Wolverine Worldwide (WWW)

Footwear conglomerate Wolverine Worldwide (NYSE:WWW) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 4.4% year on year to $412.3 million. The company expects next quarter’s revenue to be around $445 million, close to analysts’ estimates. Its non-GAAP profit of $0.18 per share was 64.2% above analysts’ consensus estimates.

Company Overview

Founded in 1883, Wolverine Worldwide (NYSE:WWW) is a global footwear company with a diverse portfolio of brands including Merrell, Hush Puppies, and Saucony.

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.

Wolverine Worldwide's primary competitors include Nike (NYSE:NKE), Adidas (ETR:ADS), VF Corp (NYSE:VFC), who owns The North Face and Vans, Deckers Outdoor (NYSE:DECK), who owns UGG and Hoka, and Columbia Sportswear (NASDAQ:COLM).

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Wolverine Worldwide’s demand was weak and its revenue declined by 4.1% per year. This wasn’t a great result and suggests it’s a low quality business.

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 trend. Wolverine Worldwide’s recent performance shows its demand remained suppressed as its revenue has declined by 17.2% annually over the last two years.

This quarter, Wolverine Worldwide reported modest year-on-year revenue growth of 4.4% but beat Wall Street’s estimates by 4.1%. Company management is currently guiding for a 4.7% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 3.1% over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below the sector average.

Wolverine Worldwide’s operating margin has risen over the last 12 months, leading to break even profits over the last two years. However, its large expense base and inefficient cost structure mean it still sports inadequate profitability for a consumer discretionary business.

This quarter, Wolverine Worldwide generated an operating profit margin of 4.8%, up 5.6 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Wolverine Worldwide, its EPS declined by 13.4% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

In Q1, Wolverine Worldwide reported EPS at $0.18, up from $0.05 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Wolverine Worldwide’s full-year EPS of $1.05 to grow 6.7%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Wolverine Worldwide has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 7.7%, subpar for a consumer discretionary business.

Wolverine Worldwide burned through $91.4 million of cash in Q1, equivalent to a negative 22.2% margin. The company’s cash burn increased from $42.3 million of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, indicating it is a seasonal business that must build up inventory during certain quarters.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Wolverine Worldwide’s five-year average ROIC was negative 2.1%, meaning management lost money while trying to expand the business. Its returns were among the worst in the consumer discretionary sector.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Wolverine Worldwide’s ROIC averaged 3.4 percentage point increases each year. This is a good sign, and we hope the company can continue improving.

Wolverine Worldwide reported $106.5 million of cash and $725.1 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $162.2 million of EBITDA over the last 12 months, we view Wolverine Worldwide’s 3.8× net-debt-to-EBITDA ratio as safe. We also see its $22.7 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Wolverine Worldwide blew past analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its EPS guidance for next quarter missed. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 4.7% to $15.51 immediately after reporting.

Updated: May 21, 2025 at 10:51 PM EDT

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

We cheer for all companies serving everyday consumers, but in the case of Wolverine Worldwide, we’ll be cheering from the sidelines. To kick things off, its revenue has declined over the last five years. On top of that, Wolverine Worldwide’s declining EPS over the last five years makes it a less attractive asset to the public markets, and its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Wolverine Worldwide’s P/E ratio based on the next 12 months is 15x. While this valuation is reasonable, we don’t see a big opportunity at the moment. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $20.78 on the company (compared to the current share price of $16.88).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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