What happened
Shares of Wolverine World Wide (WWW 3.91%) lagged the market on Thursday, falling 19% by 11 a.m. ET. That drop came even as the S&P 500 gained over 1%. The apparel specialist's stock is now down 13% in 2023 compared to an 18% boost in the wider market.
Thursday's drop was driven by a flood of news from the executive team, including an earnings update and a management shake-up.
So what
Wolverine World Wide said in a press release before the market opened that sales declined 17% in the Q2 selling period that ran through early July. This drop was not expected, management said, and reflected worsening selling conditions that affected most of its apparel and footwear brands. "Order demand has slowed as retailers manage their businesses more cautiously," CFO Mike Stornant said in a press release.
The company separately announced a change in leadership, with Chris Hufnagel stepping into the CEO position, effective immediately. Wolverine World Wide is still implementing the strategic shift it announced last year, including exploring selling the Sperry brand.
Now what
Management also reduced its 2023 forecast significantly. Wolverine World Wide now sees sales dropping by 10%, marking a major shift since last quarter when the projection was calling for a slight increase. Operating profit margin will now land at about 5% of sales, down from the prior forecast of 8% of sales. "Our second half outlook ... is disappointing," the incoming CEO admitted.
These updates suggest that the company could struggle for several additional quarters before sales trends stabilize and then return to growth. That uncertainty is amplified by the change in leadership announced today. As a result, investors can expect more volatility with this retailing stock beyond today's slump. There are more attractive options in its niche, including Nike. Consider stocks like these that are showing steady sales growth over Wolverine World Wide as investment candidates right now.
