Like other companies involved in the outdoor sector, Wolverine Worldwide is trying to maximize margins instead of sales to cope with what it calls “the new normal” of slow growth in the outdoor sector.
Announcing the completion of the portfolio management initiatives it had planned for the current financial year, Wolverine indicated that they would have saved $6.8 million in operating results if the measures had been taken earlier. The amount reflects an operating loss from four businesses that have been divested and that will not recur in 2018.
One of the businesses consists of under-performing stores that have been closed down. They will represent total sales of $68.4 million. The others are three operations, whose sale to other interests has been executed: Sebago, the company's contract business with the Department of Defense, and Stride Rite's wholesale business, which has actually been licensed out.
Together, the four businesses will contribute estimated revenues of $163.1 million this year. They will generate a combined gross profit of $52.2 million, or a margin of 32.0 percent of sales, more than offset by operating expenses of $59.0 million.
For the year ended last Jan. 2, Wolverine reported last February a gross margin of 38.5 percent and an operating margin of 6.4 percent before adjustments on total revenues of 2,495 million. Its latest forecast for the current financial year calls for an operating margin of between 5.2 percent and 5.8 percent on a reported basis, or between 10.4 and 10.9 percent on an adjusted basis.
Blake Krueger, chairman, chief executive and president of the group, says the new changes in its portfolio were an important component of the so-called ”Wolverine Way Forward.” They will allow the company to focus its resources on what it believes to be its biggest opportunities for growth.