Yahoo Movies Wolverine Sets Layoffs, Possible Sell-offs
Wolverine World Wide Inc. is biting the bullet.
The large footwear and apparel company plans to divest or license its Keds and Wolverine Leathers businesses, and reduce its workforce.
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The company began laying off workers earlier this week but did not disclose how many of its 3,700 or so employees are affected.
“These decisions, particularly those related to our impacted team members, were not taken lightly,” said Brendan Hoffman, Wolverine Worldwide’s president and chief executive officer, in a statement on Thursday, when the layoffs and sell-offs were disclosed. “We greatly value the contributions of our talented colleagues and are committed to supporting impacted team members in their transitions.”
The company indicated that the downsizing maneuvers are geared to reduce complexity, prioritize growth brands, increase shareholder value in the long term, and improve profitability.
“We believe the recent changes to our group reporting structure, and the announcement of strategic alternatives for Keds and Wolverine Leathers, as part of our regular assessment of the portfolio, will put the business on an accelerated path to improved profitability and restore Wolverine as a best-in-class brand house,” Hoffman added.
“In this rapidly evolving retail environment, agility is more important than ever. As such, I firmly believe that portfolio simplification and prioritization are essential to achieving our goals.”
Last November, Wolverine reorganized its extensive portfolio into three divisions: active, work and lifestyle. In addition, Wolverine established a Profit Improvement Office to generate greater cost savings and efficiencies.
Merrell, Saucony, Sweaty Betty and Chaco are included in the Active Group, while the Work Group includes Wolverine, Cat, Bates, Harley-Davidson and Hytest. The Lifestyle Group includes Sperry, Keds and Hush Puppies. Wolverine Leathers stands by itself.
According to Hoffman, Keds and Wolverine Leathers are “low-profit contributors.”
The company expects that reducing the workforce will result in about $30 million in savings in 2023.
Including the impact from the workforce reduction, Wolverine expects to realize total savings of about $45 million in 2023 from organizational synergies and other indirect cost areas. In addition, the company plans to build on the supply-chain cost initiatives started earlier this year and expects to realize about $20 million of savings in 2023.
Earlier this week, Wolverine finalized a new accounts receivable securitization program that is expected to generate $175 million in accelerated cash flow at favorable pricing. The company also said that inventory reduction remains a top priority with “meaningful progress made thus far in the fourth quarter.”
“Future cash flow generated from these efforts will be used to pay down outstanding debt,” the company said.
Back in July, Wolverine sold the Champion trademarks for footwear in the U.S. and Canada to its licensee, Hanesbrands Inc., for $90 million. Wolverine is still licensed to continue using the Champion trademark on certain footwear.
Through two months of the fourth quarter, revenue is in line with expectations, the company said, without getting specific.
Additional details on strategy and the fourth quarter and fiscal year 2022 performance will be presented at the 25th annual ICR Conference being held at the Grande Lakes Orlando Resort on Jan. 10.
Wolverine’s portfolio includes Merrell, Saucony, Sperry, Sweaty Betty, Hush Puppies, Chaco, Bates, Hytest and Stride Rite, as well as Keds and Wolverine. The company is also the footwear licensee of the Cat and Harley-Davidson brands.
Wolverine’s third-quarter top- and bottom-line gains missed expectations. The company has been grappling with supply chain issues, high inventory levels and high freight and handling costs.
For the period ended Oct. 1, operating profit came to $58.8 million versus $42.5 million in the year-ago period, and net profit was $38.8 million, versus a loss of $800,000 in the year-ago period.
Revenue grew 8.6 percent to $691.4 million, and 12.2 percent on a constant currency basis. The international business was strong, up 33 percent to $303 million. Direct-to-consumer revenue was up 4.5 percent to $160 million.
Wolverine forecast a fourth-quarter loss of between 19 cents and 9 cents in earnings per share. Revenue is expected to be in the range of $650 million to $675 million, representing growth of about 2.3 to 6.2 percent.
