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In a refreshing break from other retail companies that whine about weather or gasoline prices, Wolverine simply delivered the goods for the first quarter. Total sales were up about 9% on good outdoor brand sales and good performance from the Hush Puppies line, partially offset by lower revenue from co-branded products from Caterpillar
Gross margins improved by 130 basis points from the year-ago quarter, and that dropped almost straight through to an improved operating margin as well. Consequently, operating income grew 27% for the quarter, net income grew 32%, and EPS climbed 35%.
Although the company declined to provide cash flow information for the first quarter, management reiterated its guidance for roughly $75 million in operating cash flow for the full year. Assuming that trends in capital expenditures stay constant, free cash flow should come in around $55 million for the year.
Wolverine management is already returning some of that cash to shareholders, buying almost $8 million worth of stock in the quarter and hiking the dividend about 50% from last year.
Wolverine management should also be credited for running the balance sheet well. Increases in inventory were solely because of the outdoor group (the strongest-growing group at present) and days sales outstanding, and inventory turns improved by 8.8% and 6.3% respectively versus last year's period.
Many Fools have spoken well of partial competitor Timberland
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares), but he happily wears his Wolverine shoes.