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Wolverine World Wide Inc. has announced an unspecified number of global job cuts and new strategic initiatives in an effort to cut costs during an ongoing company “turnaround.”
The Rockford-based marketer and licenser of footwear and apparel aims to stabilize and restructure the organization through some key changes announced Thursday, following the ouster of former CEO Brendan Hoffman in August and recent brand divestitures.
The changes come as Wolverine (NYSE: WWW) reported sinking revenue and earnings for the most recent quarter and explores the sale of additional non-core assets, which could generate $65 million by year end, according to executives.
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The company anticipates the job cuts and strategic initiatives will produce $215 million in annualized savings, including an immediate $50 million in savings from a “pretty meaningful organizational redesign and restructuring of the workforce,” CFO Mike Stornant said during a Thursday earnings call with analysts.
CEO Chris Hufnagel described the cost-cutting measures as “stabilizing the company by deleveraging the balance sheet, reducing our inventory, and restructuring the organization to reduce the cost structure and improve the margin profile. This work will enable us to invest more in our brands and platforms to drive growth.”
The company on Thursday announced that a “global workforce restructuring” was underway. The company did not respond to a request for more information about the plan. It is unclear how many employees or which areas of the business have been affected.
The company’s new initiatives include the formation of a strategic collective focused on innovation and insights, new global licensing and planning functions, and new tools to support product management. The company also is working to align its U.S. and Canadian operations by consolidating its North American commercial structure.
“First and critically, we’ve historically underinvested in our brands, product innovation and demand creation. And I believe our top line challenges today are in part a consequence of this fact,” Hufnagel said during the earnings call. “We intend, and already have begun, to strategically invest more in our biggest growth opportunities, and we must be better protecting these brand-building investments in the future.”
Hufnagel discussed the company’s need to transition from a “push model” to a more “sell through” approach, as well as to become a better manager of its brands.
“We’re thinking about sustainable growth in a new way and investing in the brand protection team to help manage and monitor the marketplace,” he said.
The latest initiatives build on Wolverine’s ongoing efforts to transform its portfolio with the recent sale of Keds; the Hush Puppies intellectual property sale in China, Hong Kong, and Macau; the sale of the Wolverine Leathers business in North America; and the consideration of alternatives for the Sperry brand.
Earnings outlook
Meanwhile, Wolverine on Thursday reported its financial results for the recent third quarter, which included $527.7 million in total revenue, a 23.7% decline from the same period last year, driven in part by an ongoing wholesale demand slump in the U.S. and Europe.
While gross margins during the quarter showed a slight improvement, the company’s diluted earnings per share were at $0.11, down 77.1% from $0.48 from the same quarter in 2022. Executives expect fourth quarter adjusted diluted earnings per share to be a loss of $0.30 to $0.25.
Aside from brand Sweaty Betty, which generated $45 million in revenue compared to $37.8 million for the same period last year, revenue dropped among the Merrell, Saucony, Sperry and Wolverine brands this past quarter.
Looking ahead, the company has reduced its upcoming fourth quarter revenue outlook to $515 million to $525 million.
“Given the headwinds we see on the immediate horizon, our results in the final quarter of the year will be less than we previously expected and certainly less than the company’s full potential,” Hufnagel said.
The company also shared that the strategic review of the Sperry Brand is progressing and that the company is looking to sell “other non-core assets” in the current quarter.
“While our turnaround and, ultimately, the transformation of Wolverine World Wide won’t be completed in a quarter or two — especially given the challenging environment we find ourselves in today — we expect to continue to make meaningful progress toward our transformation goals,” Hufnagel said.
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