Wolverine World Wide, Inc. WWW has demonstrated strong upward momentum, trading above its 50 and 200-day simple moving averages (SMA). SMA is a key indicator of price stability and long-term bullish trends.
WWW ended yesterday’s trading session at $23.17, above its 50 and 200-day SMA of $18.15 and $13.54, respectively, highlighting a continued uptrend. This technical strength, along with sustained momentum, indicates positive market sentiment and investors’ confidence in Wolverine’s financial health and growth prospects.
WWW Trades Above 50 & 200-Day Moving Averages
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Shares of this leading designer and producer of innovative, niche footwear and accessories are 3.8% below its 52-week high of $24.09 attained on Nov. 25, 2024, making investors contemplate their next moves. In the past three months, WWW stock has rallied 68%, comfortably outpacing the Zacks Shoes and Retail Apparel industry’s 1.5% decline.
The company’s ongoing strategic approach and product diversification have enabled it to outperform the broader Zacks Consumer Discretionary sector and the S&P 500 index’s growth of 15.1% and 7.8%, respectively, during the same period.
WWW Stock Past Three-Month Performance
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WWW Drives Growth Through Brand Innovation, DTC Success
A cornerstone of Wolverine’s strategy has been rationalizing its brand portfolio and restructuring. By focusing on Wolverine’s core brands and operational efficiencies, the company has aligned its resources toward enhancing profitability.
Merrell, one of its flagship brands, achieved a 1.4% year-over-year revenue increase in the third quarter of 2024, driven by successful launches like the Moab Speed 2 and Agility Peak 5. Looking ahead, the upcoming Speed Arc Collection, set to debut in 2025, will incorporate advanced materials and cutting-edge designs, further cementing Merrell's position as a leader in the hiking and trail footwear market.
Saucony is also making strides by expanding its reach in both performance and lifestyle markets. The brand plans to launch the Endorphin Elite 2 in spring 2025 while broadening its distribution to 900 additional lifestyle-focused retail locations. These efforts are enhancing brand equity and positioning Wolverine for long-term growth across critical market segments.
The company's direct-to-consumer ("DTC") channels have shown solid performance, with Merrell and Saucony recording mid-single-digit growth in the third quarter. This success is largely attributed to Wolverine’s investments in digital innovation and delivering premium shopping experiences.
Wolverine’s Operational Efficiency, Effective Cost Structure
Wolverine's turnaround strategy has been driven by operational efficiencies and a focus on inventory management. In the third quarter of 2024, the company reduced inventory by 49.4% year over year to $285.5 million, enhancing cash flow and minimizing the risk of markdowns on outdated stock. By year end, Wolverine expects an additional $85 million reduction in inventory, further improving its financial position.
Alongside these efforts, Wolverine has modernized its supply chain, implemented cost-saving measures and improved gross margins to record levels. Cost structure improvements are also evident in reduced SG&A expenses, indicated to decrease from $716 million in 2023 to $650 million in 2024. These initiatives have contributed to a stronger gross margin, which expanded 380 basis points (bps) year over year to 45.3% in the third quarter, aided by lower supply-chain costs and a decline in end-of-life inventory sales.
Moreover, Wolverine’s adjusted operating profit rose 28.7% year over year to $34.1 million, with the adjusted operating margin improving 210 bps to 7.7%. These results highlight the company’s ability to effectively capitalize on revenue growth while maintaining financial discipline.
WWW’s Strong Financial Forecast for 2024
Wolverine's strong market position continues to fuel its growth trajectory. For 2024, the company anticipates a notable improvement in its financial metrics, implying an adjusted gross margin of 44.5%, up 460 bps from the previous year. The adjusted operating margin is expected to reach 7.2%, indicating a 330-bps increase compared with 2023.
The company forecasts adjusted earnings per share (EPS) in the range of 80-90 cents, slightly above the prior guidance of 75 cents to 85 cents, despite a projected 10-cent impact from foreign exchange fluctuations. By contrast, adjusted EPS in 2023 was 15 cents.
For the fourth quarter, Wolverine expects its gross margin to climb to 44%, a 700-bps increase year over year. The operating margin is expected at 9%, with adjusted EPS anticipated to be between 31 cents and 41 cents. These figures underscore Wolverine’s robust financial momentum and ability to navigate market challenges effectively.
Estimate Revisions Favoring Wolverine Stock
Analysts have responded positively to Wolverine’s prospects, indicated in upward revisions in the Zacks Consensus Estimate for EPS. In the past 30 days, analysts have increased their estimates for current-financial year by 4 cents. The consensus estimate for earnings is pegged at 89 cents per share. The consensus estimate for next-financial year has also been raised 7 cents to $1.35 per share.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
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Final Thoughts on WWW
Wolverine presents a compelling investment opportunity, trading above key moving averages and indicating strong financial momentum. The company's strategic focus on brand revitalization and expansion into direct-to-consumer channels has enhanced its market position. Operational efficiencies, including significant inventory reductions and supply-chain optimizations have led to record gross margins and improved profitability. With an optimistic financial outlook and positive analyst revisions, WWW is well-positioned for sustained growth and long-term value creation, making it an attractive choice for investors. It currently sports a Zacks Rank #1 (Strong Buy).
Other Key Picks
Some other top-ranked stocks are Deckers Outdoor Corporation DECK, The Gap, Inc. GAP and Gildan Activewear Inc. GIL.
Deckers Outdoor Corporation is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. It sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Deckers’ fiscal 2025 earnings and sales indicates growth of 12.6% and 13.6%, respectively, from fiscal 2024 reported levels. DECK has a trailing four-quarter average earnings surprise of 41.1%.
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Gap’s fiscal 2025 earnings and sales indicates growth of 40% and 0.7%, respectively, from fiscal 2024 reported figures. GAP has a trailing four-quarter average earnings surprise of 101.2%.
Gildan is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of North America’s apparel market. It currently carries a Zacks Rank #2 (Buy).
The consensus estimate for Gildan’s current financial-year earnings and sales indicates growth of 15.6% and 1.5%, respectively, from figures of 2023. GIL has a trailing four-quarter average earnings surprise of 5.4%.
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