“Following record financial results in the fourth quarter of 2019, the company delivered strong Q1 earnings results, despite challenging conditions caused by the Covid-19 pandemic late in the quarter”, commented Blake W. Krueger, Chairman, Chief Executive Officer and President of Wolverine. “While prioritizing the health and wellbeing of our global team, we have quickly initiated a comprehensive set of measures over the last 30 days to proactively strengthen the company’s financial position, liquidity, and balance sheet in the face of the ongoing pandemic. Our supply chain and distribution centres continue to operate, enabling strong ecommerce growth and continued wholesale shipments (...) We believe the company is strong, well positioned to navigate the current challenges, and will emerge even stronger”, he concluded.

First Quarter Review

Reported revenue reached 439.3 million US dollars, down by 16.1% versus the prior year. On a constant currency basis, revenue was down by 15.6% versus the prior year.  Owned ecommerce growth for the quarter was 17.5%. Reported gross margin was 41.4%, compared to 42.1% in the prior year, in line with the company's expectations. Reported operating margin was 3.8%, compared to 10.0% in the prior year. Adjusted operating margin was 6.9%, compared to 10.9% in the prior year. Reported diluted earnings per share were 0.16 US dollars, compared to 0.43 US dollars in the prior year.  Adjusted diluted earnings per share were 0.28 US dollars, and, on a constant currency basis, were 0.29 US dollars, compared to 0.49 US dollars in the prior year.

Liquidity and Cash Flow

The company has prioritized liquidity, cash preservation, and asset management in response to the current environment.  Over 500 million US dollars in cash preservation initiatives have been implemented, which are now expected to enable Wolverine to generate 150 million US dollars to 200 million US dollars of operating cash flow in 2020. “The company’s response to the current situation has been proactive and deliberate. As a result, we expect the company to deliver 150 million US dollars to 200 million US dollars of operating cash flow for the year in a very challenging global retail landscape. Our strong balance sheet and experience as disciplined operators provide critical advantages, and our business model enables great flexibility to optimize profits and cash flow.  Based on all of our proactive measures, we expect to be well within the requirements of our current financial covenants throughout the year”, commented Mike Stornant, Senior Vice President and Chief Financial Officer.