Wolverine Lifts Outlook as Saucony and Merrell Power Growth

A stronger quarter than expected

Wolverine Worldwide has closed the third quarter of its financial year on a high note, with revenue climbing 7.5 per cent and management lifting its guidance for the year ahead. The results land on the back of the group’s two biggest labels, Saucony and Merrell, both of which carried the wider portfolio through the period.

Revenue for the three months to 3 October reached $505.4 million, compared with $470.3 million a year earlier. Stripped of currency fluctuations, sales grew 7.7 per cent, so the underlying momentum is slightly stronger than the headline figure suggests.

The quarter marks the eighth consecutive period of growth, a milestone that Chris Hufnagel, Wolverine’s president and chief executive, framed as proof that the company’s turnaround is also a growth story. He pointed to improving profits and a healthier balance sheet giving the group more room to invest behind its brands, while acknowledging that trading conditions remain unpredictable.

Winners and laggards within the portfolio

The picture beneath the group total is uneven, and that unevenness matters for anyone tracking the UK and European footwear market.

Saucony was the standout performer, with revenue up 19.4 per cent to $158.9 million, a near-fifth jump on the same period last year. Merrell, the group’s largest brand by revenue, added 6.5 per cent to reach $178.2 million, maintaining its position at the top of the portfolio. Together the two labels now account for the bulk of the active side of the business.

Elsewhere there was pressure. The Wolverine brand slipped 4.1 per cent to $43.5 million, and Sweaty Betty recorded a 7 per cent decline to $41.4 million. Those two businesses remain the soft spots management will need to address as the group’s core athletic and outdoor lines continue to expand.

Where the growth comes from

Segment reporting shows the Active Group generating $387.8 million, an increase of 9.9 per cent, while the Work Group edged up 0.9 per cent to $106.9 million.

Geographically, international revenue climbed 11.7 per cent to $271.2 million, outpacing the wider business and underlining how much the group’s overseas exposure is contributing. Direct-to-consumer sales rose a more modest 2.2 per cent to $109.1 million, suggesting that the brand-owned channel is holding steady but is not the engine behind the quarter.

Tariff refunds flatter the profit line

The most eye-catching number in the release concerns margins. Gross margin widened sharply to 54.6 per cent from 47.5 per cent, while operating margin jumped to 17.7 per cent from 8.4 per cent.

A substantial part of that improvement is one-off in nature. The company received $35.3 million in refunds, including interest, relating to tariffs paid under the International Emergency Economic Powers Act. Those refunds added roughly 640 basis points to both gross and operating margins — a very large slice of the headline improvement.

Without that benefit, profitability would still have improved, but by a far smaller margin. Investors should treat the refund as a windfall rather than a guide to the sustainable margin profile of the business.

Net earnings attributable to Wolverine World Wide rose to $65.8 million, up from $25.1 million a year earlier. Diluted earnings per share came in at $0.78 compared with $0.30, including an approximate $0.31 benefit from the tariff refunds. Adjusted diluted earnings per share reached $0.79, up from $0.36.

A tidier balance sheet

The balance sheet tells a similar story of consolidation. Inventory fell 4.9 per cent to $278 million, a sign that stock levels are being managed more tightly after the oversupply problems that dogged much of the industry post-pandemic. Net debt dropped 26.4 per cent to $399 million, giving the group appreciably more financial headroom.

That combination — lower stock, less borrowing and growing sales — is the kind of arithmetic that supports continued brand investment without stretching the finances.

Guidance moves up

For fiscal 2026, Wolverine now expects revenue of approximately $2.000 billion to $2.010 billion, representing growth of roughly 6.7 per cent to 7.2 per cent. The previous forecast had pointed to $1.980 billion to $2.000 billion, so the top end has been raised by $10 million.

Earnings guidance has moved more dramatically. Diluted earnings per share are now expected at $1.88 to $1.92, with adjusted diluted earnings per share of $1.95 to $1.99 — both including an approximate $0.32 benefit from the tariff refunds. The earlier outlook, which made no allowance for any refund, had called for diluted earnings per share of $1.48 to $1.58.

What to watch

The upgraded numbers reflect confidence in the final quarter, but the composition of the improvement deserves scrutiny. Refund-related gains do not repeat, so the durability of earnings growth will depend on whether Saucony can keep up its double-digit pace and whether Merrell can sustain steady gains in a cautious consumer climate.

International expansion looks like the group’s strongest structural tailwind, with growth there running well ahead of the total. On the other hand, the decline at Sweaty Betty and the Wolverine brand means the portfolio still carries drag. How quickly management can stabilise those two labels — while keeping inventory lean and debt falling — will determine whether the eighth consecutive quarter of growth becomes a long run rather than a high-water mark.