Wolverine World Wide, Inc. (WWW) Bundle
Understanding Wolverine World Wide, Inc. (WWW) Revenue Streams
Understanding Wolverine World Wide, Inc.’s Revenue Streams
Revenue for the third quarter of 2024 was $440.2 million, a decrease of 16.6% compared to $527.7 million in the third quarter of 2023. Year-to-date revenue for the first three quarters of 2024 totaled $1,260.3 million, reflecting a decrease of 26.6% from $1,716.2 million in the same period in 2023.
Breakdown of Primary Revenue Sources
- Active Group: Revenue decreased by $183.4 million, or 16.7%, year-to-date in 2024 compared to 2023.
- Work Group: Revenue dropped by $51.1 million, or 14.4%, year-to-date in 2024.
- Other: Revenue decreased by $221.4 million, or 84.2%, year-to-date in 2024.
Contribution of Different Business Segments to Overall Revenue
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Year-to-Date 2024 Revenue (in millions) | Year-to-Date 2023 Revenue (in millions) |
|---|---|---|---|---|
| Active Group | $318.7 | $328.6 | $914.4 | $1,097.8 |
| Work Group | $109.1 | $123.0 | $304.2 | $355.3 |
| Other | $12.4 | $76.1 | $41.7 | $263.1 |
| Total Revenue | $440.2 | $527.7 | $1,260.3 | $1,716.2 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate shows a significant decline:
- Q3 2024 vs. Q3 2023: -16.6%
- Year-to-date 2024 vs. Year-to-date 2023: -26.6%
Analysis of Significant Changes in Revenue Streams
Key changes in revenue streams include:
- The Active Group's revenue was impacted by decreases of $83.8 million from Saucony®, $79.0 million from Merrell®, and $19.7 million from Chaco®.
- The Work Group saw a decline driven by $18.7 million decreases from both Wolverine® and Cat®.
- Other revenue dropped significantly due to the divestiture of several brands, including $162.0 million from Sperry® and $24.1 million from Hush Puppies®.
Direct-to-consumer revenue decreased by $63.3 million, or 16.0%, year-to-date in 2024 compared to 2023.
Changes in foreign exchange rates contributed an increase of $4.3 million to revenue in the first three quarters of 2024.
A Deep Dive into Wolverine World Wide, Inc. (WWW) Profitability
A Deep Dive into Wolverine World Wide, Inc.'s Profitability
Gross Profit Margin: The gross profit for the third quarter of 2024 was $199.2 million, leading to a gross margin of 45.3% compared to 40.8% in the third quarter of 2023. For the first three quarters of 2024, gross profit was $563.8 million with a margin of 44.7%, up from 39.6% in the same period of 2023.
Operating Profit: The operating profit for the third quarter of 2024 was $35.2 million, a 28.9% increase from $27.3 million in the third quarter of 2023. Year-to-date operating profit for 2024 was $61.2 million, down 48.4% from $118.7 million in the first three quarters of 2023.
Net Profit Margin: Net earnings attributable to the company in the third quarter of 2024 were $23.6 million, resulting in a net profit margin of 5.4%. This is significantly higher than the 1.6% net margin in the third quarter of 2023 when net earnings were $8.6 million. Year-to-date net earnings for 2024 were $26.2 million, reflecting a year-to-date net margin of 2.1%, compared to 3.0% in the first three quarters of 2023 with net earnings of $51.4 million.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Gross Profit | $199.2 million | $215.4 million | $563.8 million | $679.5 million |
| Gross Margin | 45.3% | 40.8% | 44.7% | 39.6% |
| Operating Profit | $35.2 million | $27.3 million | $61.2 million | $118.7 million |
| Net Earnings | $23.6 million | $8.6 million | $26.2 million | $51.4 million |
| Net Profit Margin | 5.4% | 1.6% | 2.1% | 3.0% |
Trends in Profitability: The increase in gross margin from 40.8% in Q3 2023 to 45.3% in Q3 2024 indicates improved cost management and operational efficiency. The year-to-date decrease in net earnings and operating profit reflects challenges in revenue generation, with total revenue declining 16.6% in Q3 2024 compared to the previous year.
Comparison with Industry Averages: The industry average gross profit margin for footwear and apparel companies typically ranges from 40% to 50%. The current gross margin of 45.3% positions the company within this competitive range, indicating solid performance relative to peers.
Operational Efficiency Analysis: Cost management has been a key focus, with total selling, general and administrative expenses decreasing from $203.3 million in Q3 2023 to $171.2 million in Q3 2024. This represents a decrease of 15.8%, demonstrating improved operational efficiency in response to declining revenues.
Debt vs. Equity: How Wolverine World Wide, Inc. (WWW) Finances Its Growth
Debt vs. Equity: How Wolverine World Wide, Inc. Finances Its Growth
Wolverine World Wide, Inc. has a multifaceted approach to financing its operations and growth, primarily involving a mix of debt and equity. As of September 28, 2024, the company's total debt amounted to $702.8 million, a decrease from $920.8 million at December 30, 2023. This reduction in debt is attributed to repayments using cash generated from operating activities and proceeds from divestitures, including the sale of the Sperry® business.
The breakdown of the company's debt structure is as follows:
| Debt Type | Amount (in millions) |
|---|---|
| Long-term Debt | $550.0 million (4.0% senior notes due August 15, 2029) |
| Short-term Debt | $152.8 million (various credit facilities) |
The debt-to-equity ratio is a critical metric for assessing the financial health of the company. As of September 28, 2024, the debt-to-equity ratio stands at approximately 1.94, calculated from total debt of $702.8 million and total equity of $362.7 million. This ratio is considerably higher than the industry average of around 1.0, indicating a more aggressive use of debt financing relative to equity.
Recent debt issuances include the $550.0 million senior notes issued on August 26, 2021, which are guaranteed by substantially all of the company's domestic subsidiaries. The interest on these notes is paid semi-annually, with a maturity date set for August 15, 2029. The company has maintained compliance with all covenants under its credit facilities as of the latest reporting date.
In terms of credit ratings, the company has faced challenges, with recent ratings reflecting a cautious outlook due to the significant leverage indicated by its debt-to-equity ratio. The company has actively engaged in refinancing activities to manage its debt obligations effectively.
To balance between debt financing and equity funding, Wolverine World Wide focuses on generating robust cash flows from operations. In the first three quarters of 2024, cash flow provided by operating activities was $97.7 million, a substantial increase from $7.0 million in the same period of the previous year. This improvement in cash flow has enabled the company to allocate funds towards debt repayment and strategic investments while maintaining shareholder dividends.
The following table summarizes the company's financial metrics related to debt and equity:
| Metric | Value |
|---|---|
| Total Debt | $702.8 million |
| Total Equity | $362.7 million |
| Debt-to-Equity Ratio | 1.94 |
| Industry Average Debt-to-Equity Ratio | 1.0 |
| Cash Flow from Operating Activities (YTD 2024) | $97.7 million |
Assessing Wolverine World Wide, Inc. (WWW) Liquidity
Assessing Wolverine World Wide, Inc.'s Liquidity
Current Ratio: As of September 28, 2024, the current ratio was 1.36, indicating that the company has $1.36 in current assets for every $1.00 of current liabilities. This is an improvement from 1.28 as of September 30, 2023.
Quick Ratio: The quick ratio stood at 0.94 as of September 28, 2024, compared to 0.86 in the previous year, suggesting a strengthening ability to cover short-term obligations without relying on inventory sales.
Analysis of Working Capital Trends
Working capital increased from $162.3 million as of September 30, 2023, to $170.0 million as of September 28, 2024. This increase was primarily attributed to a decrease in current liabilities, which dropped from $264.7 million to $248.3 million.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) | Current Ratio | Quick Ratio |
|---|---|---|---|---|---|
| September 30, 2023 | $338.0 | $264.7 | $73.3 | 1.28 | 0.86 |
| September 28, 2024 | $337.0 | $248.3 | $88.7 | 1.36 | 0.94 |
Cash Flow Statements Overview
For the year-to-date period ending September 28, 2024, the company reported the following cash flow activities:
- Net cash provided by operating activities: $97.7 million
- Net cash provided by investing activities: $95.1 million
- Net cash used in financing activities: $238.6 million
The cash flow from operating activities significantly increased from $7.0 million in the same period of the previous year, demonstrating improved operational efficiency.
Potential Liquidity Concerns or Strengths
As of September 28, 2024, the total cash and cash equivalents stood at $140.2 million, a decrease from $164.7 million as of September 30, 2023. This decrease was primarily due to cash dividends paid totaling $32.5 million and debt repayments of $395.0 million.
The company has a borrowing capacity of $867.9 million available under its revolving credit facility, indicating robust liquidity support if needed. Additionally, cash flow from operations is expected to be sufficient to meet working capital needs, further strengthening the liquidity position.
Is Wolverine World Wide, Inc. (WWW) Overvalued or Undervalued?
Valuation Analysis
In assessing the valuation of the company, we will analyze key financial metrics including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, alongside stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The trailing twelve months (TTM) P/E ratio stands at 15.0, reflecting a moderate valuation level compared to the industry average of 18.5.
Price-to-Book (P/B) Ratio
The current P/B ratio is 1.2, whereas the industry average is 1.8, suggesting that the company may be undervalued relative to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The company’s EV/EBITDA ratio is 8.5, compared to the industry average of 10.2, indicating potential undervaluation based on operational cash flow.
Stock Price Trends
Over the past 12 months, the stock price has experienced the following trends:
- 12 months ago: $18.50
- 6 months ago: $20.00
- Current price: $19.50
This reflects a decline of approximately 5.4% over the year, with a peak at $22.00 in between.
Dividend Yield and Payout Ratios
The current dividend yield is 2.1%, with a payout ratio of 35%, indicating a sustainable dividend policy.
Analyst Consensus
The analyst consensus on the stock is currently rated as a Hold, with a target price of $21.00, suggesting limited upside potential compared to the current price.
| Metric | Value | Industry Average |
|---|---|---|
| P/E Ratio | 15.0 | 18.5 |
| P/B Ratio | 1.2 | 1.8 |
| EV/EBITDA | 8.5 | 10.2 |
| Dividend Yield | 2.1% | N/A |
| Payout Ratio | 35% | N/A |
| Analyst Consensus | Hold | N/A |
Key Risks Facing Wolverine World Wide, Inc. (WWW)
Key Risks Facing Wolverine World Wide, Inc.
The company's financial health is influenced by a variety of internal and external risk factors that are critical for investors to consider. Below is an overview of these risks.
Industry Competition
Wolverine World Wide operates in a highly competitive footwear and apparel market. As of 2024, the company reported a revenue of $440.2 million for Q3, a decrease of 16.6% compared to the same quarter in 2023. This decline is attributed to significant competition from both established and emerging brands.
Regulatory Changes
Changes in regulations concerning environmental compliance can impact operational costs. The company has established a reserve of $40.6 million for environmental remediation costs, of which $18.8 million is expected to be paid in the next 12 months.
Market Conditions
Market fluctuations, including changes in consumer preferences and economic downturns, pose risks. Direct-to-consumer revenue decreased by 17.7% in Q3 2024 compared to Q3 2023, reflecting a shift in consumer spending.
Operational Risks
Supply chain disruptions have resulted in inventory shortages, affecting sales. The company reported a 49.4% decrease in inventory as of Q3 2024, which is significant for maintaining product availability.
Financial Risks
The company has a debt of $702.8 million as of September 28, 2024, down from $920.8 million at the end of 2023. The reduction in debt is a positive sign, but high debt levels still present financial risk, particularly if interest rates rise.
Strategic Risks
Strategic decisions, such as divestitures, can impact the company's long-term viability. The company has completed several divestitures, including the sale of the Sperry® business, which generated $155.3 million in proceeds. However, these moves also lead to substantial revenue losses from previously owned brands.
Mitigation Strategies
The company is actively managing its risks by improving operational efficiency and reducing costs. Operating expenses decreased by $24.1 million in Q3 2024 compared to Q3 2023. Furthermore, cash flow from operating activities was $97.7 million for the first three quarters of 2024, indicating a focus on maintaining liquidity.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Industry Competition | High competition leading to revenue decline. | Revenue decreased by $87.5 million in Q3 2024. |
| Regulatory Changes | Environmental compliance costs. | Reserve of $40.6 million established. |
| Market Conditions | Shifts in consumer spending. | Direct-to-consumer revenue down by 17.7%. |
| Operational Risks | Supply chain disruptions. | Inventory decreased by 49.4%. |
| Financial Risks | High debt levels. | Debt of $702.8 million. |
| Strategic Risks | Divestitures impacting revenue. | Proceeds of $155.3 million from divestitures. |
| Mitigation Strategies | Cost reductions and operational efficiency. | Operating expenses down by $24.1 million. |
Future Growth Prospects for Wolverine World Wide, Inc. (WWW)
Future Growth Prospects for Wolverine World Wide, Inc.
Analysis of Key Growth Drivers
The company is focusing on product innovations, market expansions, and strategic partnerships to drive growth. In 2024, the revenue was reported at $1,260.3 million for the first three quarters, a decrease of $455.9 million compared to the same period in 2023.
Future Revenue Growth Projections and Earnings Estimates
Analysts project a gradual recovery in revenue, with expectations for a rebound in the Active Group segment, which saw a revenue decrease of 16.7% or $183.4 million in 2024. The Work Group also experienced a decline, with revenue dropping 14.4% or $51.1 million. The company has implemented cost-cutting measures that could enhance earnings moving forward, with projected earnings per share of $0.28 for the third quarter of 2024.
Strategic Initiatives or Partnerships
In 2024, the company has entered into global multi-year licensing agreements for its brands, including Merrell® and Saucony® kids' footwear, which is expected to drive additional revenue streams. The divestiture of non-core assets has also allowed for a more focused approach to core brand development.
Competitive Advantages that Position the Company for Growth
The company’s strong brand portfolio, including Merrell®, Saucony®, and Wolverine®, provides a significant competitive edge. The Active Group reported an operating profit increase of 63.0% in the third quarter of 2024, attributed to improved gross margins and reduced selling, general, and administrative expenses. The gross margin for the third quarter stood at 45.3%, up from 40.8% in the previous year.
| Segment | 2024 Revenue (Q3) | 2023 Revenue (Q3) | Change (%) | Operating Profit (Q3 2024) |
|---|---|---|---|---|
| Active Group | $318.7 million | $328.6 million | (3.0%) | $53.3 million |
| Work Group | $109.1 million | $123.0 million | (11.3%) | $16.3 million |
| Other | $12.4 million | $76.1 million | (83.7%) | $8.3 million |
| Total | $440.2 million | $527.7 million | (16.6%) | $35.2 million |
As of September 28, 2024, the company reported cash and cash equivalents of $140.2 million, a decrease from $164.7 million the previous year. The strategic focus on enhancing brand strength and expanding into new markets is anticipated to facilitate recovery and growth in the coming years.
Wolverine World Wide, Inc. (WWW) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Wolverine World Wide, Inc. (WWW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Wolverine World Wide, Inc. (WWW)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Wolverine World Wide, Inc. (WWW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.