Wolverine World Wide earnings knocked back by environmental litigation
Rockford, Michigan-based footwear company Wolverine World Wide, Inc. announced a slight increase in its fourth-quarter sales on Tuesday, but plummeted into loss as expenses related to environmental litigation took their toll on the group’s bottom line.
For the fourth quarter ended December 28, 2019, the company, which owns the Merrell, Sperry, Hush Puppies, Saucony and Wolverine brands, among others, reported revenue of $607.4 million, up 4.8% (5.1% in constant currencies) from $579.6 million in the prior-year period.
According to Wolverine World Wide chairman, CEO and president Blake Krueger, sales growth was driven by the Merrell and Sperry brands, as well as acceleration in the company’s digital-direct DTC strategy and international expansion.
The group’s quarterly loss, however, came to $0.9 million, or $0.01 per share, compared to earnings of $39.3 million, or $0.39 per share in the same period in the previous year.
Wolverine’s bottom line was impacted by $58 million in net costs related to environmental investigation and remediation expenses incurred by the company as a result of litigation brought against it by the State of Michigan and Plainfield Charter and Algoma Townships, relating to its contamination of water with PFAS (polyfluoroalkyl substances).
Disregarding these one-off expenses, Wolverine’s adjusted quarterly earnings per share totaled $0.59, beating the predictions of FactSet analysts cited by MarketWatch, who had expected the company to report income of $0.58 per share.
Environmental litigation also had a noticeable impact on the group’s full-year income, which fell to $128.5 million, or $1.44 per share, compared to $200.1 million, or $2.05 per share, in the prior year.
Wolverine’s annual revenue was $2.27 billion, increasing 1.5% (2.3% in constant currencies) from $2.24 billion in the previous year.
“We had a very solid finish to the year, with Merrell, Sperry and Saucony – our top three brands – combining to deliver nearly 10% constant currency growth in the second half,” explained Wolverine World Wide SVP and CFO Mike Stornant in a release. “In the fourth quarter, our eCommerce and International channels exceeded expectations and were major contributors to our overall performance.”
Looking forward to fiscal 2020, Wolverine expects to report annual revenues of between $2.29 billion and $2.34 billion, representing a year-over-year increase of around 3.0% at the top of the range. Diluted earnings per share are predicted to total between $2.05 and $2.20.
These predictions take into account an expected negative impact of around $30 million in revenue and $0.10 in diluted earnings per share related to the ongoing coronavirus outbreak in China.
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