Wolverine's Growth Global Agenda Strong, Sales Trend Weak
Zacks Investment Research | Dec 05, 2018 04:40AM ET
Wolverine World Wide, Inc. (NYSE:WWW) ison track with its Way Forward initiative, as it entered into the next phase — Global Growth Agenda. Additionally, an impressive earnings history, strong product portfolio and expansion plans bode well.
Despite such upsides, the company is grappling with declining sales trend along with currency headwinds. Notably, shares of the company slumped 11.6% in the past three months, significantly underperforming the Shoes and Retail Apparel sector's loss of 3.6% in the said time period. Let’s delve deeper.
What’s Hurting the Stock?
Wolverine’s top-line has been registering a year-over-year decline for the last five quarters. Top line declined 3.9% to $558.6 million and also fell short of the Zacks Consensus Estimate of $581.5 million.
The company witnessed sales decline in all the three segments. Sales at Wolverine Outdoor & Lifestyle Group, Wolverine Boston Group and Wolverine Heritage Group decreased 0.7%, 4% and 5.7%, respectively. Sales at the company’s Boston Group and Heritage Group have declined in all the three quarters of 2018. Moreover, the company is exposed to significant currency risks.
Efforts to Revive on Track
Wolverine is progressing well with its Way Forward initiative, which is likely to drive growth.Further, the company entered into the next phase of its Way Forward initiative — Global Growth Agenda — which focuses on empowering brands, implementing advanced digital tools and expanding into new markets. Wolverine anticipates additional investments in this direction to be $40-$45 million for 2018. Out of this, 45% of such investments are directed toward the creation of powerful product development.
Also, the company remained focused on enhancing its digital capabilities. Efforts in this respect include enhancing the company’s social presence, improving digital advertisement maneuvers, and better implementation and management of consumer database. Further, the company has allocated approximately $15 million of incremental investments from Global Growth Agenda toward digital advancements. Moreover, it is witnessing solid e-commerce growth with 25% improvement in this business during the third quarter.
Moving on, Wolverine is making efforts to expand base. Going ahead, the company plans to add greater strategic resources to strengthen its regional teams, especially in the emerging regions of Asia-Pacific such as China. With such well-spun plans rolled up its sleeves, the company plans to achieve high-single digit growth in revenues from its international business in 2018.
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