperry had a strong quarter with revenue of$ 67 million, growing 19%, and projected to grow mid-single digits in Q2 [21] - Sweaty Betty revenues were $54 million, down 2% on a pro forma basis, but up 3% in constant currency [16] Market Data and Key Metrics Changes - International revenue grew 35% compared to last year, with a 10% increase excluding Sweaty Betty [36] - The U.S. work boot category holds over 30% market share, with Wolverine brand leading [22] - The company expects DTC businesses to approach 30% of global revenue in 2022, with international markets over 35% [48] Company Strategy and Development Direction - The company is focused on executing strategies to capitalize on industry trends and drive market share gains [10] - A renewed focus on the largest brands and global markets is emphasized, with an acceleration of digital and ecommerce capabilities [25] - The company is working with Boston Consulting Group to refine corporate strategy and optimize portfolio [53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth despite ongoing supply chain challenges and geopolitical issues [39] - The company anticipates a return to double-digit growth for Sweaty Betty in the second half of the year [18] - Supply chain delays are expected to lessen but remain a challenge throughout the year [23] Other Important Information - Inventory at the end of the quarter was up 36% excluding Sweaty Betty, reflecting healthy levels of core and carryover inventory [24][46] - The company plans to host an Investor Day to share insights on growth and value creation opportunities [55] Q&A Session Summary Question: Corporate strategy review and Boston Consulting Group engagement - Management indicated that the review will focus on corporate-level strategy and evaluating opportunities across brands [58][59] Question: Demand indicators in outdoor and running categories - Management remains optimistic about demand, citing strong order books despite supply chain disruptions [62][63] Question: Impact of European consumer trends and cancellations - No significant cancellations were reported, with strong demand from distributors and partners [65] Question: Marketing tactics for Sweaty Betty - Management noted shifts in marketing strategies to enhance customer engagement and drive growth [70][71] Question: Flow of goods and air freight expenses - Management expects improved visibility on product deliveries and is not excessively relying on air freight [78] Question: Price increases across brands - Price increases are being implemented selectively, with no significant pushback from consumers [81]