Wolverine Worldwide closes 140 stores in 'strategic realignment'
The Rockford-based footwear maker Wolverine Worldwide is planning to close 140 stores as part of a new “strategic realignment plan.”
Stride Rite stores
The company said yesterday the store closures would take place over the next 18 months and by the end of 2015, with 60 occurring by the end of this fiscal year.
Most of the closures involve the Stride Rite brand.
The closures are a result of a consumer shift to online purchasing versus in-store buying.
Wolverine said the realignment of its consumer-direct business is intended to “optimize the fleet of retail locations, right-size the supporting infrastructure, address a fundamental shift in consumer shopping behavior and allow for greater focus on important omni-channel initiatives.”
Wolverine Worldwide is one of the world's leading makers of casual, athletic and uniform footwear and apparel, with brands such as Merrell, Sperry Top-Sider, Hush Puppies, Saucony, Wolverine, Keds and others.
Once the plan is fully implemented, the company said it expects to save approximately $11 million annually, which it intends to re-deploy to further build out consumer-direct selling capabilities, specifically mobile and website channels, and accelerate growth in its wholesale operations.
“The strategic realignment plan announced today is an important step in the evolution of the company's consumer-direct operations to meet the changing behavior of today's consumer," said Blake Krueger, chairman and CEO, Wolverine Worldwide. "We are confident that these actions will set a new foundation for our consumer-direct business, help position our company for future growth and increase shareholder value."
Based on its realignment plan, the company expects charges in the range of $30 million to $37 million recorded between now and the end of 2015.
Approximately $13 million to $15 million of this estimate represents non-cash charges, primarily asset write-offs related to closed retail locations and restructuring charges related to the remaining retail store fleet and international operations. Of this non-cash amount, $3.4 million was recorded in the second fiscal quarter.
Wolverine Worldwide (NYSE: WWW) also reported yesterday its second quarter 2014 financial results, which include record revenue and record adjusted earnings.
The company said each of its three brand operating groups contributed to the quarter's revenue growth.
Revenue in the quarter reached $613.5 million, an increase of 4.4 percent versus the prior year.
Wolverine reported net earnings, attributable to the company, of $27.5 million in the quarter, up from $17.9 million last year.
The company reported adjusted operating expenses in the quarter were $190.8 million, a decline of 2.8 percent versus the prior year.
As a percentage of revenue, adjusted operating expenses were 31.1 percent compared to 33.4 percent in the prior year.
"We are extremely pleased to deliver a record quarter in what continues to be a volatile global retail environment, particularly in the U.S.," Krueger said. "All of our operating groups achieved a revenue increase in the quarter, which was spread across nearly every region of the world.
“Our Saucony, Keds, Caterpillar Footwear, Chaco and Wolverine brands posted very strong year-over-year results, and double-digit revenue gains in EMEA, Latin America and Asia-Pacific highlight the broad geographic reach of our portfolio."
Based on revised expectations for the remainder of the year, Wolverine expects its full-year consolidated revenue to be approximately $2.775 billion, representing growth of approximately 3 percent compared to prior year revenue of $2.69 billion.
“As we turn to the back half of the year, we have taken a somewhat more conservative approach to our revenue outlook, reflective of a continued soft retail environment in the U.S.,” said Don Grimes, senior vice president and CFO, Worlverine Worldwide.