Wolverine World Wide Q4 2014 Earnings Release

This morning, Wolverine World Wide (WWW) reported its fourth quarter earnings and fiscal year ended January 3rd, 2015. The company’s fourth quarter net income rose as sales revenue spiked in regions overseas (excluding North America). Wolverine World Wide’s adjusted diluted EPS increased 36.4% leaving it in line with analyst’s estimates at 30 cents per share. Full year earnings per share climbed 13.3% to $1.62, compared to the prior year’s EPS of $1.43. Revenue was a company record-breaking number at $808.9 million, but just about met consensus estimates listed at $808.11 million. The rise in revenue represented a 9.2% increase y/y leaving the company with its fifth consecutive year of record-breaking revenue. During the quarter, 9 of Wolverine World Wide’s 16 brands generated double-digit revenue growth, as well as their too largest brands, Merrell and Sperry, delivering mid single-digit and high single-digit revenue growth. The company also reported a record $189.4 million in operating free cash flow, enabling Wolverine World Wide to reduce interest-bearing debt by $195.7 million.

Last month the company announced plans to significantly increase brand-building investments in fiscal 2015, in order to capitalize on growth opportunities around the globe. These brand-building investments focus on consumer-demand creation, omnichannel initiatives and international expansion. Wolverine World Wide plans to incrementally invest approximately $30 million into these brand-building initiatives for FY 2015. As for 2015 earnings, the company now expects reported revenue between $2.82 and $2.87 billion representing a 2%-4% growth y/y. They expect adjusted operating margin to decline 80 basis points, driven primarily by the incremental brand-building investments listed above. A lower interest expense of $40 million, but a modestly higher effective tax rate of approximately 27.5% is also expected. Adjusted diluted EPS is expected to drop into the range of $1.53 to $1.60. This reduction in EPS is reflected by the incremental brand-building investments, higher pension expense, and the negative impact on foreign exchange.

Wolverine World Wide reported solid earnings, the only downside being the reduction in 2015 projections that can be explained through the investments towards future expansion. The company appears to be making smart moves for sustained long-term growth and in my opinion, should be a company to hold on to. Today at market close Wolverine World Wide  (WWW) had a drop in price leaving it at $28.25 (-2.25%).