Footwear conglomerate Wolverine Worldwide (NYSE:WWW) beat analysts' expectations in Q2 CY2024, with revenue down 18.4% year on year to $425.2 million. The company expects the full year's revenue to be around $1.72 billion, in line with analysts' estimates. It made a non-GAAP profit of $0.15 per share, down from its profit of $0.19 per share in the same quarter last year.
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Wolverine Worldwide (WWW) Q2 CY2024 Highlights:
- Revenue: $425.2 million vs analyst estimates of $410.8 million (3.5% beat)
- EPS (non-GAAP): $0.15 vs analyst estimates of $0.11 (37.7% beat)
- The company slightly lifted its revenue guidance for the full year from $1.71 billion to $1.72 billion at the midpoint
- EPS (non-GAAP) guidance for the full year is $0.80 at the midpoint, missing analyst estimates by 1.4%
- Gross Margin (GAAP): 43.1%, up from 30.6% in the same quarter last year
- EBITDA Margin: 8.3%, in line with the same quarter last year
- Free Cash Flow of $23.7 million is up from -$42.3 million in the previous quarter
- Market Capitalization: $1.10 billion
“We delivered better-than-expected revenue and earnings in the second quarter, while continuing to execute our ambitious turnaround plan,” said Chris Hufnagel, President and Chief Executive Officer of Wolverine Worldwide.
Founded in 1883, Wolverine Worldwide (NYSE:WWW) is a global footwear company with a diverse portfolio of brands including Merrell, Hush Puppies, and Saucony.
Footwear
Before the advent of the internet, styles changed, but consumers mainly bought shoes by visiting local brick-and-mortar shoe, department, and specialty stores. Today, not only do styles change more frequently as fads travel through social media and the internet but consumers are also shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some footwear companies have made concerted efforts to adapt while those who are slower to move may fall behind.
Sales Growth
A company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one tends to grow for years. Over the last five years, Wolverine Worldwide's revenue declined by 4.1% per year. This shows demand was weak, a rough starting point for our analysis. 
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or emerging trend. Wolverine Worldwide's recent history shows its demand has stayed suppressed as its revenue has declined by 15.2% annually over the last two years.
This quarter, Wolverine Worldwide's revenue fell 18.4% year on year to $425.2 million but beat Wall Street's estimates by 3.5%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months.
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Cash Is King
If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Wolverine Worldwide has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3.3%, lousy for a consumer discretionary business.
Wolverine Worldwide's free cash flow clocked in at $23.7 million in Q2, equivalent to a 5.6% margin. The company's cash profitability regressed as it was 20.7 percentage points lower than in the same quarter last year, but it's still above its two-year average. We wouldn't put too much weight on this quarter's decline because investment needs can be seasonal, causing short-term swings. Long-term trends trump temporary fluctuations.
Key Takeaways from Wolverine Worldwide's Q2 Results
We were impressed by how Wolverine Worldwide blew past analysts' revenue and EPS expectations this quarter. We were also excited it slightly lifted its full-year revenue guidance. On the other hand, its full-year earnings forecast was underwhelming. Overall, this quarter seemed fairly positive, but the market was likely expecting more. The stock traded down 3.7% to $13.31 immediately after reporting.
So should you invest in Wolverine Worldwide right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.