Footwear conglomerate Wolverine Worldwide (NYSE:WWW) beat analysts' expectations in Q1 CY2024, with revenue down 32% year on year to $394.9 million. On the other hand, the company's full-year revenue guidance of $1.71 billion at the midpoint came in slightly below analysts' estimates. It made a non-GAAP profit of $0.05 per share, down from its profit of $0.09 per share in the same quarter last year.
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Wolverine Worldwide (WWW) Q1 CY2024 Highlights:
- Revenue: $394.9 million vs analyst estimates of $361.6 million (9.2% beat)
- EPS (non-GAAP): $0.05 vs analyst estimates of $0 ($0.05 beat)
- The company dropped its revenue guidance for the full year from $1.73 billion to $1.71 billion at the midpoint, a 1.2% decrease (but reiterated full year EPS (non-GAAP) guidance)
- Gross Margin (GAAP): 45.9%, up from 37.4% in the same quarter last year
- Free Cash Flow was -$42.3 million, down from $118.7 million in the previous quarter
- Market Capitalization: $912.6 million
Founded in 1883, Wolverine Worldwide (NYSE:WWW) is a global footwear company with a diverse portfolio of brands including Merrell, Hush Puppies, and Saucony.
FootwearBefore the advent of the internet, styles changed, but consumers mainly bought shoes by visiting local brick-and-mortar shoe, department, and specialty stores. Today, not only do styles change more frequently as fads travel through social media and the internet but consumers are also shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some footwear companies have made concerted efforts to adapt while those who are slower to move may fall behind.
Sales GrowthA company’s long-term performance can give signals about its business quality. Any business can put up a good quarter or two, but many enduring ones muster years of growth. Wolverine Worldwide's revenue declined over the last five years, dropping 2% annually. Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. Wolverine Worldwide's recent history shows its demand has decreased even further as its revenue has shown annualized declines of 9.9% over the last two years.
This quarter, Wolverine Worldwide's revenue fell 32% year on year to $394.9 million but beat Wall Street's estimates by 9.2%. Looking ahead, Wall Street expects revenue to decline 12.5% over the next 12 months.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Over the last two years, Wolverine Worldwide's demanding reinvestments to stay relevant with consumers have drained company resources. Its free cash flow margin has been among the worst in the consumer discretionary sector, averaging negative 1.1%.
Wolverine Worldwide burned through $42.3 million of cash in Q1, equivalent to a negative 10.7% margin, increasing its cash burn by 59.8% year on year.
Key Takeaways from Wolverine Worldwide's Q1 ResultsWe were impressed by how significantly Wolverine Worldwide blew past analysts' EPS expectations this quarter. We were also excited its revenue outperformed Wall Street's estimates. On the other hand, its operating margin missed and its full-year revenue guidance slightly fell short of Wall Street's estimates. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track. The stock is flat after reporting and currently trades at $11.4 per share.