Wolverine's profit target jumped. A refund explains most of it.
Saucony and Merrell are growing, but a tariff refund explains most of the increase in Wolverine's annual adjusted earnings target.
Wolverine Worldwide raised its annual adjusted earnings target to $1.95–$1.99 a share, from $1.55–$1.65 in August. The adjusted measure excludes selected costs. Most of that jump has a simple explanation: tariff refunds that the earlier forecast left out.
There is a stronger footwear business underneath the refund. Sales at Saucony and Merrell rose again. But the size of the earnings upgrade makes more sense once the refund is separated from the new target.
A 37-cent upgrade, with 32 cents from refunds
Research by Ticker Byline shows that the midpoint of Wolverine's adjusted earnings forecast rose by 37 cents, while the company puts the annual refund benefit at about 32 cents a share. That is roughly 86% of the midpoint increase.
| Forecast | Range |
|---|---|
| August, excluding potential refunds | $1.55–$1.65 |
| November, including refunds | $1.95–$1.99 |
| November less about $0.32 from refunds | About $1.63–$1.67 |
The last range overlaps August's target. It isolates the disclosed refund benefit, rather than every change in the forecast: November also assumes a higher tax rate and a slightly higher diluted share count.
Wolverine received $35.3 million in tariff refunds and interest during the quarter ended October 3. Most reduced the cost of goods sold. The company estimates that refunds added about 31 cents to quarterly earnings per share, including its adjusted measure. Calling the earnings “adjusted” does not remove that benefit.
Saucony supplies a second reason for the increase
Quarterly revenue rose 7.5% to $505.4 million. Saucony sales climbed 19.4% to $158.9 million, while Merrell grew 6.5% to $178.2 million. The Wolverine brand and Sweaty Betty both declined.
Adjusted earnings reached 79 cents a share, against 36 cents a year earlier. Subtracting the estimated 31-cent refund contribution leaves about 48 cents, still roughly one-third higher. The improvement extends beyond the refunds.
The annual sales target also moved up, to $2.000 billion–$2.010 billion from $1.980 billion–$2.000 billion. The increase in expected sales is much smaller than the increase in expected profit per share.
Less debt, with a clearer test ahead
Wolverine ended the quarter with $148.1 million in cash and $547.4 million in debt at its balance-sheet carrying value. Management's rounded net debt figure, debt less cash, fell to $399 million from $542 million a year earlier.
The next results will show whether Saucony and Merrell can keep lifting sales and margins after the refund boost. Our Wolverine company profile tracks the brands, forecast changes and debt reduction.